Francis12
JF-Expert Member
- Sep 30, 2016
- 7,533
- 22,276
Tough times ahead as government unveils more spending cuts
Privately-owned insurance companies, hotels, telecoms, media and transport firms are expected to be among those hardest hit in the new spending cuts that will specifically target a complete halt or drastic reduction of the flow of government funds to the private sector.
The Ministry of Finance and Planning is to issue official instructions to all central government, local government authorities, public institutions and statutory corporations to engage in government-to-government business dealings, which could effectively strangle private sector companies altogether.
According to new guidelines for the preparation of the government fiscal plan and budget for the year 2017/18, issued by the Ministry of Finance and Planning and seen by The Guardian, accounting officers of all public entities are to stop buying goods and services from private firms and instead deal with state-owned enterprises.
"Accounting officers ... are instructed to procure services such as insurance, courier, internet, telephone, media and transport from public entities as long as this is cost-effective," the new guidelines on public spending say in part.
President John Magufuli's government has, among other things, sought to curb wasteful government spending and introduce strict austerity measures as part of an all-out effort to boost state coffers since coming into office just over a year ago.
But while the moves, coupled with a hard-nosed crackdown on tax evaders, have won him many kudos at home and abroad, analysts also note that very little of these saved government funds are actually finding their way back into the economy; a fact seen as contributing in part to an ongoing national liquidity crisis and cash crunch.
It has been noted that since many private companies, in sectors such as telecoms and media, rely on the government for a significant chunk of their businesses, the decision to divert public funds towards state-owned entities could significantly hurt the private sector even further.
Sources close to the government have now confirmed that government institutions will from next year only do business with state-owned enterprises, leaving private companies out in the cold.
"For example, all public officials will from now onwards strictly fly by the state-owned Air Tanzania on applicable routes. Government officials won’t be allowed to use private airlines, such as Fastjet or Precision Air, if Air Tanzania also flies on the same route," said one source.
"Similarly, the government will pay for media advertising only in state-run media such as Tanzania Broadcasting Corporation (TBC) and government-owned newspapers," the source added.
According to the new budget guidelines, government-to-government procurement of goods and services is also part of expenditure control and cost reduction measures to be implemented by all public accounting officers.
"Accounting Officers should continue to implement cost reduction measures under their jurisdictions without compromising the quality of service delivery," the guidelines say. Public entities already undercut private companies in terms of offering lower prices for goods and services because they get regular financial bailouts and subsidies from the government.
Since state-owned companies generally offer relatively cheaper prices compared to private businesses, they will be seen as a ‘cost-effective’ option, hence squeezing out private firms from public tenders.
Hotels will also continue to suffer from a decline of business in 2017/18 due to the government's decision to ban public-funded seminars and workshops in hotels. "Accounting officers ... are instructed to use government and public entities facilities in conducting meetings including board meetings, training, seminars and workshops," state the guidelines.
Government officials have furthermore been instructed to "continue reducing unnecessary expenditure and minimise costs in areas such as national ceremonies, sitting allowances, printing of T-shirts, caps, bags, foreign travel, overseas short-term training, and imported office furniture.
" The Treasury registrar has been ordered to ensure that all commercially viable public entities are operating profitably and not dependent on government subvention. An example is the state-owned Twiga Bancorp, which was taken over by the Bank of Tanzania (BoT) last month after being discovered to be making heavy losses, and is now run under a statutory manager appointed by the central bank after suspending the previous management and board of directors.
As part of the deeper spending cuts for 2017/18, the government wants to ensure all contracts with public entities are quoted in Tanzanian shillings to minimise exposure to fiscal risks, unless the contracts involve foreign transactions.
The new spending guidelines also call for stricter controls in public procurement of goods, services and works to ensure value for money through use of ‘force account, bulk procurement, competitive bidding and direct local market.’ The government has also ordered public utilities to use energy saving technologies and ensure that ring-fenced funds for utilities are solely used for the intended purposes
Public entities will from now onwards also conduct periodic audits of water, telephone and electricity bills to avoid unwanted expenditure. The state also plans to use mortgage financing arrangement to acquire office buildings for the country's embassies and consulates abroad instead of renting as part of the cost-cutting measures.
Foreign travel by all public officials will continue to be curbed in the 2017/18, with government employees required to seek written approval for foreign travel from the president's office even if the trip is fully funded by other organisations.
"Accounting officers ... are instructed to limit foreign travel and associated delegation, subject to approval by the State House," said the guidelines. The procurement of motor vehicles will also be done through the Government Procurement Services Agency (GPSA) after obtaining permit from the Prime Minister's Office (PMO) to control costs.
The government also plans to further control the issuance of student loans in higher learning institutions to "ensure that loans are granted only to eligible beneficiaries.
" Public entities will also use information and communication technology (ICT) services such as video conference calls to facilitate communications between government Offices, particularly during the interim period of shifting operations of the government headquarters from Dar es Salaam to Dodoma, say the guidelines.
Source: The Guradian
Privately-owned insurance companies, hotels, telecoms, media and transport firms are expected to be among those hardest hit in the new spending cuts that will specifically target a complete halt or drastic reduction of the flow of government funds to the private sector.
The Ministry of Finance and Planning is to issue official instructions to all central government, local government authorities, public institutions and statutory corporations to engage in government-to-government business dealings, which could effectively strangle private sector companies altogether.
According to new guidelines for the preparation of the government fiscal plan and budget for the year 2017/18, issued by the Ministry of Finance and Planning and seen by The Guardian, accounting officers of all public entities are to stop buying goods and services from private firms and instead deal with state-owned enterprises.
"Accounting officers ... are instructed to procure services such as insurance, courier, internet, telephone, media and transport from public entities as long as this is cost-effective," the new guidelines on public spending say in part.
President John Magufuli's government has, among other things, sought to curb wasteful government spending and introduce strict austerity measures as part of an all-out effort to boost state coffers since coming into office just over a year ago.
But while the moves, coupled with a hard-nosed crackdown on tax evaders, have won him many kudos at home and abroad, analysts also note that very little of these saved government funds are actually finding their way back into the economy; a fact seen as contributing in part to an ongoing national liquidity crisis and cash crunch.
It has been noted that since many private companies, in sectors such as telecoms and media, rely on the government for a significant chunk of their businesses, the decision to divert public funds towards state-owned entities could significantly hurt the private sector even further.
Sources close to the government have now confirmed that government institutions will from next year only do business with state-owned enterprises, leaving private companies out in the cold.
"For example, all public officials will from now onwards strictly fly by the state-owned Air Tanzania on applicable routes. Government officials won’t be allowed to use private airlines, such as Fastjet or Precision Air, if Air Tanzania also flies on the same route," said one source.
"Similarly, the government will pay for media advertising only in state-run media such as Tanzania Broadcasting Corporation (TBC) and government-owned newspapers," the source added.
According to the new budget guidelines, government-to-government procurement of goods and services is also part of expenditure control and cost reduction measures to be implemented by all public accounting officers.
"Accounting Officers should continue to implement cost reduction measures under their jurisdictions without compromising the quality of service delivery," the guidelines say. Public entities already undercut private companies in terms of offering lower prices for goods and services because they get regular financial bailouts and subsidies from the government.
Since state-owned companies generally offer relatively cheaper prices compared to private businesses, they will be seen as a ‘cost-effective’ option, hence squeezing out private firms from public tenders.
Hotels will also continue to suffer from a decline of business in 2017/18 due to the government's decision to ban public-funded seminars and workshops in hotels. "Accounting officers ... are instructed to use government and public entities facilities in conducting meetings including board meetings, training, seminars and workshops," state the guidelines.
Government officials have furthermore been instructed to "continue reducing unnecessary expenditure and minimise costs in areas such as national ceremonies, sitting allowances, printing of T-shirts, caps, bags, foreign travel, overseas short-term training, and imported office furniture.
" The Treasury registrar has been ordered to ensure that all commercially viable public entities are operating profitably and not dependent on government subvention. An example is the state-owned Twiga Bancorp, which was taken over by the Bank of Tanzania (BoT) last month after being discovered to be making heavy losses, and is now run under a statutory manager appointed by the central bank after suspending the previous management and board of directors.
As part of the deeper spending cuts for 2017/18, the government wants to ensure all contracts with public entities are quoted in Tanzanian shillings to minimise exposure to fiscal risks, unless the contracts involve foreign transactions.
The new spending guidelines also call for stricter controls in public procurement of goods, services and works to ensure value for money through use of ‘force account, bulk procurement, competitive bidding and direct local market.’ The government has also ordered public utilities to use energy saving technologies and ensure that ring-fenced funds for utilities are solely used for the intended purposes
Public entities will from now onwards also conduct periodic audits of water, telephone and electricity bills to avoid unwanted expenditure. The state also plans to use mortgage financing arrangement to acquire office buildings for the country's embassies and consulates abroad instead of renting as part of the cost-cutting measures.
Foreign travel by all public officials will continue to be curbed in the 2017/18, with government employees required to seek written approval for foreign travel from the president's office even if the trip is fully funded by other organisations.
"Accounting officers ... are instructed to limit foreign travel and associated delegation, subject to approval by the State House," said the guidelines. The procurement of motor vehicles will also be done through the Government Procurement Services Agency (GPSA) after obtaining permit from the Prime Minister's Office (PMO) to control costs.
The government also plans to further control the issuance of student loans in higher learning institutions to "ensure that loans are granted only to eligible beneficiaries.
" Public entities will also use information and communication technology (ICT) services such as video conference calls to facilitate communications between government Offices, particularly during the interim period of shifting operations of the government headquarters from Dar es Salaam to Dodoma, say the guidelines.
Source: The Guradian
