7 February 2013

Tanzania: Fears Over Debt Servicing Allayed

Dodoma — THE government has allayed fears over the country's ability to settle a national debt currently amounting to Sh21 trillioncom, insisting that concrete financial management plans were underway to contain the situation.

The Minister for Finance and Economic Affairs, Dr William Mgimwa, informed the National Assembly that under the National Debt Strategy, which focuses on ways to control growth of the national debt, the government borrows from international financial institutions with fairly minimal interest rates.

"Sources willing to lend Tanzania include the World Bank, the International Monetary Fund (IMF), Africa Development Bank, OPEC and other donor countries.

He was responding to a basic question from Amina Mohamed Mwidu (Special Seats- CUF) who asked the government to explain the strategies in place to address challenges related to the national debt.

"Before borrowing, the government takes precaution that includes assessment of the debt stock position, reasons for the borrowing whether for the purpose to stimulating the economy," Dr Mgimwa explained. He said negotiations are underway between the government and Non Paris Club Creditors, looking into the possibility to offset some of the debts whose interest rates have matured.

Earlier, the Deputy Minister for Finance and Economic Affairs, Ms Saada Mkuya Salum, informed the House that effective financial year 2012/13, the State suspended government bonds to public institutions and organizations. However, government securities were provided to projects serving as economic catalysts, also supporting joint ventures between public and private sectors.

The foreign debt amounts to 15trln/- and domestic debt is 6trln/-. In her supplementary question, Amina Mohammed Mwidau, (MP - Special Seat - CUF) and Richard Ndassa, (MP - Sumve - CCM) expressed doubt on the strategies adopted to service the national debt.

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