LOCAL analysts have welcomed budget highlights for the next financial year 2019/2020 presented by Finance Minister Philip Mpango, describing the blueprint ahead of the actual financial plan in June as ‘an investment budget.’
Presenting the framework of the budget in Dodoma on Tuesday, Dr Mpango explained to Members of Parliament that the government plans to collect and spend 33.1tri/- in the coming fiscal year against the target of 32.5tri/- for the current year.
The new plans show an increase of 1.9 per cent in collection and expenditure of the government, translating to 600bn/-.
“The structure of the plan shows that a large chunk of it will be channeled for recurrent expenditures but the good thing is that such spending is on development rather than consumption,” renown economist, Prof Haji Semboja, told ‘Daily News’ in a telephone interview yesterday.
Prof Semboja pointed out further that infrastructure projects being earmarked for implementation will steer the country towards socio-economic development.
“The budget framework is the fourth since the current government came into power; we have been witnessing an increase of funds allocated for development projects each year,” the senior lecturer of economics at the University of Dar es Salaam (UDSM) stated.
Speaking in a separate interview, the Executive Director of Tanzania Private Sector Foundation (TPSF), Mr Godfrey Simbeye, was impressed that the plan focused on creating more industries as part of the Second Five-Year-Development- Plan (FYDP II) spanning between 2015/2016 and 2020/2021.
The TPSF top executive however proposed for reduction of the Value Added Tax (VAT) on locally produced goods to stimulate consumption and eventually increase production in industries.
“The country is gearing to attain industrialised economy and this will be possible through stimulating consumption of goods to be manufactured in the existing and new factories.
As we speak, demand is low and this has reduced production,” he stated. Confederation of Tanzania Industries (CTI)’s Policy Specialist Trade, Mr Frank Dafa, pointed out on the other hand that industrialists have been engaging the government to expedite tax refunds.
“Delays in refunding taxes impact negatively on industries since it reduces their capacity to produce,” the analyst commented, noting that refunds on VAT were the most serious area which is affecting local factories.
The CTI official was generally pleased that the proposals by Minister Mpango focused on among others, implementation of power projects since electricity is a catalyst for industries.
According to Dr Mpango, the government plans to spend 20.9tri/- in recurrent expenditure in the next fiscal year, which will include financing of the 2019 civic polls and preparations for the country’s General Election next year.
Development expenditure is pegged at 12.2tri/- , out of which 9.7tri/- will be sourced internally while the remaining 2.5tri/- will be from external revenue sources.
Dr Mpango, who was presenting the National Development Plan and the budget ceiling for 2019/2020, told the parliamentarians that the focus of the next budget would remain on building an industrial economy that will stimulate employment and social welfare.
According to him, by considering the 2019/2020 Budget Policy, in order to properly execute the 33.1tri/- budget, 23tri/- will be obtained from internal revenue sources, loans from local financial institutions (5tri/-), foreign loans with business conditions (2.3tri/), and development partners (2.8tri/-).