The government has borrowed 655.1 million US dollars (about 1.048tri/-) in three months ending September, on back of new expenditure and interest arrears.The borrowing means that the government contracted almost 300bn/- new loan per month, although the report did not indicate if the expenditure was on development or recurrent votes.
The Bank of Tanzania (BoT) said in the September Quarterly Economic Bulletin that the borrowing pushed up the external debt stock to 12,744.3 billion US dollars (20.4 tri/-) as at the end of September, this year.
The central bank said that out of the total external debt stock, 89.6 per cent was Disbursed Outstanding Debt (DOD) and 10.4 per cent was interest arrears.
“The increase was mainly on account of new disbursement,” BoT said in the report. Out of the debt contracted up to end of September, central government debt accounted for the largest share in external debt stock and has sprung to 10,160.9 billion US dollars (16.3tri/-) from 9,369.9 billion US dollars (14.9tri/-) recorded at the end of June.
The external debt service amounted to 42.9 million US dollars, out of which 12.8 million US dollars was principal and 29.3 million US dollars was interest payments, which is well below the threshold.
“The amount of debt service was 1.9 per cent of export of goods and services against a sustainability threshold of 25 per cent,” the report said.
On the stock of domestic debt as at the end of September was 6,146.3 billion, an increase of 9.0 per cent over the amount recorded at the end of the preceding quarter and 32.9 per cent over the amount recorded at the end of the corresponding quarter in 2012.
“The increase was on account of relatively large issuance of government bonds compared to maturing obligations and securitisation of an overhang of past net domestic financing held at the BoT,” the bank said.
The level of debt has now caught the attention of Breton Woods institutions which suggested that there was needs to strike the balance between making large capital investments and maintaining fiscal discipline.
According to the report by the World Bank on Tanzania Economic Update launched last week, the 2012/13 fiscal deficit was higher than anticipated, partly because ambitious revenue targets could not be achieved.
It said the official aid inflows to Tanzania are increasingly being replaced by non-concessional borrowing, thereby exposing the country to interest rate risks and high cost debt, while state owned corporations are running large deficits.
“Tanzania needs to maintain fiscal discipline and continue to keep the country’s debt and debt-service at acceptable levels to consolidate the gains achieved over the past decade,” it stated.
Source: Daily News, reported from Dar es Salaam, Tanzania
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