DODOMA, Tanzania
The Speaker of the National Assembly Job
Ndugai has made a public apology to President Samia Hassan following claims he
made earlier last week that Tanzania risks being auctioned due to rising
national debt from external sources.
Speaking at a public rally in his Kongwa
constituency in Dodoma on December 27, Ndugai said that Tanzania should stop
accepting loans from external lenders and instead expand its domestic revenue
streams to pay for development projects.
Ndugai came under attack from within the ruling
CCM party for saying the country was in danger of being auctioned off if its
external debt burden continued to grow.
At a press conference in the capital Dodoma on
Monday, he said, however, that his comments were misinterpreted.
He said he was only answering critics of
Parliament's endorsement of a mobile money transfer levy last year that remains
highly unpopular among users.
“It was just a call to Tanzanians to accept
taxes, levies and such government charges as a necessary part of increasing
internal government revenues to help cover costs for social services such as
health, education and the like,” he said.
Ndugai's remarks last week drew response from
President Samia Suluhu Hassan who, a day later, said her administration would
not be discouraged from prioritising external loans over domestic taxes to
complete key infrastructural projects such as the Standard Gauge Railway and
the Julius Nyerere Hydropower projects.
Speaking after the signing of a new $1.93
billion deal with Turkish contractors Yapi Merkezi for another phase of the
ongoing SGR project, the president said:
“There are people who thought these projects would ground to a halt so they would have something to say. That’s not going to happen. There is no country anywhere that doesn't borrow - even the so-called developed countries have bigger loan debts than ours. We will borrow, borrow and borrow in order to finish the projects we have started.
“That way we will be able to complete these projects much sooner and start making money off them to pay off whatever loans we incur. If we were to depend on our own internal revenues, how long would that take?”
Ndugai had asserted that external borrowing for
development was not “sustainable” and recommended that alternative means be
used to raise funds to finance infrastructure investments. “Higher domestic
taxes and expanding the internal revenue tax base is much more preferable,” he
said last week.
The House Speaker appeared to be supporting the
position adopted by Samia's predecessor John Magufuli, whose
five-and-a-half-year tenure was marked by frequent public claims that his
government was paying for most if not all infrastructure projects and other
social development initiatives out of its own pocket.
These claims were underscored by often
high-handed domestic tax collection methods coupled with tough austerity measures
designed to rein in the government’s recurrent expenditure.
However, Ndugai said the video clip of his
remarks, which went viral on social media leading to a huge political backlash,
was edited to misrepresent his comments.
He added that he did not intend to “disrespect”
President Samia’s administration.
“That clip was smartly edited to convey a
different message and soil my relationship with the presidency. Social media
has become a very powerful tool these days; it can create agendas out of
nothing. People are now using it to attack the current administration and drag
the Speaker into it,” he said.
“But for all those whom I may have wronged by
my remarks, I apologise wholeheartedly,” he added.
According to Ndugai, fences have already
started being mended after President Samia accepted an invitation to be chief
guest at a National Prayer Breakfast organised by the Speaker’s Office in
Dodoma on January 29 ahead of the first parliamentary session of 2022 that will
be held on February 1.
Tanzania's national debt stood at $35.7 billion
in November 2021, according to the Bank of Tanzania. The country has so far
secured about $3 billion in loans from various external sources since President
Samia took office following Magufuli's death in March 2021.
The latest loan was a $567.25 million package
from the International Monetary Fund that included $372.4 million at zero
interest rate. According to the IMF, this was due to Tanzania's “new
eligibility to borrow from the Fund fully on concessional terms.”
Tanzania has also said it will borrow at least
$2.34 billion from foreign sources in support of its proposed 2022/2023 budget
of $17.1 billion. About $1.32 billion will be funded through direct
concessional loans and grants from development partners under the traditional
General Budget Support (GBS) arrangement, and another $1.04 billion is expected
to come from project-specific commercial loans from international lenders.
The government will also borrow $2.32 billion
from the domestic market towards ensuring at least $12.4 billion internal
financing of its 2022/2023 budget.
About 29 percent of the total budget ($4.62
billion) has been tentatively allocated for government debt repayment.
According to Finance Minister Mwigulu Nchemba, the 2022/2023 budget will
include external and domestic debt repayment among its priorities.
Despite the mounting external debt, Tanzania
has remained the only country in the East African region to maintain a low risk
of debt distress since 2013, according to AfDB's regional economic outlook for
2021.
The AfDB report relegated both Kenya and Ethiopia from low to high risk and Uganda from low to moderate risk. Rwanda maintained a moderate risk rating over the same period while South Sudan dropped from moderate to high risk alongside Burundi. Djibouti remained high risk as Somalia, Eritrea and Sudan were all placed in the critical debt distress category.
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