Tanzania: Donor dependence to be slashed to 8.4%

Tanzania government plans to cut donor dependency in the coming Budget from the current 14.8 per cent to 8.4 per cent of the total estimates as part of its effort to facilitate smooth implementation of development projects.

Finance Minister Saada Mkuya Salum said yesterday that the government wants to strengthen revenue from domestic sources to avoid risks associated with condition-bound foreign aid.

In the 2015/16 Budget, the government plans to get Sh1.89 trillion from donors, which is 8.4 per cent of the Sh22.48 trillion general estimates, she said.

In 2014/15, the soft loans and grants promised by development partners were Sh2.94 trillion which added up to 14.8 per cent of Sh19.8 trillion Budget.

Last year, however, the UK, Japan, Germany and other development partners including the World Bank announced to withhold the $558 million (Sh922 billion) pledged for the country’s 2014/15 Budget following a corruption scandal in the energy sector.

In January this year, however, donors released $15 million (Sh25.8 billion) of the $558 million (Sh959 billion) support they had withheld over the Tegeta escrow account scam. The money was sent in December, according to a statement by the Development Partners Group Tanzania.

And speaking in Dar es Salaam yesterday, Ms Salum said out of the Sh2.94 trillion, until March 2015, the development partners had only released Sh1.58 trillion, representing a mere 54 per cent of their pledges.

Tanzania is one of Africa’s biggest per capita aid recipients and the withheld funds derailed spending plans including the preparation for the October General Election.

“The only reliable revenue that we can manage is that from domestic sources. We are strengthening revenue from the taxman and as any other country would like to be, we want to stand on our own feet,” said Ms Salum during the pre-budget presentation to MPs.

“It’s important to target being independent in budget funding to avoid risks in implementing projects. Donor funds come with conditions and sometimes they are not reliable, a trend that disrupts our plans,” she added.

She said that looking at the current economic development rate of around 7 per cent, Tanzania has the potential to collect revenue that can meet all its expenditure. “But then, Tanzanians need to be encouraged to pay taxes,” she noted.

The minister’s statement comes hardly a month since Tanzania Revenue Authority (TRA) commissioner general Rished Bade told The Citizen that the East Africa’s second biggest economy is capable of financing its entire budget through funds sourced locally in the next five years.
Source: The Citizen, reported by Alawi Masare, from Dar es Salaam, Tanzania
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