Tanzania’s Parliamentary Budget Committee has challenged the government to look for new potential revenue source to fund the budget to reduce borrowing, especially from domestic sources.
Tabling the committee’s report on the 2017/18 budget estimates, Chairperson Hawa Ghasia warned that too much borrowing from domestic sources was economically unhealthy for national growth.
She said the trend deprived the private sector of the opportunity to borrow locally since the government had exhausted the sources. “There is an increasing trend by the government whereby it borrows locally, a situation that is likely to choke private sector development,” she said.
Ghasia noted that by April, 2017, the government had borrowed 4.7 trn/-, being 87.7 per cent of the 5.37 trn/- earmarked to be borrowed in the 2016/17.
The committee also took issue with the delay by development partners to submit foreign concessional and commercial loans, urging the government to fast track agreement procedures in order to get money on time.
She noted that in the 2016/17 the development partners promised to provide Sh 3.6 trillion as basket fund but up to April, 2017, only Sh 2.4 trillion, being 65 per cent was realised.
The committee argued that such slow disbursement of funding affected development projects, urging the government to focus on collecting more revenues and avoid dependence on foreign support.
Minister for Finance and Planning Philip Mpango on Friday told the Parliament that the government failed to disburse the entire 2016/17 development budget as only 38 per cent of the targeted development fund was disbursed in the financial year.
In the financial year, the government planned to spend Sh 11,820.503 billion for development activities, whereby Sh 8,702.697 billion was expected from domestic sources and Sh 3,117.805 billion from foreign sources.
He noted that up to April 2017, the total amount disbursed was Sh 4,516.7 billion, equivalent to 38 per cent of the development budget. The amount included disbursements to local government authorities and out of it, Sh 3,608.9 billion was from domestic sources and Sh 907.8 billion from foreign sources.
Meanwhile, the committee also expressed fears on the growing national debt, arguing that a big percentage of the national income went towards servicing the debt.
However, the committee praised the government for removal of VAT on capital goods as well as on ancillary transport services. It also praised the decision to remove annual motor vehicle licence, saying it was a nuisance to the public.