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2022/23 B UDGET: Where money will go

2022/23 B UDGET: Where money will go

MEMBERS of Parliament (MPs) yesterday unanimously endorsed the 41.48tri/- budget for the 2022/23 fiscal year, with transport infrastructures and agriculture taking the lion’s share of the development budget. On the part of recurrent expenditure, servicing national debt and salaries will gobble huge portion of the budget.

The new national budget has set aside 15tri/- equivalent to 36.2 per cent of the total budget for development projects, whereas the recurrent expenditure is 26.48tri/-, equivalent to 63.8 per cent of the total amount.

In the next year, the government will spend 1.11tri/- for the Standard Gauge Railway project (SGR), 1.44tri/-for the Julius Nyerere Hydropower Project (JNHP); 1.18tri/- for Road Fund, 944.1bn/- for railway, water and Rural Electrification Agency (REA).

The government will also spend 954bn/- for agriculture, up from 294bn/- in outgoing budget with 150bn/- set aside to subsidise fertiliser prices. Other development programmes prioritised are higher education student’s loans (570bn/-), payment of verified arrears to contractors (230bn/-) and financing basic education (346.5bn/-).

On the part of recurrent expenditure, the government will spend 11.3tri/- for servicing government debt, 9.3tri/- for salaries and 5.3tri/- for other charges.

Out of the amount, 12.31tri/- equivalent to 82.0 per cent of the development budget is from domestic sources and 2.70tri/- equivalent to 18. 88 per cent of development budget, is from external sources.

When winding up a weeklong debate on the budget in the Parliament yesterday, Finance and Planning Minister Dr Mwigulu Nchemba offered explanations on several issues that were raised by MPs when debating the estimates for the recurrent and development expenditures for the next financial year.

According to Dr Nchemba, at least 225 legislators contributed during the seven-day debate, with several burning issues being raised, among them the ballooning national debt.

When tabling the state of the national economy for 2021/2022 and the budget speech for 2022/23 respectively, Dr Nchemba said as of April 2022 the debt had increased to 69.44tril/- equivalent to 14.4 per cent increase as compared to 60.72tri/- in April 2021.

The amount, according to him, includes domestic debt of 22.37tri/- equivalent to 32.2 per cent of the debt stock and while the external public debt was 47.07tri/-, equivalent to 67.8 per cent of the debt stock.

Dr Nchemba said the stated amount for external public debt covers external non-concessional loans, amounting to 14.27tri/- equivalent to 30.3 per cent of the debt stock.

This means that a large portion of the external public debt is concessional. Concessional loans are loans that are extended on softer terms than market loans, either through interest rates below those available on the market or by grace periods, or a combination of these.

Concessional loans typically have long grace periods.

The figures raised eyebrows from a section of legislators when debating the national budget estimates demanding the government’s clarification as to why it had increased sharply just within one year.

However yesterday, the Finance and Planning Minister said the debt was increasing depending on how the country was implementing several development projects.

“I want all Tanzanians to understand that, as you implement development projects you cannot avoid seeing the debt going up because this is a contract issue and part of the money that we are receiving is a result of the contracts that were signed some years back for the projects that are still ongoing,’’ he said.

He added: “You are not supposed to have an unnecessary headache because what borrows is the country and not the president and we cannot sit down and say that we bury or suspend all ongoing projects at the expense of the ballooning national debt because so far it is sustainable.”

However, he insisted, in November, 2021, the government conducted the Debt Sustainability Analysis (DSA) in accordance with the government Loans, Guarantees and Grants.

“The conducted DSA revealed that debt burden indicators are within sustainability thresholds that are internationally acceptable during short, medium and long terms.

Furthermore, the minister said, the analysis revealed that the present value of public debt to GDP ratio is 31.0 per cent which is less than a threshold of 55.0 percent. The present value of external debt to GDP is 18.8 percent as compared to the established benchmark of 40.0 per cent; and the present value of external debt to export is 142.4 per cent as compared to the cut-off threshold of 180 percent,’’ he said.

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Author: KATARE MBASHIRU in Dodoma

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