Tanzania stays the course on rail, power; terms debt ‘sustainable’

Monday June 14 2021
Mwigulu Nchemba.

Tanzania Minister of Finance Mwigulu Nchemba ahead of presenting budget estimates for 2021/22. PHOTO | EDWIN MJWAHUZI


Tanzania passed a Tsh36.36 trillion ($15.61 billion) budget for 2021/22 with just 37 percent of the total budget (Tsh13.33 trillion or $5.75 billion) going towards development expenditure.

An estimated 8.1 percent of the new budget (Tsh2.96 trillion or $1.27 billion) will be covered by grants and concessional loans from development partners through either direct project financing or Basket Fund financing, and another Tsh7.34 trillion ($3.16 billion) will be borrowed from domestic and external sources on commercial terms.

Citing a recent debt sustainability analysis that concluded that Tanzania’s debt was still sustainable, Finance Minister Mwigulu Nchemba said that the 2021/22 budget would again lean heavily towards external funding while also prioritising internal sourcing.

Development fund allocations include Tsh1.19 trillion ($513.37 million) for railway projects such as the ongoing standard gauge railway construction and Tsh2.34 trillion ($1.01 billion) for power generation, transmission and distribution projects including the 2,115-megawatt Julius Nyerere Hydro Power dam.

Mr Nchemba described both as "mother projects for every Tanzanian” and emphasised that they will be completed.

Dam project


In a presentation last month, the Ministry of Energy disclosed that Tsh1.4 trillion ($603.97 million) comprising 58.67 percent of its own entire budget for 2021/2022 would be channelled towards the dam project

The SGR project meanwhile is also moving along fast with President Samia Suluhu set to preside over the official launch of its latest phase involving construction of a 341-kilometre stretch between Mwanza and the Isaka dry port later this month.

Officials have confirmed that the government has already released Tsh376.34 billion ($162.35 million) out of the total Tsh3.07 trillion ($1.32 billion) donated by China earlier this year for the Mwanza-Isaka SGR stretch.

According to Mr Nchemba, a further Tsh3.13 trillion ($1.35 billion) has been allocated in the new budget to kick start another SGR construction project from Mtwara to Mbamba Bay in southern Tanzania.

He mentioned other government spending priorities in the new budget as including further strengthening of the national carrier Air Tanzania under a Magufuli government-sanctioned revival plan; commencement of the East African Oil Pipeline project; and resumption of negotiations for the establishment of a $30 million Liquefied Natural Gas plant in Lindi.

However, the final budget figure is only slightly above the Tsh36.23 trillion ($15.6 billion) preliminary estimate tabled in March and does not directly reflect a $850 million World Bank loan that was endorsed just last week as part of a budget support package.