Tanzania seeks to allay concerns over $35 billion debt in budget
Tanzania’s public debt is well within sustainable metrics despite ballooning by close to a fifth in the year through March, Finance Minister Mwigulu Nchemba said in his budget speech, seeking to allay discontent over the surge in obligations.
The East African nation’s debt jumped to 91.7 trillion shillings ($35 billion) by the end of the first quarter, 19% higher than a year earlier, he said to lawmakers in the capital, Dodoma. African governments are under pressure to strike a balance between burdening their already heavily indebted nations with more loans and boosting their economies.
“There’s been great debate about public debt, which is often misguided and used politically,” Nchemba said. “It is important to understand the reasons for debt increase before judging or spreading fear.”
President Samia Suluhu Hassan’s government has borrowed 17.2 trillion shillings from foreign sources in the past three years, which has been spent on projects including a new railway.
In the fiscal year starting July, Tanzania’s budget aims to increase domestic borrowing by 37% and foreign loans by 42%.
The present value of government debt to gross domestic product is 35.6%, compared with the threshold of 55%, the minister said. The value of outstanding loans grew partly on the back of a weaker shilling against the dollar and the disbursement of new and old loans.
Budget Highlights:
- Fiscal deficit of 2.9% of gross domestic product
- Total expenditure of 49.34 trillion shillings
- Recurrent spending of 34.59 trillion shillings
- Development spending of 14.76 trillion shillings
- Total income of 49.34 trillion shillings
- Tax revenue of 29.42 trillion shillings
- External borrowings of 2.98 trillion shillings
- Domestic loans of 2.59 trillion shillings
- Government requires 1.07 trillion shilling to rebuild infrastructure destroyed by El Nino-related floods
- Bank of Tanzania plans to spend $400 million on gold for its reserves; finance ministry proposes to cut royalties on gold sold to the central bank to 2% from 6%
