Tanzania: Four Reasons Why Tanzania's National Debt Is Surging

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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.

Dodoma — Finance and Planning minister, Dr Philip Mpango has said new loans secured by the government during implementation of mega projects was among the four reasons that has contributed to increase of the national debt from Sh49.86 trillion in April 2018 to Sh51.03 trillion in April, 2019.

Dr Mpango made the statement on Monday, June 3, 2019, at the Parliament in Dodoma when tabling the Sh11.9 trillion budget estimates for his docket during the 2019/20 fiscal year.

"The increase was particularly caused by new loans received during that period for implementing development projects including construction of the Terminal III of the Julius Nyerere International Airport (JNIA), the Standard Gauge Railway (SGR), power generation projects and construction of roads and bridges," he said.

He said the national debt that increased by 2.35 per cent during the last twelve months was sustainable, adding that of the total debt, Sh13.25 trillion was secured domestically while Sh37.78 trillion was sourced from outside the country.

He said the ministry evaluated the national debt annually to measure its sustainability.

"Evaluation made in December 2018 shows that the debt has a short, medium and long term sustainability. Indicators show the value of the national debt as compared to the Gross Domestic Product (GDP) was 27.2 per cent and that the ceiling stands at 70 per cent."

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He added: "The current value of the national debt is 55 per cent and the value of foreign debt due to exports is 157.3 per cent as compared to 240 per cent ceiling and serving of foreign debts through exports is 15.2 per cent as compared to the upper limit of 23 per cent."

He said in 2018/19, the government allocated Sh1.41 trillion for payment of domestic interests.

"As to April 2019, Sh1.06 trillion payment was made which is equivalent to 75.18 per cent of the target. The government set aside Sh689.67 billion for servicing interests raised by foreign debts and that Sh588.30 billion has been paid as by April 2019, which is equivalent to 85.30 per cent of objective."

"The government allocated Sh1.66 trillion for payment of foreign capital debt and that Sh1.23 trillion has been paid by April 2019, which is equivalent to 74.10 per cent of the target.

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