TZ debt servicing bill is 30pc of 2020/21 budget

Dar es Salaam. The government is to spend Sh10.48 trillion over the next one year to pay the national debt, according to the treasury budget.

The debt servicing allocation in the 2020/2021 budget, is equivalent to 84.58 per cent of the total Sh12.39 trillion budget for the ministry of finance for the coming financial fiscal year.

It was tabled in Parliament yesterday by finance minister, Dr Philip Mpango. He told MPs that his total recurrent budget would be Sh11.37 trillion, meaning debt servicing will consume 89.34 per cent of this vote.

The ministry was allocated Sh659 billion for development and Sh750.29 billion will be used for Other Charges (OC) and Sh510 billion for salaries.

According to government data, the money meant for debt repayment this year is Sh4.29 trillion more than the amount spent in the previous 2019/2020 fiscal year as at March 2020.

When compared with the government’s Sh34.88 trillion budget for 2020/2021, the debt allocation will thus consume over 30 per cent of the entire year’s income and expenditure plan.

Mpango revealed that in the 2019/2020 financial year, the government spent Sh6.19 trillion of its Sh33.1 trillion budget to service the national debt. The debt expenditure for that year was 18.70 per cent of the total budget. The figure will thus jump up by 11.3 per cent this year.

According to Dr Mpango, Sh624.7 billion of development funds will be sourced internally while the remaining Sh34.61 billion will be sought externally.

He said the government disbursed Sh597.54 billion as of March 2020 for servicing debts it owed contractors, suppliers, service providers and public servants.

The minister asked the Parliament to approve Sh80.54 billion as recurrent and development funds for the National Audit Office of Tanzania (NAOT).

The parliamentary budget committee vice chairman, Mr Mashimba Ndaki said the committee’s opinion was that despite commendable efforts to service verified debts, payment should be expedited to avoid expensive penalties.

“Also, servicing the debts will enable service providers to clear loans secured from financial institutions in order to provide services to the government. This is mostly important at these moments of Covid-19,” he said.

Mr Ndaki, who doubles as the committee acting chairman, believe that the move will increase liquidity in the economy and boost business survival and reduce Non Performing Loans (NPLs) .

To get a copy of The Citizen newspaper

 VISIT https://bit.ly/2yVdf0C