Tanzania allocates Sh10.5 trillion to service national debt

Dar es Salaam. The government has allocated a whopping Sh10.48 trillion to service the national debt in the financial year 2023/24. The amount is a 15 percent rise from the Sh9.1 trillion that the Parliament approved for paying the loans that the government took from various sources in the current (2022/23) financial year.

As he requested the Parliament’s approval of a total of Sh15.94 trillion for his ministry for the fiscal year 2023/24, the Finance and Planning Minister, Dr Mwigulu Nchemba, said a total of Sh10.48 trillion would be spent on servicing the government debt.

A total of Sh2.854 trillion has been allocated to the Treasury, while another Sh2.315 trillion has been allocated for services classified as “other services.’

The Parliament’s Budget Committee said it was happy with the government’s pace of debt servicing. “We, however, advise the government to ensure that all the loans it acquires are spent on development projects,” said the vice chairman of the committee, Omari Mohamed Kigua.

He said it is when borrowed funds are channelled to development projects that they benefit Tanzania’s economy better.

Meanwhile, the National Audit Office of Tanzania, popularly known as the Office of the Controller and Auditor General (CAG), will spend Sh97.134 billion to conduct its duties during the next financial year.

Dr Nchemba, who doubles as the Member of Parliament for Iramba West on the ruling party’s ticket, said one of his ministry’s priorities for the coming fiscal year would be to facilitate the collection of a total of Sh40.8 trillion in revenues to implement the 2023/24 budget. As such, the Sh10.48 trillion to be spent on servicing the government’s debt means that 25.686 percent of all the money that the ministry collects will be spent on debt repayment.

In other words, for every Sh100 collected by the ministry, almost Sh26 will be spent on debt servicing.

Tanzania’s total national debt stock, which included both public and private sector debts, stood at $42.26 billion (about Sh97 trillion) at the end of April 2023.

But Dr Nchemba told the House yesterday that a debt sustainability analysis that was conducted by the government has established that it is sustainable in the short, medium, and long term.

“In order to have correct information on the national debt control, the Ministry has conducted an analysis of the same for a period of 20 years, starting from the 2022/23 fiscal year. The results show that the government debt is sustainable in the short, medium, and long terms,” Dr Nchemba told the House in Dodoma yesterday.

He said the analysis has shown that Tanzania’s debt-to-gross domestic product (GDP) ratio currently stands at 31.8 percent, which is well below the ceiling of 55 percent.

Out of the Sh9.1 trillion that was meant for debt servicing during the current fiscal year, a total of Sh7.4 trillion had been paid as of April 2023.