By Our
Correspondent, Dodoma TANZANIA
Tanzania
has started the New Year with a national debt of 54.84 trillion shillings
($23.77 billion) as of November 30, 2019. This is due to a shortfall in revenue
collection coupled with low external financing exacerbating pressure on an
economy that is expected to expand by 7.1 per cent by June.
However, the Minister for Finance and Planning,
Phillip Mpango, is optimistic that the debt is sustainable.
“All ratios are below international thresholds. The
ongoing debt assessment shows the country can continue to borrow locally and
abroad to finance its development activities and pay off matured loans using
its internal and external revenue," he said in a state of the economy
address on December 31.
According to Mpango, the increase in debt is
attributed to two factors: The matured interest loans of previous contracts and
new loan disbursements to finance the standard gauge railway and airports,
construction of electrical plants and implementation of water projects.
“Most of the debts we are currently paying are
dated 40 years back. In 2019/2020, the government intends to increase and
strengthen domestic resource mobilisation aiming at financing government
operations including paying debts and ensuring funds mobilised are spent as
intended on projects that in turn will transform the country economically,” Mpango
said.
The country’s external debt stands at 40.39
trillion shillings ($17.50 billion) while domestic debt is at 14.44 trillion
shillings ($6.25 billion) as of November 30, 2019.
According to the central bank, transport and
telecommunication were the major beneficiaries, accounting for 26.8 per cent of
the debt, followed by social welfare and education, energy and mining, and
balance of payments and budgetary support.
Meanwhile, revenue collection was slightly below
target in the first five months of the 2019/2020 financial year at 8.50
trillion shillings ($3.7 billion) against a target of 9.01 trillion shillings
($3.9 billion) during the period.
“Despite the fact that domestic revenue collection
has generally increased compared with past years, the amount collected is less
than the targeted amount mainly because of tax evasion,” said Mpango.
The World Bank previously noted that the missed
revenue targets imply serious weakness in revenue forecasting, and advised the
country to improve its revenue and tax collection forecast and intensify
mobilisation of domestic revenue to finance investments.
The World Bank predicted that the country’s economy
is likely to expand by 5.8 per cent at the close of 2019.
Several projects are still ongoing such as the
construction of the standard gauge railway, hydroelectric power project at
Rufiji River at 1.44 trillion shillings, and 788.80 billion shillings for water
and rural electricity projects.
The government expects to attain real GDP growth of
7.1 per cent by the end of the 2019/2020 financial year.
The country’s external debt stands at 40.39
trillion shillings ($17.50 billion) while domestic debt is at 14.44 trillion
shillings ($6.25 billion) as of November 30, 2019.
According to the central bank, transport and
telecommunication were the major beneficiaries, accounting for 26.8 per cent of
the debt, followed by social welfare and education, energy and mining, and
balance of payments and budgetary support.
Meanwhile, revenue collection was slightly below
target in the first five months of the financial year 2019/2020 at 8.50
trillion shillings ($3.7 billion) against a target of 9.01 trillion shillings ($3.9
billion) during the period.
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