The government’s reliance on borrowing to pay salaries and development projects are major motives behind growth of the national debt, The Guardian on Sunday has revealed.
“Borrowing from foreign governments to pay salaries and development projects has tapped our economy to an endless tag of national debt increment,” said Hebron Mwakagenda, Executive Director of Tanzania Coalition on Debt and Development (TCDD) in an exclusive interview with the newspaper in Dar es Salaam mid-this week.
He believes that excessive inclination on donor money was placing the country into higher risk of economic woes, as he denounced the trend, saying it was prudent for the government to step into other strategies to mobilize funds for salaries to avoid further escalation of the current Sh40.6trn debt.
He said the current debt that scores 33 per cent of the Gross Domestic Product (GDP) is in par with Tanzania’s 40-million people per capita debt of Sh800,904 in a situation where bigger chunk of the borrowed money is poured into salaries with a negligible portion directed at development projects such as roads and agriculture.
Expressing concerns, he questioned the destiny of $40m recently borrowed from the government of India to empower local farmers with tractors through Suma JKT, saying; “what is going on in that project is yet to be known as farmers are lavishing in poverty with their hand hoe, as few people have seemingly taken advantage of the project.”
According to International Monetary Fund (IMF), national debt should not exceed 30 per cent of GDP to avoid higher risks of capsizing in economic doldrums, but Tanzania’s debt increased sharply from Sh9.3trn in 2007/2008 fiscal year to Sh30.6trn last year and stood at Sh35trn as of June this year.
He said the World Bank (WB) released Sh122bn loan in 2011/2012 fiscal year, but made no difference to date, sparking suspicions that the funds might have ended up in the hands of the corrupt hierarchy on top.
He said Sh1.8trn was borrowed from domestic sources last year, but interests from domestic loans are much higher than external ones.
An expert with the organization, Boniface Komba said the Sh40.6trn debt bore no positive impact to the economy and called for transparency and proper management of loans.
He said it was high time to amend the laws to mandate the Parliament with powers to regulate the borrowing through approval or denial of loans and overseeing expenditures set forth.
“The government should deploy gently on tax collection, combat tax evasion and refuse unnecessary exemptions for the country to be self-reliant instead of relying on grants and loans,” he insisted.
“Borrowing from foreign governments to pay salaries and development projects has tapped our economy to an endless tag of national debt increment,” said Hebron Mwakagenda, Executive Director of Tanzania Coalition on Debt and Development (TCDD) in an exclusive interview with the newspaper in Dar es Salaam mid-this week.
He believes that excessive inclination on donor money was placing the country into higher risk of economic woes, as he denounced the trend, saying it was prudent for the government to step into other strategies to mobilize funds for salaries to avoid further escalation of the current Sh40.6trn debt.
He said the current debt that scores 33 per cent of the Gross Domestic Product (GDP) is in par with Tanzania’s 40-million people per capita debt of Sh800,904 in a situation where bigger chunk of the borrowed money is poured into salaries with a negligible portion directed at development projects such as roads and agriculture.
Expressing concerns, he questioned the destiny of $40m recently borrowed from the government of India to empower local farmers with tractors through Suma JKT, saying; “what is going on in that project is yet to be known as farmers are lavishing in poverty with their hand hoe, as few people have seemingly taken advantage of the project.”
According to International Monetary Fund (IMF), national debt should not exceed 30 per cent of GDP to avoid higher risks of capsizing in economic doldrums, but Tanzania’s debt increased sharply from Sh9.3trn in 2007/2008 fiscal year to Sh30.6trn last year and stood at Sh35trn as of June this year.
He said the World Bank (WB) released Sh122bn loan in 2011/2012 fiscal year, but made no difference to date, sparking suspicions that the funds might have ended up in the hands of the corrupt hierarchy on top.
He said Sh1.8trn was borrowed from domestic sources last year, but interests from domestic loans are much higher than external ones.
An expert with the organization, Boniface Komba said the Sh40.6trn debt bore no positive impact to the economy and called for transparency and proper management of loans.
He said it was high time to amend the laws to mandate the Parliament with powers to regulate the borrowing through approval or denial of loans and overseeing expenditures set forth.
“The government should deploy gently on tax collection, combat tax evasion and refuse unnecessary exemptions for the country to be self-reliant instead of relying on grants and loans,” he insisted.
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