Tanzania halts debt rating push, seeks SWF money

By George Obulutsa

DAR ES SALAAM (Reuters) - Tanzania has suspended a push for the debt rating it needs to issue a Eurobond and is seeking financing from sovereign wealth funds in the Gulf and Asia, Finance Minister Mustafa Mkulo said on Thursday.

The east African nation, whose relative macroeconomic stability has made it popular among foreign investors and donors, first announced it would seek a sovereign debt rating in August and had hoped to have one by this month.

"We have suspended it because those people who are experts in the ratings exercise are the ones who caused the financial problems in the West," Mkulo told Reuters, declining to give any more details.

Tanzania had planned to issue a debut $500 million Eurobond this year to fund infrastructure projects, following in the footsteps of sub-Saharan countries Gabon and Ghana which issued debut Eurobonds in 2007.

Mkulo said that in light of the postponed bond issue and the global economic crisis -- which could eat into donor funding for Tanzania's budget - the country was seeking alternative external funding and boosting tax collection.

"There are state wealth funds. There are some rich countries that are ready to lend to Tanzania at very concessional terms, like the Gulf States, countries like China," he told reporters.

Tanzania is among Africa's main aid recipients. It factored in 34 percent of its 2008/09 (July-June) fiscal budget to come from external sources in concessional loans and grants.

Tanzania's Eurobond plans were postponed in January due to the global financial crisis. President Jakaya Kikwete said then the country would review the plan when conditions improved.