TZ Public debt swells by US$1 b

tz

SOUNDING THE ALARM:Tanzania’s Finance Minister Saada Mkuya

Dar es Salam;Tanzania’s public debt and contingent liabilities ballooned to US$19.5billion (about Tsh38.716trillion) as at the end of march this year, according to the Finance Minister Saada Mkuya.

The figure released by the finance minister in Dar es Salaam this week, reflects a 4.2 per cent rise from a previous estimate of US$18.7billion (sh. 27.12trillion) as at the end of March, 2014.

Releasing draft budget for 2015/16 before Members of the Parliament, the minister attributed the changes to increased concessional loan and foreign debt interest arrears.

Concerns have grown over the amount of debt and its potential impact on the East African’s second-largest economy.

In 2013, the World Bank said the liability had not reached an alarming point at a time the debt stood Tsh20 trillion, compelling economists to warn over the increasing national debt.

The decision by the government to keep borrowing yet the national debt has steadily increased over the past few years is burdening the already saddled economy and its people, the experts warned.

But the finance minister quickly challenged the view saying the debt is still “appealing.”

“The loans acquired were directed to implement development projects and especially, infrastructures (roads), energy, transport, education and water,” she said.

“According to international standards, Tanzania local government debt and contingent liabilities are flexible,” she added.

Last year the Tanzania Coalition on Debt and Development (TCDD) also warned over the government for extending internal borrowing notably on local commercial banks which have high interest charges, saying it was very dangerous especially when some of the money was used for paying civil servants’ salaries.

Meanwhile, the finance minister has said the Tanzania Shilling’s Exchange rate against the US dollar had depreciated by 9.9 percent compared to other international currencies, the Euro and Japanese Yen, which had depreciated by 26 per cent and 18 per cent respectively.

She said the Tanzanian shilling was strong and that it can be compared to the Ugandan Shilling and South African Rand, which both depreciated by 15 percent.

She said the US dollar gained against Tanzania shilling due to reduced export, drop in gold prices on the world market and an increased demand of US dollars in external financial transactions.