Tanzania: Borrowing Shrewdly Important for Tanzania

THE Sixth Phase Government is in the implementation of major strategic projects that cost trillions of shillings, and it is imperative that they are completed within the intended timeframe.

They are important projects for the country and its people as they will steer economic growth in one way or the other, and delay in completion translates to additional costs, because of the fact that price hikes of goods and services, including those needed in the said projects, are likely.

One of the main projects that were initiated by the Fifth Phase Government is the Standard Gauge Railway (SGR) that is on the first phase - Dar es Salaam - Morogoro and Morogoro - Makutopora in the first and second lots respectively. Completion of such major projects can be difficult if the government uses its own funds from different taxes, levies or the dividends it gets from its corporation, which may prove difficult given the real situation of the economy as compared to the funds needed.

It is therefore through loans that the projects can be timely completed in the required standard. Borrowing means the government can meet a temporary shortfall, rather than having to delay the said projects or cut back on spending. President Samia Suluhu Hassan's statement on Tuesday regarding the necessity of borrowing to complete the ongoing SGR project has been echoed by many, especially economists and those with knowledge in financial and investment matters.

And that seems to be the way forward, as she emphasized the importance of government borrowing funds for the sake of completing the SGR on time so that it starts operation, makes money and repays the concessional loan.

The project will be constructed for a duration of 46 months at a cost of 4.41tri/-. That is a lot of money but when the SGR becomes operational, a lot is expected to be collected. It is wise that the government borrows so as to complete the project so that operation of the same starts early and earns the government funds. Government borrowing gives it more flexibility and means it can maintain spending commitments for the development of the country and its people.

It is good for the public to understand well the logic behind such decisions and stand behind their government because the fact is that borrowing is for the country's interest. It must be understood that completion of the project will stimulate the economy and ease integration of Tanzanians and others from the neighbouring countries, such as Burundi, the Democratic Republic of Congo (DRC), Rwanda and Uganda as SGR will link the countries.

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