Tanzania Debt 'Sustainable but Under Pressure'

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The finance minister has said the national debt that increased by 2.35 per cent during the last twelve months is sustainable.

Dar es Salaam — Tanzania debt to exports ratio has jumped to 205 per cent for 2017, from 172.9 per cent recorded during the previous year, the 2019 International Debts Statistics (IDS) released by the World Bank this week say.

This is, however, still below the ceiling of 240 per cent, which is perceived as danger zone as stipulated by the International Monetary Fund indicators.

The debt to exports ratio is used to calculate a country's total amount of debt in comparison to its total amount of exports. It's an important way for countries to measure their independent sustainability.

Tanzania, and other poor countries, enjoyed debt relief under Heavily Indebted Poor Countries (HIPC) in November 2001.

At the end of last year 54 per cent of countries in the Sub-Saharan had an external debt-to-export ratio of over 150 per cent, as compared to 28 per cent of countries in 2010 and the number of countries where the ratio surpassed 200 per cent more than doubled, from 6 countries to 14 countries, over the same period, according to the Word Bank-IDS. "Most of these countries are ones that benefitted from HIPC and MDRI relief, including Burundi, Ethiopia, Niger, Senegal and Tanzania," reads part of the World Bank-IDS.

Last December a report by the International Monetary Fund (IMF) on the country's debt sustainability analysis for Tanzania indicates that the country still has low risk on external debts distress.

During the June 2018/19 National Budget presentation in the House in June, Finance minister Philip Mpango maintained that the country was still credit-worthy because the ratio of total debts to GNI was below 40 per cent. With regard to indicators on the sources of international borrowing, the IDS data for the country shows that credit from the IMF has declined from $515 million to $459 million in the same period.

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