Tanzania in plans to amend budget, exclude donor funding

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By A JOINT REPORT, The EastAfrican

Posted Saturday, February 28 2015 at 09:52


IN SUMMARY

  • Withheld financing has impacted the disbursement of Tsh290 billion ($163,413,000) to the national electoral commission to procure biometric voter registration kits, as well as prepare for a referendum on a new constitution, scheduled for April. Major energy and infrastructure projects have also been affected.




Stung by a decision by major donors to withhold $500 million in aid until a corruption scandal is fully investigated and implicated officials punished, the Tanzanian government now says it will not plan for any support in the next budget.


Servacius Likwelile, the Permanent Secretary in the Finance Ministry, said donors had stayed away from a scheduled budget review meeting in November, and that there were no indications of how much money, if any, they would give to reduce the budget deficit for the 2015/16 financial year that begins in July.

"The government has decided that, going forward, we will not continue to depend on donors, and we have come up with other measures to offset this," Dr Likwelile said.

The new budget guidelines seen by The EastAfrican acknowledge the difficulties the government has faced in accessing promised aid in the first two quarters of the 2014/15 financial year.

"The challenge that the government faced in accessing general budget support (GBS) funds in the first two quarters of the 2014/15 budget has cast a shadow on the realism of projecting GBS funds into the budget," the guidelines note. "Therefore, GBS funds will be recognised once the disbursements are made."

Donors withheld $500 million (5 per cent of their commitment in GBS) in budget support, to encourage the government to investigate the irregular removal of $125 million from the Tegeta escrow account at the Tanzanian central bank in 2013.

The withheld financing has impacted the disbursement of Tsh290 billion ($163,413,000) to the national electoral commission to procure biometric voter registration kits, as well as prepare for a referendum on a new constitution, scheduled for April. Major energy and infrastructure projects have also been affected.

The EastAfrican understands that donors promised about $3 billion for the 2014/15 financial year (35 per cent of the country's budget), most of which was not affected by the aid cuts and continues to go to the earmarked projects.

Nevertheless, the guidelines say the government intends to borrow Tsh4.2 trillion ($2.36 billion) from both domestic and external sources, of which domestic borrowing for rollover of matured government securities is Tsh1.4 trillion ($789 million) in the next financial year.

Recurrent expenditure is estimated at Tsh15 trillion ($8.45 billion) including Tsh6 trillion ($3.38 billion) for wages and salaries for civil servants, while development expenditure is estimated at Tsh4.8 trillion ($2.7 billion). Of this, locally financed development expenditure is Tsh3.3 trillion ($1.86 billion), and foreign financed development expenditure is estimated at Tsh1.5 trillion ($845 million).

The government says it will try to close the financing deficit by improving tax collection and implementing a new VAT law.

Haji Semboja, a senior economist and lecturer at the University of Dar es Salaam, said Tanzania was not in a position to give up on budget support and the decision may impact the country's credit rating.


"There is no country in the world that can survive without financial support from outside," he said.

Dr Semboja added that the decision could affect plans to pull more Tanzanians above the poverty line, making youths vulnerable to radicalisation by extremist groups.

Sources confirmed that the government had decided to make do with its available resources, and open market debt.

Zitto Kabwe, a former shadow finance minister and parliamentary Public Accounts Committee chairman, told The EastAfrican that he was aware of the decision, and warned of the challenges of developing new revenue streams and the risk of drawing down national reserves that could lead to volatility in the currency markets.

"The next budget will be a populist one due to the forthcoming election. The government after the 2015 election will be forced to introduce a mini-budget immediately after the inauguration," Mr Kabwe said.

A few government officials, including the Attorney General and former Lands minister Anna Tibaijuka resigned from their positions after being implicated in the escrow account scandal.

However, with the referendum only a month away and a general election in October, the government appears reluctant to play into the hands of opponents by admitting to widespread corruption among senior officials.

Reported by Erick Kabendera and Rosemary Mirondo


 
Dr. Semboja please think big! Do you want us continue begging and hence recolonized!
 
Kikwete is driving our country down the hill.I have never seen a useless government like the one we have right now, absolutely a disaster.
 
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Is this true?
"“There is no country in the world that can survive without financial support from outside,” he said."

I don't think so!! These are our professors


Very Poor IQ professors like these in Tz, just think BEER AND KITIMOTO...hand-to-mouth tht is hw far they can think...

Imagine tht is the thought of sbdy he teaches ECONOMICS AT UNIVERSITY LEVEL....!!!! WE ARE DEAD...!!!
 
Kikwete is driving our country down the hill.I have never seen a useless government like the one we have right now, absolutely a disaster.
Based on this decision?
Tanzania can do without donors' money.
 
What do they want to tell us on this? No BVRs iquipement no regstration of voter?....what is the altenative underway to make sure all Tanzns are registered?
 
Based on this decision?
Tanzania can do without donors' money.

Not only this mkuu, but also a root cause (UFISADI) behind this decision we are about to go through.What makes me jittery about this decision is the possibility of us common people being shouldered another tax burden in order to fund the government budget. All this is about to happen because of UFISADI.
 
Not only this mkuu, but also a root cause (UFISADI) for this disaster we are about to go through.What makes me jittery about this decision is the possibility of us common people being shouldered another tax bidden in order to fund the government budget. All this is about to happen because of UFISADI.
We can't depend on donors and we can't survive with this level of corruption. But blaming the governmen for not including donors in its budget shows the absurdity of our decision-making process.
We have to build our country, it's our job/our responsibility.
 
We can't depend on donors and we can't survive with this level of corruption. But blaming the governmen for not including donors in its budget shows the absurdity of our decision-making process.
We have to build our country, it's our job/our responsibility.
No no no, you took me out of context, I don't blame the decision of excluding donors from our budget,in fact I was dying to see this happen many years ago. I blame the unprecedented level of corruption in this administration and how inactive the government has been in combating this problem. It surely seems many decision makers in the government are the major beneficiary of UFISADI and we common people have to pay for this,why?
 
Tanzania is currently receiving 35% from donors and the question is if Tanzania decided to exclude donors contribution then what is going to be the source of funds for her 35% deficit? is it by reducing the spend by 35%, increase revenue by 35% or use loans from banks and institutions. The fact is they are going to use loans but this is not good for economy for the following reason
By government taking too much loans is going to push T-Bills rates to increase and this is also going to cause all banks loans interest rates to increase also. Currently business loans are ranging from 15%-30% so this rate will increase even more and discourage small business to take any loans. Small business loans are very important to expand employment in any capital based economy.
 
This country bwana! Every time they (lwananchi) believe in miracles and think one day things gonna be fine without even trying harder to crack down on ther useless leaders. My concern so far is that the price of everything is gonna be high unreasonably.

Let's prepare ourselves to suffer longer and longer as long as we continue to say "hewala bwana" to everything from our leaders without even questioning their dire consequences to our people.
 
We can't depend on donors and we can't survive with this level of corruption. But blaming the governmen for not including donors in its budget shows the absurdity of our decision-making process.
We have to build our country, it's our job/our responsibility.
Building our country while the outcome is not seen and those monis are robbed by mafisad papa?!
 
hahaha very interesting, I wonder these are senior lectures at our academic institution and they are talking rubbish like this. shame on you
 
J
Is this true?
""There is no country in the world that can survive without financial support from outside," he said."

I don't think so!! These are our professors
It depends on what he meant by financial support from outside. It could be borrowing from outside - which even the USA does (remember its debt to China). However, if he means donor dependent (of which is our case) he is very incorrect. Any way I remain supportive of the move away from donnor dependent, we cannot develop with such attutude.
 
Kikwete is driving our country down the hill.I have never seen a useless government like the one we have right now, absolutely a disaster.

Mmatumbi hapa kweli umegonga ngeli lakini umeelewa topic, na unawajua waliokimbilia kwa wazungu kuwaomba wasitoe mtonyo? na no need to kiss somebody ass ili upewe msaada wamesema hawataki lazima maisha yaendelee.
 
We can't depend on donors and we can't survive with this level of corruption. But blaming the governmen for not including donors in its budget shows the absurdity of our decision-making process.
We have to build our country, it's our job/our responsibility.

"Our responsibility" phrase is a Silly excuse by a Government which fails to do its job.
Serikali inakusanya Kodi,lakini katika kuleta Maendeleo inajificha kwenye kichaka cha jukumu letu sote,there should be a measure,the role play the Govt and the Citizen,big role should be played by the Govt
 
So, don't then! .... wait for donors to build your country! Geez!

we must clean our house and remove all rubbish and mice, then we start afresh. God bless UKAWA for our prosperous future.
 
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