Tanzania borrows money because it has ability to pay, says Finance Minister
Tanzania's Finance Minister, Dr. Mwigulu Nchemba
What you need to know:
- The borrowed funds, he said, are utilized for significant projects that require substantial financing upfront.
Dar es Salaam. According to data from the Bank of Tanzania (BoT), as of December 2023, Tanzania’s national debt was $41.7 billion (Sh120 trillion), while government debt was Sh87.47 trillion.
However, the country's Finance Minister, Dr. Mwigulu Nchemba, emphasized that borrowing indicates the lender's confidence in being repaid.
He stated that the country borrows funds for the implementation of various strategic projects because it has the ability to pay.
"Even the richest countries in the world have the biggest debts. The most developed countries have bigger debts than Tanzania," he said on Friday after signing a Sh231.3 billion financing agreement with the African Development Bank (AfDB) to start the construction of SGR that seeks to connect Tanzania with Burundi and the DR Congo.
His remarks were made at a time when the government has allocated Sh10.48 trillion to service the national debt in the financial year 2023/24.
The borrowed funds, he said, are utilized for significant projects that require substantial financing upfront.
Dr. Mwigulu clarified that borrowing is a strategic decision to address large-scale projects efficiently. He emphasized that the borrowed funds are invested in projects like building railways, which generate revenue to repay the debt over time.
A Ministry report from June 7 last year indicated that the government had assessed the sustainability of the national debt for the next 20 years, showing that the current debt level is sustainable in the short, medium, and long term.
