4 October 2018

Tanzania: National Debt Fell By Over Sh1tr in July - BoT

Dar es Salaam — The national external debt declined by $619.4 million (Sh1.3 trillion) in July in a month on month basis, the Bank of Tanzania (BoT) reported.

The BoT's Monthly Economic Review for August indicated that the significant decline was due to the weak US dollar .

"The decrease was largely on account of appreciation of the US dollar against other currencies in which the debt is denominated," the BoT noted. The central bank says the national debt, which comprises borrowing by both the public and private sectors, was $19.8 billion in July from $20.5 billion in June this year.

Year-on-year, the debt stock increased by $1 billion in July 2018 on account of new disbursements and accumulation of interest arrears.

"The central government external debt accounted for 76.5 per cent of the debt stock, lower than 77.2 per cent and 78.5 per cent at the end of the preceding month and July 2017, respectively," the BoT said.

In terms of debt flows, external debt disbursed in July 2018 amounted to $6.1 million, of which 4.0 per cent was received by the central government, the BoT said.

"Cumulative disbursement of external loans during the year ending July 2018 was $1.5 billion, of which, $1.2 billion was received by the central government and the balance by private sector," the BoT said. On the other side, the composition of external debt stock in terms of creditor category remained the same as in the previous month and corresponding month in 2017.

In the June budget session the minister for Finance Dr Philip Mpango said the government will spend a total of Sh10 trillion on debt servicing during the financial year 2018/19, the Finance and Planning Minister has said.

Dr Mpango said the debt, measured by several sustainability indicators, was still 'very sustainable' and that Tanzania still has a wide room for further borrowing.

He said a debt sustainability analysis, which was conducted in November last year (2017), showed that the debt was sustainable for both the medium and long term periods.

"The ratio of government debt to Tanzania's gross domestic product (GDP) stood at 34.4 per cent as of June 2017 against a threshold of 56 per cent," he said.

As for the foreign debt, said Dr Mpango, its ratio stands at 19.7 per cent of the GDP against a threshold of 40 per cent.

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