Tanzania domestic revenue collection reaches $300m monthly By MIKE MANDE The EastAfrican Tanzanias domestic revenue collection has reached $300 million per month this year compared with the $25 million that was collected monthly in 2005. Mustafa Mkulo, the Minister for Finance and Economic Affairs, said in Dar es Salaam last week that for five successive years, domestic collection has exceeded targets. Mr Mkulo said the collection has been strong due to the governments tax policy and tax administration. According to the minister, the government has managed to contain inflation to single digits in the past six years although inflationary pressures remain strong for a number of reasons, including high petroleum and food prices in the world market. In these circumstances, the government is striving to maintain a prudent monetary and fiscal policy stance to avoid exacerbating the pressures, he said. Tanzanias economic growth averaged 7 per cent per annum between 2001 and 2007 despite external shocks such as adverse weather conditions, high energy prices and prices of food and other commodities. The domestic revenue to gross domestic product (GDP) ratio has risen from 11 per cent five years ago to nearly 17 per cent in 2007/2008. Tanzanias financial sector is vibrant, with credit to the private sector growing at more than 40 per cent. Interest rates, which were very high in the past, have recently been reduced through prudent fiscal and monetary policy measures. The government is now facing the challenge of broadening the tax base in order to increase domestic financing capacity and reduce aid dependency. The country has been implementing aid management reforms as part of the broader economic reforms undertaken since the mid 1990s to make aid more effective and supportive of national development and poverty reduction efforts. The Ministry of Finance and Economic Affairs has also developed the Joint Assistance Strategy, a national medium term framework for managing co-operation between Tanzania and its development partners. The development partners have imposed new aid policy in the country including the adoption of General Budget Support (GBS) for delivering development assistance. The GBS provides untied budget support to Tanzania using a unified framework and common dialogue. The resources are fully integrated into Tanzanias budget process with 14 development partners, who contribute up to 40 per cent of total aid flows and 15 per cent of the countrys budget.