The Tanzanian government has allocated an astounding amount of Sh10.48 trillion ($4.4 billion) to address the country's debt during the fiscal year 2023-2024. This sum reflects a 15% increase from the previously approved Sh9.1 trillion, which was allocated by Parliament to pay off loans acquired by the government in the current fiscal year (2022-2023) from various sources.
Dr. Mwigulu Nchemba, the Minister of Finance and Planning, stated that the total of Sh10.48 trillion would be utilized to service the nation's debt, while requesting Parliament to approve a budget of Sh15.94 trillion for his ministry for the upcoming fiscal year.
The Treasury has received Sh2.854 trillion in overall funding, and an additional Sh2.315 trillion has been allocated to "other services."
The budget committee of Parliament expressed satisfaction with the government's plan to pay off the debt. Omari Mohamed Kigua, the deputy chairman of the committee, advised the government to ensure that all acquired loans are invested in development projects. He emphasized that Tanzania's economy benefits significantly when borrowed funds are utilized for such initiatives.
The Controller and Auditor General (CAG), also known as the National Audit Office of Tanzania, will allocate Sh97.134 billion to carry out its responsibilities in the next fiscal year.
Dr. Nchemba, who is also the ruling party's candidate for the Iramba West seat in Parliament, declared that one of the ministry's main objectives for the upcoming fiscal year is to facilitate the collection of Sh40.8 trillion in taxes necessary to implement the 2023-24 budget. Consequently, out of the Sh10.48 trillion designated for debt servicing, 25.686% of the ministry's total funds will be allocated to debt repayment.
In simpler terms, for every Sh100 collected by the ministry, approximately Sh26 will be used to pay off the debt.
As of the end of April 2023, Tanzania's total national debt, including obligations from both the government and commercial sectors, stood at $42.26 billion (approximately Sh97 trillion). However, Dr Nchemba informed the House that a government assessment of debt sustainability concluded that it remains manageable in the short, medium, and long terms.
"To obtain accurate information on national debt control, the Ministry has conducted a 20-year analysis, starting from the 2022/23 fiscal year. The results indicate that the government debt is sustainable in the short, medium, and long terms," Dr. Nchemba stated during the session in Dodoma.
According to the research, Tanzania's debt-to-gross domestic product (GDP) ratio currently stands at 31.8%, significantly lower than the maximum limit of 55%. As of April 2023, Sh7.4 trillion had already been paid out of the Sh9.1 trillion allocated for debt payments in the current fiscal year.