External debt up by Sh3tr

Dar es Salaam. Tanzania external debt stock increased by $1.3 billion (about Sh3 trillion) to $20.6 billion during the third quarter ending September from $19.2 billion recorded during a similar quarter of 2017.

When compared with the second quarter, the external debt stock increased by $52.6 million from $20.5 billion that was recorded during the quarter period for the month ending in June.

According to the Economic Bulletin for the quarter ending September 2018 released by the Bank of Tanzania (BoT), the increase was largely due to new disbursements and accumulation of interest arrears. The central government external debt amounted to $15.7 billion, a decrease of $125.1 million from the end of the preceding quarter, and an increase of $570.0 million from the end of September 2017. The proportion of debt owed to multilateral institutions remained dominant, accounting for 46.5 per cent of the external debt stock, followed by debt from commercial banks, which accounted for 32.8 per cent.

The external debt disbursed during the quarter was $77.4 million, of which the central government received $65.7 million. Meanwhile, the domestic debt stock has decreased by Sh584.5 billion to Sh14,147.6 billion, compared with the preceding quarter on account of redemption of bonds in August 2018. On annual basis, the domestic debt stock increased by Sh1,770.9 billion, attributable to government financing.

Long-term instruments—Treasury bonds and stocks— constituted the largest part of the debt, accounting for 72.3 per cent of domestic debt, whereas Treasury bills accounted for 19.4 per cent.

Earlier this year, the Finance and Planning minister, Dr Philip Mpango, said that the government would spend one third of the 2018/19 budget or Sh10 trillion on servicing debts.

When presenting the Budget Committee’s views on the National Development Plan for 2019/20, committee chairman George Simbachawene said if left unchecked, the debt would gobble up all funds from domestic sources.