Tanzania's government debt increases by Sh12.7 trillion in one year

Dar es Salaam. Tanzania's government debt has increased to Sh87.47 trillion from Sh74.75 trillion in 2022, according to the Parliamentary Budget Committee.

This marks an increase of Sh12.7 trillion or 17.09 percent compared to the same period last year.

Out of the total amount, Sh56.79 billion is external debt, while Sh56.79 trillion is internal debt.

This was said in parliament on February 14, by the chairperson Daniel Sillo while presenting the committee’s report.

He said the borrowed funds are being utilised for various development projects, such as road infrastructure, railways, airports, energy, agriculture, water, education, livestock and health.

The debt will continue to increase as Tanzania continues to undertake several major infrastructure projects, which are key to attracting investors upon their completion.

The projects include the Standard Gauge Railways, the Julius Nyerere Hydro-Power Dam, the expansion of the ports and the construction of the Bus Rapid Transit infrastructure in Dar es Salaam, to mention just a few.

The committee's analysis shows that the increase in external debt is due to changes in exchange rates and interest rates based on financial market conditions (floating rate).

 “28.3 percent of the external debt has a flexible exchange rate and 71.7 percent of the debt has a fixed exchange rate,” he said.

The report indicates that the external debt consists of Sh16 trillion in commercial loans and Sh40.7 trillion in concessional loans.

The internal debt has various sources. Commercial banks contribute Sh8.289 trillion, financial institutions Sh523 billion, social security funds Sh8.5 trillion, and insurance firms Sh1.764 trillion.

Others are foreign institutions (Sh1 trillion), small organizations (Sh1.155 trillion) and individuals (Sh2.2 trillion).

However, according to the latest report from the International Monetary Fund (IMF), Tanzania is among the least indebted nations in Africa.