On national debt, Tanzania cuts its cloth as per its size, keeping levels sustainable

Monday November 11 2019

President John Magufuli inspects construction works of the SGR project in Dar es Salaam. Tanzania’s 2020/21 National Development Plan includes major infrastructure projects such as the standard gauge railway. FILE PHOTO | NMG


Tanzania's public debt rose to $22.5 billion as at August this year, from $21.2 billion last year, with the increase attributed to new loans secured to undertake public projects.

Finance and Planning Minister Philip Mpango, while announcing the debt estimates in the National Assembly last week, said external loans amounted to $16.5 billion while internal debt stood at $6 billion.

Tanzania’s debt-to-GDP ratio is set to rise to 43.6 per cent this year from 41.4 per cent last year, putting it among the lesser indebted economies among the East African Community partner states.

Dr Mpango, who is also a former World Bank Economist, told the National Assembly that an assessment conducted by the government last December showed that the National debt ‘’was on a sustainable level tolerant in the short, medium and long term by international standards.’’

“The government continues to keep debt sustainable by ensuring that borrowed loans are directed to national development projects,” he said.

Dr Mpango said the economy remains stable, noting that real GDP has grown by an average of 6.4 per cent per year over the past decade (2009-2018).


The Finance and Planning Minister further added that the shilling remained relatively stable during the year ending August 2019, with foreign exchange of the dollar adjusted at an average of Tsh2,289.1 compared with Tsh2,273.7 in the same period in 2018.

Tanzania’s revenue collection is also on the rise.

In the first quarter of the financial year, $1.9 billion tax was collected, with a record of $759 million revenue recorded in September alone.

Dr Mpango said internal revenue collection during the year 2018/2019 stood at $7.9 billion, which was 88.7 per cent of the targeted $9 billion.

According to Gen Edwin Mhede, the Tanzania Revenue Authority Commissioner, the taxman is required to collect a total of $8.2 billion an average of $684 million a month, to partly finance the country’s $14.3 billion budget.

“It’s a huge milestone compared with revenues collected in the same month in 2018; we have outdone it by 29.18 per cent,” he said.

The Finance Minister told the National Assembly that the government plans to increase the 2020/2021 budget by 3.79 per cent by spending a total of $ 14.8 billion from its domestic and external sources, up from the $14.3 billion budget of the financial year of 2019/2020.

He said regular spending is also estimated to increase by 4.7 per cent to $9.3 billion, equivalent to 13.7 per cent of GDP, while development expenditure is estimated at $5.5 billion, equivalent to eight per cent of GDP.

National revenue (including council revenue) is projected to rise to $10.1 billion in 2020/21 from $9.9 billion in 2019/20, with a projected average increase of 8.8 per cent in the medium term.

The 2020/21 National Development Plan was developed based on major infrastructure projects such as the standard gauge railway, Julius Nyerere hydro power plant and boosting Air Tanzania company Ltd.

Tanzania aims to grow its gross domestic product by 7.1 per cent next year from 7.0 per cent currently.