Tanzania external debt swells by $500m in one month: BoT

Tanzania’s external debt stock reached $12.5 billion at the end of July 2013, an increase of $500 million from that of the previous month, the central bank has reported.

Economists and financial gurus warn that such a rise augurs ill for the economy.

“The external debt has been increasing and we have been discouraging the government from further borrowing. It should concentrate on increasing domestic revenue sources,” said a Mzumbe university economics lecturer, Dr Honest Ngowi.

He cautioned that borrowing prompted the government to spend huge amounts of the budget on repaying loans instead of using the money for development.

Last month’s economic review by the Bank of Tanzania indicated that the increase in the external debt was a result of new disbursements and an accumulation of interest arrears.

The profile of external debt by borrower category shows that in July 2013, the Central Government debt increased by $216.7 million from the amount recorded at the end of June 2013 on account of new disbursements.

According to the report, the government spent $4.2 million to service the external debt, out of it $4.1 million involved principal payments.

“A large proportion of outstanding debt was utilised for the balance of payments and budget support followed by education and social welfare, transport and telecommunication,” said the report.

The stock of domestic debt as at the end of July 2013 increased by Sh348.7 billion to Sh6 trillion from the level recorded in June 2013.

On an annual basis, domestic debt stock increased by Sh1.5 trillion from Sh4.5 trillion at the end of July 2012.

“The increase was mainly on account of an issuance of government securities that outweighed maturing obligations.”

During July 2013, the government borrowed Sh143.7 billion from domestic sources, out of which Sh82.1 billion involved Treasury bills and Sh61.6 billion Treasury bonds. Total domestic debt issued during the year ending July 2013 was Sh3.3 trillion.
Source: The Citizen, reported by Veneranda Sumila, from Dar es Salaam, Tanzania
Share on Google Plus

About Abduel Elinaza

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.