18 February 2013

Tanzania External Debt Hits U.S. $10.7 Billion

Dar es Salaam — Tanzania's external debt stock at the end of last year stood at $10.66bn, an increase of $726.5m from the stock recorded at the end of the corresponding period in 2011, the central bank said.

According to Bank of Tanzania (BoT)'s Monthly Economic Review of January 2013, the stock also increased by $71.8m from the amount recorded in the preceding month.

"This development was explained by new disbursements and accumulation of interest arrears," the BoT's Governor Prof Beno Ndulu said in a Monthly Economic Review released to East African Business Week in Dar es Salaam last week.

He added; "Out of the external debt stock, disbursed outstanding debt accounted for 85.7% and the remaining was interest arrears."

Prof Ndulu said that the ratio of public and private sector external debt to GDP in nominal terms was 30.7% and 6.6%, respectively.

Based on results of the latest Debt Sustainability Analysis (DSA) conducted in March 2012, the present value of debt to GDP was 18.9% compared to the sustainability threshold of 50%, the BoT said in the report.

The profile of external debt by borrower category shows that Central Government debt increased to $8.24bn, its share in external debt stock rose to 77.3% from 77.0% recorded at the end November 2012.

"The increase was due to new disbursements received from International Development Association (IDA) and accumulation of interest arrears on non-serviced bilateral debt," the monthly report said.

During the year ending December 2012, external debt stock by creditor increased across all categories, except for export credit.

The report said that the increase in multilateral and commercial debt was due to new disbursements, while the increase in bilateral debt was due to accumulation of interest arrears on un-serviced debt.

It further said that disbursed outstanding debt by use of funds shows that a large proportion of outstanding debt was utilized in social welfare and education; followed by Balance of Payment (BOP) and budget support; and transport and telecommunication.

Disbursements received during December 2012 amounted to $47.6m, out of which $47.5m was received by the government, the central bank said.

External debt disbursements received during the year ending December 2012 amounted to $1.02bn, out of which $980m was disbursed to the government, it said.

Meanwhile, external debt service during the month amounted to $18.9m, out of which $4.4m was principal repayments, $1.7m was interest payments and $12.8m was management fees paid to Exim Bank China.

The total external debt payment during the year ending December 2012 was $129.6m.

The stock of domestic debt decreased by Tsh319bn ($197.71m) from the level recorded in the preceding month to Tsh5.15trn ($3.19bn) at the end of last year.

"The decrease emanated from large redemption of Government securities compared with new issuances," Prof Ndulu said.

He said that on annual basis, domestic debt stock increased by Tsh1.10trn ($682.05m) from Tsh4.05trn ($2.51bn) recorded in the corresponding period in 2011.

"The increase was mainly on account of issuance of Government securities that outweighed maturing obligations as well as securitization of an overhang of net domestic financing held at the BoT," he said.

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