Tanzania plans to borrow at least Tsh5.4 trillion ($2.34 billion) from foreign sources to finance its proposed 2022/2023 budget of Tsh39.38 trillion ($17.1 billion).

According to Finance minister Mwigulu Nchemba, 7.7 percent (Tsh3.04 trillion, $1.32 billion) of next financial year's budget will be funded through direct concessional loans and grants from development partners under the traditional general budget support arrangement. Another Tsh2.4 trillion ($1.04 billion) is expected to come from project-specific commercial loans from international lenders, Nchemba said Wednesday while presenting the 2022/2023 budget proposals to parliament in Dodoma.

The government will borrow a further Tsh5.35 trillion ($2.32 billion) from the domestic market towards ensuring at least Tsh28.56 trillion ($12.4 billion) internal financing of its 2022/2023 budget to balance the external funding, Mr Nchemba said.

Rising debt

Tanzania's total national debt currently stands at Tsh77.9 trillion ($33.88 billion).

According to the Bank of Tanzania’s (BoT) latest report, the national debt went up $182.3 million as at end of August compared to July and up $3.87 million from August 2020.

External debt (public and private) accounted for 76.6 percent of the stock at $25.95 billion, an increase of $2.54 billion from August last year.

Tanzania’s external debt service payments amounted to $27.8 million in August 2021, of which $18 million was spent on principal payments and the rest on repaying accumulating interest, the central bank said. A total of Tsh10.66 trillion ($4.63 billion) was allocated for government debt repayment in the 2021/2022 budget, making up 29 percent of total expenditure.

According to MNchemba, next year's budget will again prioritise external and domestic debt repayment along with the continued implementation of key infrastructure projects, including the standard gauge railway, the 2,115-megawatt Rufiji hydropower dam and revival of the ailing national carrier, Air Tanzania.

Other projects are the East African Crude Oil Pipeline from Uganda to Tanga and a liquid natural gas processing plant in Lindi.

Next fiscal year’s budget will also focus on civil service salary increment and the planned national population census in August 2022.