Delayed funds push project costs up, says CAG

Dar es Salaam. Delays in releasing budgeted money for development expenditure create extra costs for local projects and deny Tanzanians access to intended benefits in time.

The Controller and Auditor General (CAG) report on development projects indicates that some additional billions would have to be paid for projects whose implementation was also delayed.

For instance, the report states that construction projects relating to roads and airports by Tanzania National Roads Agency (Tanroads) alone had claims from contractors and consultants amounting to Sh1.03 trillion at November 2019 but Sh224.03 billion of it was interest charges. The principal amount was Sh794.09 billion but the costs were inflated by the delays.

The impact of delayed release of funds from Treasury was also seen in the local government authorities whose projects stalled or sometimes remained with unspent money.

“I urge the Treasury to release funds as per the approved budget and on time to enable timely implementation of the planned activities,” states the report which was one of the tabled packages to Parliament on Monday.

Apart from the Tanroads projects, the CAG also observed that 58 project implementers made payments amounting to Sh6.5 billion with respect to the procurement of goods and services without demanding electronic receipts.

The move, he said, is contrary to the requirements of Income Tax (Electronic Fiscal Devices) Regulations, 2012.

“The failure to demand the electronic fiscal devices (EFD) receipts not only increases the risk of tax evasion, but also undermines government efforts to increase tax collection,” the report stated.

The CAG also noted a delay in the release of funds from Treasury for development activities which led to significant balances of unutilized funds at the year-end from 182 local government authorities (LGAs) amounting to Sh258.66 billion.

The unspent development and recurrent grants is attributed by delay in the release of funds by the Treasury.

“Delay in releasing funds especially for development projects exposes the LGAs to a risk of projects cost overrun,” the document states.

The delays in payments has resulted in a delay in project completion and hence denies timely provision of intended services to beneficiaries. It could further result to project cost increase due to penalties.

The report states that assessment made on the implementation of development projects noted uncompleted projects worth Sh77.5 billion in 81 LGA mainly caused by late release of funds, inadequate community participation in development activities, inadequate project management and abandonment of projects for a long time.