Causes of Sh6tr budget hole cited

What you need to know:

The Members of Parliament had approved a Sh29.5 trillion budget in June 2016 for the financial 2016/17 with government’s revenue collection (tax and non-tax) expected to be Sh18.5 trillion.

Dar es Salaam. The government collected Sh23.6 trillion in the financial year 2016/17 from both domestic and external sources falling short of the Sh29.5 trillion expenditure plan that legislators had passed in June 2016, the minister of Finance and Planning Philip Mpango said in Parliament last week.

The Members of Parliament had approved a Sh29.5 trillion budget in June 2016 for the financial 2016/17 with government’s revenue collection (tax and non-tax) expected to be Sh18.5 trillion.

The government had also expected to receive grants, concessional and non-concessional loans to the tune of Sh11.1 trillion.

But statistics revealed by Dr Mpango when he was tabling the 2018/19 budget plan in Parliament last week showed that the government failed to collect Sh5.9 trillion hole equivalent to a 20 per cent deficit, according to calculations by The Citizen.

The huge budget deficit was impacted by slow disbursement from donors and delays in processing commercial loans, Dr Mpango hinted.

Domestic revenue collection had a deficit of 9.8 per cent as the government collected Sh16.6 trillion out of Sh18.5 trillion budgeted.

“While the aid received from donors was 68.7 per cent of the budget estimates (Sh2.47 trillion), domestic borrowing was 83.8 per cent of the target (Sh4.5 trillion),” Dr Mpango.

As far as external commercial borrowing the government collected Sh1.2 trillion (equivalent to 58.4 per cent of the target).

“The Sh1.2 trillion that the government borrowed commercially came in late and has been allocated to financing projects approved in the 2017/18 budget,” Dr Mpango noted.

The huge budget deficit impacted expenditure in development projects, details issued by Dr Mpango indicate. Funds released for development projects in the 2016/17 financial year were only 55 per cent of the budget amount or Sh6.5 trillion. Development projects are financed to a large extent by development partners, The Citizen understands.