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| Dr Masawe speaking in one of the money-market seminars |
Bank
of Tanzania (BoT) has said the national debt is sustainable despite ballooning
to 12.53billion US dollar, pushing up mainly by exchange rate fluctuations.
In
October, the national debt stock increased by 186.4million US dollar (298.24bn/)
in a single month, blaming exchange rate fluctuating and new disbursements.
BoT
data show that national debt stock ballooned to 12.53bilion US dollar
(20.05trn/-) in last October alone when the exchange rate reached historical
higher level of 1,840/- per greenback.
However,
the central bank said, despite the number to look huge, the debt is sustainable
while is only 15 per cent of the Gross Domestic Product (GDP) net present value.
BoT’s
Director of Economic Research and Policy Dr Joe Masawe told the Daily News that
the debt sustainability analysis shows the government borrowing level is far
from the threshold pegging against the GDP.
“The
debt is very sustainable because we are far from debt to GDP threshold which is
50 per cent,” Dr Masawe said yesterday over the phone.
The
Director added that the low-level does not mean the country will continue to
borrow blindly but carefully to only projects which are viable with good rate
of returns to social welfare.
“IMF has permitted us to borrow form
non-concessional sources as our debt is still sustainable, but fund will be directed
to the projects that have good returns,” Dr Masawe said.
Economists
are not against borrowing as long as the fund is investment wisely in
development projects like hospitals, schools and infrastructure rather than in recurrent
expenditures.
If
the national debt were to be distributed to fairly among Tanzanians, each would
have to pay the lenders some 455,555/-.
According
to BoT last November’s Monthly Economic Review,
out of the total debt stock, external debt accounted for 80.2 per cent while
domestic debt accounted for 19.8 percent.
During
the period under corresponding, external debt stock increased by 152.7 million US
Dollar (244.32bn/-) to 10.05 billion US dollar (16.08trn/-), with disbursed
outstanding debt accounting for 82.2 per cent and the balance was interest
arrears.
The
stock of domestic debt stood at 4.12trn/-, an increase of 111.6bn/- over the
amount registered at the end of previous month. Government bonds continue to
account for the largest share of domestic debt followed by Treasury bills
Commercial
banks remained the leading investors in government securities, holding about 48
per cent of total domestic debt.
Other
investors in government securities include BoT that accounted for 24.9 per cent,
pension funds holding 17.5 per cent, insurance 5.4 per cent, non-bank financial
institutions 2.2 per cent, BoT Special Funds (1.3 percent), Other Official
Entities (OOE) 0.6 per cent, and private sector 0.4 percent.
Source: The Daily News www.dailynews.co.tz reported by Abduel Elinaza
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