Obi
JF-Expert Member
- Jul 6, 2009
- 374
- 79
By Costantine Sebastian
THE CITIZEN
The national debt soared to $9.33 billion (about Sh12 trillion) in September, as the government borrowed more from internal sources to fill the gap caused by shortfalls in tax collections, The Citizen can reveal.
According to Bank of Tanzania (BoT) figures, the debt stock increased by nearly Sh3 trillion over the same period last year, and by about Sh213 billion between September and August this year.
As a result, the cost of debt servicing will also increase, denying the government resources for the provision of social services, payment of salaries and financing of development projects.
The BoT's monthly economic reviews (MERs) indicate that the national debt was about $7.1 billion (about Sh9.2 trillion) at the end of October last year, before ballooning to $7.8 billion (about Sh10.1 trillion) in January 2009.
According the October MER, government securities accounted for 99.7 per cent of the total domestic debt of about Sh2.41trillion at the end of September.
"The outstanding domestic debt stock, as of the end of September 2009, stood at Sh2,418.1 billion. The stock recorded an increase of Sh62.7 billion from Sh2,355.4 billion at the end of the preceding month," the report reads in part, adding: "The increase was due to government financing through the issuance of marketable government bonds."
Other factors that pushed up the debt include new disbursements and accumulation of interest on the external debt, which was 80.1 per cent of the total stock.
The national debt burden, which grew from $1,445 million to $7,972.2 million between 1970 and 1998, was reduced to Sh7.5 trillion in June 2007, following the implementation of the G8?s multilateral debt relief initiative (MDRI).
The new domestic debt increased by nearly four times, from the Sh606.27 billion recorded in September 2008. The total debts incurred during the first nine months of this year were nearly $1.6 billion (about Sh2 trillion) and domestic borrowing, Sh492.2 billion.
Increased domestic borrowing means reduced funds available for lending by financial institutions to the private sector and individuals.
A senior official at the central bank, however, dispelled fears that the surge in domestic borrowing would limit funding for productive activities.
Government borrowing is expected to leave room for credit to the private sector to grow by 30 per cent in the year to June 2010 a comfortable rate by any standard, BoT's director of economic research and policy, Dr Joe Masawe, said.
"Already, interest rates on government securities have fallen substantially, which is expected to crowd in the private sector," he added.
In the last financial year, credit to the private sector grew by 33.2 per cent and reached 40 per cent before the second round effects of the global crunch, which hit Tanzania most.
Experts say that steady lending is mostly needed to help stimulate the performance of various sectors, as part of national efforts to get the economy out of the woods.
"The impact (of the recession) has cut across most areas of the economy, as also manifested by lower than anticipated government revenue. The revenue target for 2008/09 was missed by about 10 per cent, which necessitated increased government domestic borrowing to cover the shortage," Dr Masawe told The Citizen.
Revenue collection did not improve in the first quarter of 2009/10, as the Tanzania Revenue Authority (TRA) missed its target by a whopping Sh100 billion.
Impeccable sources said the situation had not been any better in the following months, continuing to put the government in an awkward fiscal position.
Finance minister Mustafa Mkulo recently told our sister paper, the Sunday Citizen, that the shortfalls in July, August, and September should be no cause for alarm. He said that was the normal trend during the early months of the financial year, and gave an assurance that government plans would not be in jeopardy.
According to the BoT, by September, most of the government's borrowing from local sources was from the central bank and commercial banks, which accounted for 71.3 per cent of the total domestic debt stock.
The central bank was the leading creditor, with 41 per cent of the debt. The others were pension funds (22.9 per cent), non-bank financial institutions (two per cent), and other official entities (one per cent).
Insurance firms, private sector creditors and funds drawn from BoT?s special fund held the remaining two per cent. Bonds accounted for 76.6 per cent of the domestic debt, while Treasury bills and government stocks accounted for 12.7 per cent and 10.7 per cent, respectively.
Domestic debt amounting to Sh46.2 billion fell due for payment. Of this, the principal, amounting to Sh34 billion, was rolled over and interest amounting to Sh12.2 billion paid out of government revenue.
At the end of September 2009, the external debt stock amounted to $7,474.8 million, representing an increase of 5.7 per cent from $7,357.8 million at the end of August. Out of the external debt stock, $5,932.8 million (79.4 per cent) was disbursed outstanding debt (DOD) and the remaining $1,541.9, was interest.
Dr Masawe said funds to check the spillover of the global economic crisis had been provided by the International Monetary Fund, which gave a Sh322 billion loan for balance of payments support.
He said that by October, the government had borrowed Sh473 billion of the Sh805 billion that had been provided for the 2008/09 and 2009/10 financial years.
"This was factored into the macroeconomic programme in a manner that would still allow credit to the private sector to grow at a comfortable rate," the official said.
The public debt stock reduced drastically from 2007 after the implementation of MDRI, which the G8 countries pledged in Scotland in 2005 to cancel debts for the most indebted countries.
The initiative was to provide $3.8 billion relief to Tanzania between 2007 and 2044.
The external debt declined to $4.9 billion in June 2007, nearly 44 per cent below the stock in June 2006.
At the end of December 2006, the national debt stood at $7188.2 compared to $8153.7 million at the end of December 2005.
Additional reporting by Mkinga Mkinga
THE CITIZEN
The national debt soared to $9.33 billion (about Sh12 trillion) in September, as the government borrowed more from internal sources to fill the gap caused by shortfalls in tax collections, The Citizen can reveal.
According to Bank of Tanzania (BoT) figures, the debt stock increased by nearly Sh3 trillion over the same period last year, and by about Sh213 billion between September and August this year.
As a result, the cost of debt servicing will also increase, denying the government resources for the provision of social services, payment of salaries and financing of development projects.
The BoT's monthly economic reviews (MERs) indicate that the national debt was about $7.1 billion (about Sh9.2 trillion) at the end of October last year, before ballooning to $7.8 billion (about Sh10.1 trillion) in January 2009.
According the October MER, government securities accounted for 99.7 per cent of the total domestic debt of about Sh2.41trillion at the end of September.
"The outstanding domestic debt stock, as of the end of September 2009, stood at Sh2,418.1 billion. The stock recorded an increase of Sh62.7 billion from Sh2,355.4 billion at the end of the preceding month," the report reads in part, adding: "The increase was due to government financing through the issuance of marketable government bonds."
Other factors that pushed up the debt include new disbursements and accumulation of interest on the external debt, which was 80.1 per cent of the total stock.
The national debt burden, which grew from $1,445 million to $7,972.2 million between 1970 and 1998, was reduced to Sh7.5 trillion in June 2007, following the implementation of the G8?s multilateral debt relief initiative (MDRI).
The new domestic debt increased by nearly four times, from the Sh606.27 billion recorded in September 2008. The total debts incurred during the first nine months of this year were nearly $1.6 billion (about Sh2 trillion) and domestic borrowing, Sh492.2 billion.
Increased domestic borrowing means reduced funds available for lending by financial institutions to the private sector and individuals.
A senior official at the central bank, however, dispelled fears that the surge in domestic borrowing would limit funding for productive activities.
Government borrowing is expected to leave room for credit to the private sector to grow by 30 per cent in the year to June 2010 a comfortable rate by any standard, BoT's director of economic research and policy, Dr Joe Masawe, said.
"Already, interest rates on government securities have fallen substantially, which is expected to crowd in the private sector," he added.
In the last financial year, credit to the private sector grew by 33.2 per cent and reached 40 per cent before the second round effects of the global crunch, which hit Tanzania most.
Experts say that steady lending is mostly needed to help stimulate the performance of various sectors, as part of national efforts to get the economy out of the woods.
"The impact (of the recession) has cut across most areas of the economy, as also manifested by lower than anticipated government revenue. The revenue target for 2008/09 was missed by about 10 per cent, which necessitated increased government domestic borrowing to cover the shortage," Dr Masawe told The Citizen.
Revenue collection did not improve in the first quarter of 2009/10, as the Tanzania Revenue Authority (TRA) missed its target by a whopping Sh100 billion.
Impeccable sources said the situation had not been any better in the following months, continuing to put the government in an awkward fiscal position.
Finance minister Mustafa Mkulo recently told our sister paper, the Sunday Citizen, that the shortfalls in July, August, and September should be no cause for alarm. He said that was the normal trend during the early months of the financial year, and gave an assurance that government plans would not be in jeopardy.
According to the BoT, by September, most of the government's borrowing from local sources was from the central bank and commercial banks, which accounted for 71.3 per cent of the total domestic debt stock.
The central bank was the leading creditor, with 41 per cent of the debt. The others were pension funds (22.9 per cent), non-bank financial institutions (two per cent), and other official entities (one per cent).
Insurance firms, private sector creditors and funds drawn from BoT?s special fund held the remaining two per cent. Bonds accounted for 76.6 per cent of the domestic debt, while Treasury bills and government stocks accounted for 12.7 per cent and 10.7 per cent, respectively.
Domestic debt amounting to Sh46.2 billion fell due for payment. Of this, the principal, amounting to Sh34 billion, was rolled over and interest amounting to Sh12.2 billion paid out of government revenue.
At the end of September 2009, the external debt stock amounted to $7,474.8 million, representing an increase of 5.7 per cent from $7,357.8 million at the end of August. Out of the external debt stock, $5,932.8 million (79.4 per cent) was disbursed outstanding debt (DOD) and the remaining $1,541.9, was interest.
Dr Masawe said funds to check the spillover of the global economic crisis had been provided by the International Monetary Fund, which gave a Sh322 billion loan for balance of payments support.
He said that by October, the government had borrowed Sh473 billion of the Sh805 billion that had been provided for the 2008/09 and 2009/10 financial years.
"This was factored into the macroeconomic programme in a manner that would still allow credit to the private sector to grow at a comfortable rate," the official said.
The public debt stock reduced drastically from 2007 after the implementation of MDRI, which the G8 countries pledged in Scotland in 2005 to cancel debts for the most indebted countries.
The initiative was to provide $3.8 billion relief to Tanzania between 2007 and 2044.
The external debt declined to $4.9 billion in June 2007, nearly 44 per cent below the stock in June 2006.
At the end of December 2006, the national debt stood at $7188.2 compared to $8153.7 million at the end of December 2005.
Additional reporting by Mkinga Mkinga