National budget for 2018-2019 was implemented by 68 per cent says BoT

What you need to know:
- Budget financing has for a number of years now been a major concern among lawmakers and economists, who have called for realistic and credible revenue and expenditure plans that can be fully implemented by the government.
Dar es Salaam. The Budget expenditure for the last financial year was implemented by only 68.56 per cent (Sh22.265 trillion) as the wage bill and local financing of development projects, the Bank of Tanzania’s annual report for the year ended June 2019 shows.
The government tabled a Sh32.5 trillion expenditures plan in Parliament in June 2018, which was approved for the 2018/19 financial year .
In the previous year, the Budget was implemented by 64.5 percent, as the government spent Sh20.468 trillion out of the planned Sh31.711 trillion.
Out of the Sh22,265 trillion spent in the last financial year, the BoT says in its latest operational report for the year to June 30, 2019 that development expenditure was Sh8.45 trillion while recurrent expenditure was Sh13.8 trillion.
“Out of the resources spent on development projects, 76.8 percent was from domestic sources. Government expenditure was equivalent to 16.6 percent of GDP,” states the central bank in its report.
Budget implementation has been a concern among lawmakers and experts who have been calling for framing credible and realistic budgetary estimates, instead of adopting unrealistic ambitions.
In the financial year to 2014/15, the expenditure targets were met by 84.9 percent, equivalent to 17.3 percent of GDP.
In the following year (2015/16), total expenditure amounted to Sh17.759 trillion, or 91.5 percent of the budgeted amount. This was equivalent to 18.8 percent of GDP.
In 2016/17, the expenditure was 66.5 per cent of the budget as the government had been aligning with its priorities especially in the development expenditure.
Revenue and grants
According to the central bank, domestic revenues collected by the government in 2018/19 amounted to Sh18.5 trillion, higher than the amount collected in the previous financial year by 3.2 percent.
It was also estimated to be equivalent to 13.8 percent of GDP.
However, according to the budget speech delivered in Parliament in June 2018, the government planned to collect Sh20.15 trillion from domestic sources, with Sh18 trillion being the targets for tax revenue to be collected by the Tanzania Revenue Authority (TRA).
The BoT says that, out of the total revenue, 96.4 percent was collected by the central government and the remaining share by the local government authorities.
Tax revenue, which accounted for 86.1 percent of the central government’s collections, amounted to Sh15.38 trillion. This was below the annual target by 13.9 percent: equivalent to 11.4 percent of GDP.
“The underperformance in tax collections was largely associated with challenges of taxing the informal sector, underutilisation of electronic fiscal devices (EFDs) and smuggling activities along the coast of the Indian Ocean,” states the central bank in the report.
Non-tax revenues amounted to Sh2.4 trillion, which was above the annual target by 8.3 percent - and was equivalent to 1.8 percent of GDP. On the other hand, external grants amounted to Sh461.2 billion, out of which Sh285.3 billion was project grants - with Sh175.9 billion being ‘basket funds.’
External grants received in FY-2018/19 were equal to 0.3 percent of GDP.
However, the government had budgeted to get Sh2.68 trillion from the grants and concessional loans.
Financing
The report also states that the government’s budget operations in FY-2018/19 realized an overall deficit of Sh4.23 trillion, which was financed through foreign and domestic borrowing of Sh1.19 trillion and Sh3.037 trillion.
The deficit was equivalent to 3.1 percent of GDP. This was slightly below the government target of 3.2 percent.