National debt: Be patient, says govt

By Felix Lazaro The Citizen Reporter Dar es Salaam.A day after the Controller and Auditor General (CAG) revealed that the national debt--currently standing at Sh22 trillion – could be more than than the sum announced, the government has called for patience. CAG Ludovick Utouh’s audit report for the financial year ending June 30, 2012, indicates a number of liabilities that would raise the debt if they were taken into account. As of June 30, 2012, the total outstanding public debt stock was Sh16,975.9 billion.   This comprised Sh12,430.068 billion (73 per cent) external and Sh4,545.9 billion (27 per cent) domestic debts. The government also has a number of other debts that have not been included in the portfolio, bringing into question the government’s position. The CAG’s report notes, for instance, that there are claims by the Parastatal Services Pension Fund (PSPF) amounting to Sh716.6 billion out of the total claim of Sh3.2 trillion in dues for unpaid government employees’ contributions to the PSPF. This is payable via the government budget in 10 equal instalments of Sh71.66 billion each financial year. Also to be taken into account is Air Tanzania Company Limited’s debt owed to South African Airways and Citi Bank amounting to $4,129,298.38 and $1.46 million respectively--equivalent to Sh6.5 billion and Sh2.3 billion respectively--which the government is paying through the Ministry of Finance. The CAG’s report 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 at UDOM, PCCB headquarters, Nelson Mandela University and police housing. Finance Minister William Mgimwa told The Citizen in Dar es Salaam on Monday that his ministry will issue a comprehensive statement on the issue when it receives the full report of the CAG. Asked why the liability was not included in the national debt, Dr Mgimwa responded that it was just a matter of working out what happened. The CAG might also be in a position to tell the reason behind the exclusion of some debts, he added. The treasury permanent secretary, Mr Ramadhan Khijjah, echoed Dr Mgimwa’s sentiments: “We are making efforts to get the report, work on it and submit it to the House so that the parliamentary committee chaired by Zitto Kabwe scrutinises it and proposes the way forward.” The treasury will then instruct the ministries, institutions and departments implicated in the report to provide answers to the questions raised. Only then will an explanation be released. “Let the public be patient about the CAG’s concern over unaccounted billions in public debt,” said Mr Khijjah. The approach to the CAG’s report has changed this year. The House did not discuss it this time around and it was instead handed to the Public Accounts Committee chaired by Mr Zitto Kabwe. When the ministries, institutions and departments have provided the necessary answers, the Finance ministry will compile one report and submit it to the PAC, which will scrutinise it. “All the processes of working on the CAG report should be completed in this Budget sitting,” noted Mr Khijjah. Speaking to The Citizen on the phone, CAG Ludovick Utouh said he had done his job in a professional manner and it was now up to the ministries/agencies and departments implicated to clear their names.Mr Utouh said it was not the CAG’s responsibility to correct and compile the ministry’s data about how money was spent and his task was simply to go through the financial reports of the ministries . The data the ministry presented to CAG, he said, were mismatched as some liabilities were not included in the public debt. He told The Citizen: “The correct place to ask why the debts were not included is the ministry since it was supposed to complete its report. I only passed through the presented reports and found the unaccounted debts.” The CAG’s report notes that the the government has been unable to consolidate its controlled entities such as local government authorities 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.” Guarantees that had become liabilities to the government as of 30 June last year amounted to Sh253.994 billion, notes CAG. The Statement of Guarantees reflect guarantees issued to various parastatals. If the unaccounted debts were to be included, the national debt would be more than Sh24 trillion.