Banks are the government’s main source of domestic loans in Tanzania, accounting for 41.7 per cent of total domestic debt as at the end of March 2017.

According to the Bank of Tanzania’s latest monthly economic review, the decline resulted from the emergence of other players providing loans to the government — particularly pension funds and insurance companies.

The stock of financing domestic debt was Tsh10,976.8 billion ($4,859.4 million) at the end of March 2017, an increase of Tsh327.8 billion ($145,118 million) from the end of the preceding month. On year-to-year basis, the debt stock increased by Tsh1,538.9 billion ($681,275) from March 2016.

The proportion of long-term debt increased in March 2017 from the preceding month consistent with medium-term debt strategy.

The average time to maturity of outstanding domestic debt improved marginally to 3.7 years in March 2017 from 3.6 years in February 2017. The World Bank recently advised the government to reduce its arrears for the domestic market.

Year-on-year basis

During presentation of the Tanzania Economic Update last April the World Bank said that arrears remain high and pose a serious credibility challenge. It said that even though there has been a significant increase in revenue collection since November 2015, progress toward clearing arrears has been slow.

Arrears to contractors and other suppliers and pension funds was 6.3 per cent of GDP (Tshs6.5 trillion) at end-June 2016, which is 0.2 per cent of GDP lower than the figure recorded in June 2015.

The report shows that external debt stock increased by $ 47.1 million to $17,578.1 million at the end of March 2017 from February 2017, while on year-on-year basis it increased by $884.8 million from the end of March 2016.