Covid-19 may hit Budget execution
Dar es Salaam. Just days before the government budget for the next financial year was unveiled in Parliament, figures showed that execution of the current budget for the (2019/20 financial year was likely to be adversely impacted by the raging Covid-19 pandemic.
Available data show that, after posting a record Sh1.9 trillion revenues collection in December 2019, some revenue targets were nonetheless missed during the third quarter of the financial year . This wasin circumstances that were directly or indirectly linked to Covid-19 .
For instance, the Bank of Tanzania’s monthly economic review for April indicated that the tax revenue for March totalled Sh1.52 trillion: ten percent higher than the sum collected in March 2019.
The improvement was, however, on account of “administrative efforts in revenue mobilization,” said the BoT in its report.
But the amount was nonetheless far from the set target of Sh1.8 trillion as indicated by the central bank. This means that the taxman collected only 83 percent of target.
Some of the revenue sources which fell short included taxes on local goods and services, whose collection reached only 56.9 percent of targets. This, analysts say, could be a direct impact of the Covid-19 pandemic which disrupted some economic activities.
The fall in tax collections on local goods and services signals slowed domestic production and consumption.
Tax collections on imports also fell short of targets - and the experts say this could have also been due to the Covid-19 outbreak which had disrupted supply and logistics chains globally, and accelerated a decline in consumers demand.
The Tanzania Revenue Authority (TRA) - which is tasked with managing tax assessments, collections and accounting of all central government revenues - said it would give a full report on the issues after the current financial year elapses.
Still, economists forecast that the budget will significantly be affected by the Covid-19 pandemic - as it is already doing to budgets and economies across the world.
“It’s obvious that the targets won’t be met, since Covid-19 has disturbed the equilibrium and increased some expenses,” said Prof Honest Ngowi of Mzumbe University.
“The challenge is that, on top of the travel restrictions which are discouraging movement of goods, some businesses - like hotels and tourism - were hard hit, resulting in declining demand,” he added.
Tanzania confirmed its first coronavirus case on March 16, sending shock waves through businesses, some of which closed operations.
The ministry of Natural Resources and Tourism said it conducted a scenario analysis whose results showed that some 477,000 jobs in the tourism sector are at risk if Covid-19 persists through October this year.
Already, some major hotels have closed operations, partly due to the lack of tourists resulting from travel restrictions in the wake of the Covid-19 outbreak.
Revenue trend
TRA reported a record Sh1.9 trillion tax revenue collections in December 2019 - and, since then, it has not announced new collection figures. However, data from the BoT indicate that, for the third quarter to March 31, 2020, the taxman collected Sh4.36 trillion against the target of Sh4.74 trillion for the three months.
This means that TRA had achieved almost 92 percent of the set target during the quarter.
Cumulatively, TRA had managed to collect Sh13.46 trillion from July 2019 to the end of March 2020. The amount is only about 70 percent of the set targets for the current financial year which ends on June 30, 2020.
In the relevant budget speech, the government had projected TRA to collect Sh19.1 trillion in the 2019/20 financial year. In the event, TRA needed to collect the remaining Sh5.64 trillion in April, May and June this year to meet the budgetted estimates.
To do so, it would have to collect a monthly average of Sh1.88 trillion: clearly an uphill task amid the ravaging coronavirus pandemic.
Get your digital newspaper here: www.egazeti.co.tz
