THE government of Tanzania postponed borrowing from international lenders in the 2016/17 financial year after the interest rates increased, the Minister for Finance and Planning, Dr Phillip Mpango has said.
Dr Mpango said in Parliament yesterday that the government had put on hold borrowing plans from international lenders after interest rates increased to nine per cent from six per cent.
"In 2016/17 a deliberate decision to defer borrowing was made following borrowing rates from international lenders increased from an average rate of six per cent to nine per cent," he said when presenting a state of the economy to Members of Parliament.
The government plans to issue debut Eurobond to raise funds for financing infrastructure development but there has been delays in the launch as it sought a credit rating.
The Ministry of Finance and Planning had said last year it had concluded talks with Fitch Ratings for a sovereign credit rating and also hoped to finalise similar discussions with Moody’s Investors Service, paving the way for a possible debut Eurobond issue.
The government has increased public investments of some key infrastructure projects to help the country make optimal use of its strategic position as a transport hub in the region. It has outlined some key flagship infrastructure projects with significant multiplier effects to economy including construction of a standard gauge railway, reviving of the Air Tanzania Company Limited and Mchuchuma Coal Mining and Liganga Iron Ore Mining.
Others are construction of a Liquified Natural Gas (LNG) plant in Lindi Region, establishment of Special Economic Zones (SEZ) in Tanga, Bagamoyo, Kigoma, Ruvuma and Mtwara; establishment of Kurasini Logistic Centre; and procurement of new and rehabilitation of existing ships for Victoria, Tanganyika, and Nyasa lakes and construction of Liquified natural gas.
Dr Mpango said delays in disbursement of funds from foreign concessional and commercial loans due to prolonged negotiations with lenders and development partners were among challenges in implementing 2016/2017 development budget.
He said various measures have been taken to address the challenge including further strengthening of domestic revenue collection, improving business environment to attract more private sector investments including small investors.