ALL eyes will be on Dodoma today as the Minister for Finance and Planning, Dr Mwigulu Nchemba unveils government’s budget estimates for the 2023/24 financial year.
The government plans to increase spending by seven per cent in the next financial year to 44.38tri/-, up from 41.48tri/- in the current financial year, to cater for growing development needs.
According to a budget ceiling for the 2023/24 financial year, the 44.38tri/- will come from domestic revenue estimated to reach 31.38tri/-, which is about 71 per cent of the total budget.
Other sources will be grants and concessional loans from development partners estimated to reach about 5.46tri/- or 12.3 per cent of the total budget and non-concessional loans from domestic and foreign sources, which is expected to reach 7.54tri/- equivalent to 16.98 per cent of the budget.
The budget ceiling for 2023/24 financial year has increased compared to the previous estimates presented on the guidelines for the preparation of the government budget for the 2023/24 financial year after completion of discussions with the World Bank and the African Development Bank, which have pledged to provide 1.16bn/- and 247.4bn/- respectively.
The 2023/24 budget will be the third in implementation of the Third-Five Year National Development Plan (2021/22-2025/26), which has been prepared in accordance with the National Development Vision 2025, CCM Election Manifesto 2020, East African Development Vision 2050, Africa Agenda 2063, The 2030 Agenda for Sustainable Development Goals, Development Cooperation Framework; and other regional and international agreements that Tanzania has ratified.
It has been prepared based on domestic revenue collection trend and actual financing of development projects including the construction of the Hydroelectricity Project – Julius Nyerere 2,115 MW, construction of International standard railway (Standard Gauge Railway- SGR), repayment of salaries, payment of government debt and other important government expenditures.
Over quarter of the budget will be spent on servicing government debt, where 12.77tri/- or 28.7 per cent has been allocated. The government allocated 9.1tri/- or 21.9 percent of the budget for the current fiscal year for debt servicing.
Real growth of the economy is projected to rise to 5.3 per cent in 2023 out of expected 4.7 per cent in 2022 as it rebounds from Covid-19 pandemic, which hit-hard important sectors such as tourism and the war in Ukraine which has sent the price of commodities such as wheat and oil soaring.
The government is expecting to put up measures that will contain inflation to a single digit of the average of between three per cent and seven per cent in the medium term.
It is projecting domestic revenue (including local government revenue) to reach 14.9 per cent of the GDP in 2023/24 and tax revenue collection to reach 12.1 per cent of the total economy up from projections of 11.5 in 2022/24 financial year.
Budget deficit is expected not to exceed 3.0 per cent of the GDP and the government is expecting to maintain foreign reserves sufficient to cover for at least four months of imports of goods and services.
Several economists have aired their views on the kind of budget they expect to be tabled today.
In his opinion, a seasoned economist-cum-banker, Dr Hildebrand Shayo said the prevailing expectation is that the government would stick with its current policy and continue to raise capital expenditures.
He said the execution of policies to promote private sector engagement, which continues to be a driving force behind national progress, will be crucial in this budget, while also insisting that tax reform initiatives, which are already having a good effect in other countries, could help to increase the viability and engagement of private actors.
“The 2023/24 fiscal budget is going to mark yet another new era during the sixth phase of government led by President Samia Suluhu Hassan, which presents an opportunity to test the success of the government’s policy agenda in realising its obligation and advancing the welfare of the Tanzanian people,” noted Dr Shayo.
The University of Dar es Salaam (UDSM) School of Business Lecturer, Godsaviour Christopher said in the budget to be tabled today, the government is expected to continue focusing on reducing poverty and unemployment, especially among youth.
“The main focused sector in 2022/23 was agriculture, which is also expected to receive more budget attention this year. Apart from agriculture, the government is expected to continue financing the transformation of the economy to a digital economy to increase efficiency in different government institutions and authorities,” he said.
He said the government is also expected to continue financing a large portion of the budget through internal revenue. Regarding this tax revenue is expected to continue to be charged on alcoholic products, fuel, and financial transactions to finance the budget.