Context. The unfavorable global economic environment and domestic factors continue to weigh on Tanzania’s economic recovery. Growth rebounded during the first half of 2023 but is expected to slowdown in the second half amid headwinds from a weak global outlook and forex liquidity shortages. Inflation has moderated and is now well within the Bank of Tanzania’s target. The fiscal deficit was wider than expected in FY2022/23, largely reflecting shortfalls in revenue collections. A wide current account deficit for FY2022/23 and tighter external financial conditions resulted in pressures in the foreign exchange market.Program status. In July 2022, the IMF’s Executive Board approved a 40-month arrangement under the Extended Credit Facility (ECF) in an amount equivalent to 200 percent of quota. The ECF arrangement focuses on safeguarding macroeconomic stability in the face of global economic shocks and supporting reforms towards sustainable and inclusive growth, drawing on the government’s reform priorities summarized in the authorities’ Third Five-Year Development Plan. The first review of the arrangement was approved by the Board in April 2023.