Business
Tanzania’s strategy to end poverty and drive growth faces a setback
Poor families in Tanzania will have to hold on a little longer, before the government can address their plight. Photo/FILE
Tanzania’s strategy for growth and poverty reduction is at the crossroads as government backtracks on its budgetary allocations towards development.
The government, for instance, allocated more than 50 per cent of its 2009/2010 national budget towards the implementation of the strategy, which locally is referred to as Ukakati wa Kukuza Uchumi na Kupunguza Umasikini Tanzania — Mkukuta — but increased recurrent spending stood in the way of developing the sector.
Economic experts say on closer scrutiny, stated priorities, budget allocations and actual spending are not well aligned.
Further, the credibility of the budget as a strategic resource allocation instrument has been weakened by unrealistic revenue projections.
Emmanuel Mungunasi, an economist at the World Bank’s Tanzania Country Office, said approved government resources were lower than the proposed allocations, and capital spending declined to 15 per cent this financial year, from 24 per cent in 2008/2009.
“Sectors affected include infrastructure construction and rehabilitation, acquisition of technical equipment and other capital, — which was contrary to the objectives stated at the 2008 General Budget Support Annual Review,” said Mr Mungunasi.
He said this forced the government to meet the budget shortfalls through in-year cuts of approved expenditure.
“The road budget was underfunded by $130 million while the Ministry of Finance and Economic Affairs doesn’t recognise unpaid bills as arrears, then caters for them through the in-year cuts,” said Mr Mungunasi.
A programme officer with the Tanzania Association of Non-Governmental Organisations Mussa Billegeya blamed the poor budget execution on sustained financial indiscipline, especially where donor funds were concerned.
“There are billions of shillings said to have been spent on development projects but the reality on the ground indicted the contrary. It is time donors devised a mechanism that would ensure proper use of funds,” he said.
Foreign aid accounts for up to 10 per cent of GDP and finances an average of 40 per cent government outlays.
But with the Government considering borrowing up to 1 per cent of GDP annually on non-concessional terms through the issuance of sovereign bonds, experts warn that aid may decline to 8 per cent of GDP by next year.
