East Africa aims to free up money to help minimise the economic impact of Covid-19

Governments in East Africa has said that they will ask for debt relief and implement new tax measures to free up money to help their economies through the impact of the coronavirus pandemic.

The governments of Kenya, Uganda and Tanzania all outlined their spending and taxation plans in budget announcements coordinated to happen on the same day.

Government spending for the three countries combined will amount to $52.6bn (£41.7bn).

In Kenya, the government has set aside $500m to be spent on the tourism, manufacturing and agricultural sectors, which have all been affected by the measures brought in to contain the spread of Covid-19.

To help pay for government spending, Kenya’s Finance Minister Ukur Yatani has proposed a new tax on companies providing digital services, which could prove controversial.

Uganda will clamp down on tax compliance and raise some levies to collect more revenue for the economy and also to boost local industries and protect them against cheap imports, Finance Minister Matia Kasaija said.

As Africa’s second-biggest coffee grower, agriculture makes up about a quarter of gross domestic product in the country’s that also produces tea and sugar.

The IMF approved $491.5 million for Uganda from its Rapid Credit Facility for its response to the pandemic last month.

Tanzania is seeking as much as $272 million from the IMF’s Rapid Credit Facility and is in talks with bilateral creditors for debt relief, according to Finance Minister Philip Mpango.

Tanzania’s Finance Minister Philip Mpango has said that the government will maintain its levels of spending but acknowledged that the pandemic will reduce economic growth from 6.9% to 5.5%.