Billions ‘excluded from national debt’

CAG’s report for the financial year ending on June 30, 2012 shows a number of liabilities that could add to the debt

By Peter Nyanje
The Citizen Reporter

Dodoma. The staggering national debt, which stands at Sh22 trillion does not include all the money the government owes various creditors, The Citizen has established.

If other liabilities are considered, the size of the national debt would be bigger than what is currently reported.

The report of the Controller and Auditor General (CAG) for the financial year ending on June 30, 2012 shows a number of liabilities which would add to the debt if they were taken into account.  These include guarantees extended by the government to institutions and organisations which have no ability to honour their commitments.

The complex national debt situation is further compounded by the government’s failure to consolidate its accounts to give a clearer picture of its financial position. 

According to CAG: “The audit revealed that the government has been unable to consolidate its controlled entities such as Local Government Authorities (LGAs) and Parastatals due to differences in accounting reporting standards which is against Paragraph 6.5 of IPSAS -  Cash basis of accounting which requires a controlling entity to issue consolidated financial statements for both foreign and domestic operations.”  

As of June 30, 2012, the total outstanding public debt stock was Sh16,975.9 billion which reflects an increase of Sh2,534 billion equivalent to 17.6 per cent as compared to the previous year. 

According to CAG, the total outstanding debt of Sh16,975.9 billion comprised Sh12,430.068 billion (73 per cent) external and Sh4,545.9 billion (27 per cent) domestic debts.

However, checks by The Citizen established that despite the above debt position, the government has the following debts which have not been included in the debt portfolio thus making the debt position reported by the government questionable. 

The CAG’s report notes for instance that there are claims by PSPF amounting to Sh716.6 billion, out of the total claim of Sh3.2 trillion being dues for the unpaid government employees’ contributions to the PSPF payable by the government budget in ten equal installments of Sh71.66 billion each financial year.

There is also Air Tanzania Company Limited’s debts due to South African Airways and Citi Bank amounting to $4,129,298.38 and $1.46 million equivalent to Sh6.5 billion and Sh2.3 billion respectively, which the government is paying through the Ministry of Finance (Vote 50). 

The CAG reports also lists a number of government guarantees issued by MDAs, LGAs and Public Corporations for loans borrowed from pension funds as reported in the draft Tanzania National Debt Sustainability analysis amounting to Sh1.25 trillion. 

The funds were used for construction projects of UDOM, PCCB headquarters, Nelson Mandela University, Police Force houses and the like.

“Guarantees which have become liabilities to the government as of the 30th June, 2012 amounted to Sh253.994 billion,” notes CAG in his report, adding that the Statement of Guarantees reflected guarantees issued to various parastatals.