24 December 2012

Tanzania: External Debt Surges By Sh43 Billion

Photo: futuradosmil/Flickr
Tanzania Currency: Government cautioned against borrowing from local commercial banks.

TANZANIA'S external debt stock increased to 10.5 billion US dollars, an increase of 27.1 million US dollars in the period ending October this year compared to an addition of 456.1 million US dollars in the corresponding period last year.

According to the Bank of Tanzania (BoT) monthly economic review for October this year, the month to month increase is explained by new disbursements, with 85.7 per cent of the external debt being the principal amount and 14.3 per cent as interest arrears.

"The profile of external debt by borrower category shows that the central government debt increased to 8 billion US dollars and its share in external debt stock rose to 76.5 per cent," stated the BoT report. The increase was due to new disbursements received from International Development Association (IDA) and Japan International Cooperation Agency (JICA), stated the report.

The multilateral debt accounts for the largest share followed by commercial debts. Disbursed outstanding debt by use of funds shows that social welfare and education accounted for the largest share followed by Balance of Payment, budget support and transport and telecommunication.

During the period under review, the new loans worth 40.3 million US dollars were contracted and recorded whereas external debt disbursements amounted to 39.1 million US dollars, of which 38.3 million US dollars was received by the government.

The external debt service during the month amounted to 19.7 million US dollars, out of which 11.2 million US dollars was principal repayments and 8.4 million US dollars interest payment. The stock of domestic debt increased by 513bn/- to 5,137.7bn/- at the end of October 2012 compared to 4,624.7bn/-registered at the end of the preceding month.

The increase was mainly on account of conversion of short term advances that had accumulated to 469.5bn/- into a special bond. On annual basis, domestic debt stock increased by 1,051.2bn/- from 4,086.5bn/-recorded in the corresponding period in 2011.

Domestic debt stock by instruments shows that government bonds accounted for 71.9 per cent followed by Treasury bills, which accounted for 23.1 per cent. Domestic debt by holder category shows that share of commercial banks holding was 47.5 per cent down from 51.6 per cent recorded at the end of the preceding month, while that of central bank rose to 28.2 per cent from 21.4 per cent following conversion of short term overdraft into special bond.

Domestic debt issued during the month amounted to 134.7bn/-, out of which, 48.7bn/- was Treasury bills and 86bn/- Treasury bonds. The amount that fell due for payment during the month was 75.3bn/-. The principal amounting to 48.2bn/- was rolled over while interest amounting to 27.1bn/-was paid using Government resources.

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