Tanzania: Development Expenditure Struggles

 

 Photo: The Citizen

Tanzanian Shillings.

By Alawi Masare

Dar es Salaam — The government is still facing a tough time implementing its budget as it misses both revenue collection and development expenditure targets.

Development expenditure for October was set at Sh713.7 billion, financed by local and foreign resources, but only Sh380.2 billion, or 53.27 per cent, was released.

It was expected that international development partners would have pumped in Sh276.2 billion, but only Sh45.2 billion was released during the month, according to the Bank of Tanzania's monthly economic review released yesterday.

The government released Sh335 billion of the Sh437.5 billion that was to have been sourced locally for development expenditure.

During the period under review, total government expenditure was Sh1.35 trillion, out of which recurrent expenditure was Sh969 billion, and development expenditure Sh380.2 billion, according to the report.

Revenue collection amounted to Sh1.24 trillion, which was 83.8 per cent of the target. Tax revenue collected was Sh1.11 trillion, 15.9 per cent higher than the collection during the corresponding period in 2015, but 93.1 per cent of the target.

Local government collections from own sources totalled Sh35.5 billion against the projected Sh55.5 billion.

Forty per cent of the government's Sh29.5 trillion budget for 2016/17 has been set aside for development expenditure.

Only 26.6 per cent of the development budget for September was released, while domestic revenue collection was 16 per cent short of target.

The current account balance recorded a deficit of $1.84 billion in the year ending October 2016 compared with $4.79 billion registered in the preceding year. The shortfall was mainly attributed to a decrease in imports of goods and services coupled with an increase in exports.

The value of exports was $9.47 billion, being 7.5 per cent higher than the sum recorded in the corresponding period in 2015.

"This development was attributed to good performance in exports of traditional commodities, gold as well as increase in travel receipts," the BoT report says.

Tourism is still the leading foreign exchange earner, having generated $2.2 billion during the year under review followed by gold at $1.39 billion and manufactured goods, which brought in $1.25 billion.

The value of traditional exports, which include tobacco, cashew nuts, tea, cotton, cloves, coffee and sisal, amounted to $850 million during the year.

The value of imports of totalled $10.69 billion in October compared with $13.23 million recorded in the corresponding month in 2015, the report shows.

With the exception of oil and industrial raw materials, all other categories of imports recorded a decline.

The decline in imports was partly attributed to exchange rate depreciation, particularly due to demand for consumer goods and completion of major projects such as cement factories, power plants and exploration activities. During the period, oil imports increased by 1.7 per cent to $2.97 billion, largely driven by an increase in volumes.

The prices of crude oil and white petroleum products declined mainly due to a rise in supply from Opec member countries.

National debt

Tanzania's external debt stock reached $16.4 billion as at the end of October, being an increase of $7.8 million from the amount recorded during the preceding month.

On an annual basis, the stock of debt was $1.03 billion higher than the amount recorded at the end of the corresponding period in 2015 mainly due to new disbursements.