Dar es
Salaam. The government did not borrow much at the start of the current
financial year, but that was not enough to stop national liabilities
swelling to a staggering Sh30 trillion at the end of July, further
complicating an already distressed financial position. (FS)
The
public debt was about Sh27 trillion at the end of last year, which means
it has ballooned by about Sh3 trillion in less than a year. Official
figures show that most of it has been incurred by the government, and
state officials are spending sleepless nights trying to figure out how
to deal with it.
The Bank
of Tanzania (BoT) says the national debt has not reached alarming
levels. But The Citizen on Saturday has reliably learnt that staff are
burning the midnight oil daily to come up with strategies to convince
lenders to reschedule part of it or even cancel it altogether.
"The
total external debt stock as at July 2014 stood at $14,052.3 million
(about Sh23.24 trillion) and government domestic debt stood at Sh6,760.9
billion," the BoT chief economist and top policy researcher, Dr Joseph
Masawe, said this week. "While this level of debt appears high, our debt
level is quite sustainable," he said.
Analyst
Eric Mwakibete concurs. The biggest problem might not even lie in the
ballooning of the public debt itself, but in the lack of mechanisms to
stop the executive incurring more debt. Mr Mwakibete adds: "As things
stand now, the government isn't restricted by any other organ or
authority in its borrowing and bad spending habits. It is not
accountable to fully justify some of that debt. There is no debt
ceiling. And the public largely loses track of that growing debt."
The
International Monetary Fund (IMF) is also not too worried by the
swelling of the debt but calls for prudence in spending so the situation
does not get out of control.
The IMF
conservatively estimates that the public debt will rise to about Sh33.8
trillion by mid-2016. It could soar to nearly Sh42 trillion during
2017/18 if the borrowing appetite, which has mostly been caused by
failure to generate enough revenue, continues unabated.
"Tanzania
remains at low risk of external debt distress," the IMF says in its
July country report. "The public debt outlook is sustainable, assuming
that economic growth remains strong and that the fiscal deficit
gradually declines to 4–4.5 per cent of GDP over the medium term."
Fiscal
experts have decried the trend for quite some time. They have warned
that if the borrowing spree is not contained or better managed, the debt
stress that had eased tremendously eight or so years ago will hit new
heights in the not very distant future.
Unless
conditions are created now to ensure there is enough money to pay the
debts when they fall due, they argue, future generations will suffer
most from the consequences of the current borrowing. Experts and
activists are worried because considerable amounts of the credit is
invested in recurrent expenditure. To make it worse, the debts are
short-term and obtained from local commercial banks, which makes them
more expensive.
"That
calls for the contracted loans to be put in development investment
instead of using the money on recurrent spending like paying salaries,
buying diesel guzzling four-wheelers and similar luxuries," says
activist Jimmy Luhende of Mwanza.
Mr
Mwakibete wants mechanisms put in place to check borrowing, including
Parliament being notified every quarter of a financial year about our
indebtedness. But assistant lecturer Saumu Jumanne of the Dar es Salaam
University College of Education says she is not concerned so much about
the size of the debt as how the money borrowed is spent.
Source: The citizen 20 sept, 2014.
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