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Tanzania to bail out companies
Publish Date: Jun 11, 2009
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EAST AFRICAN BUDGETS 2009

DODOMA
Tanzania will spend 1.7 trillion shillings ($1.3b) to compensate companies hit by the global financial crisis, president Jakaya Kikwete said.

Speaking to legislators and elders in the administrative capital Dodoma, Kikwete said the government would guarantee debt rescheduling for some companies in tourism, agriculture and other sectors – and reimburse some losses directly.

“The cost of these measures is 1,692.5 billion shillings. We have put that money in the budget,” Kikwete said.

The global slowdown has hit Tanzanian tourism receipts, its biggest foreign exchange earner, dented demand for its coffee and cotton exports, and prompted foreign investors to suspend significant projects in the mining sector.

The government and analysts polled by Reuters predict 5% growth in 2009, down from 7.4% last year.

Growth is seen rising to 5.7% in 2010 and 7.5% in 2012.

“We will compensate those who got losses in 2008/09. These include cooperatives and companies,” Kikwete said.

“"The government will pay straight away to the banks that lent to them. We will not pay old debts that had nothing to do with the global economic crisis,” he told the meeting.

Other companies struggling with debt from the global slowdown would be helped by rescheduling and repayment holidays.

“We will also guarantee 70% of their debts and postpone repayment for two years,” he said.

“By April this year, 48,000 people had lost their jobs due to this crisis,” Kikwete revealed.
- Reuters

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