The Bank of Tanzania (BoT) has said the country rating process is
expected to be completed by early next year following the appointment of
Citigroup as the lead advisor on the exercise.
The central bank said the commencement of sovereign rating
implementation awaits the agreement signing between the government and
Citigroup. BoT’s Director of Economic Research and Policy Dr Joe Masawe told
the ‘Daily News’ that “very soon” the contract between the two parts would be
signed to pave way for the issuance of sovereign bond.
“Citigroup is now an official country advisor on the rating process,”
Dr Masawe said, “we expect the process to be completed next year.”
The Director, however, said the bank has been also advised to engage
other banks in the rating process. “We expect that they will also engage other
commercial banks in the process,” Dr Masawe said.
In May, HSBC, Europe’s largest bank, told the President was ready to
backup the issue of the Eurobond of between 700 and 1,000 million US dollars
(between 1.1trn/- and 1.6trn/-). The international bond geared to finance
infrastructure projects, especially roads, with pay-back period of between 50
and 60 years.
In January, BoT said IMF has permitted the country to go for
non-concessional loans because of the country’s modest debt ratio to GDP. The
country’s debt to GDP ration stands at 15 per cent while the threshold level is
50 per cent of net present value. The GDP is around 60 billion US dollar
(96trn/-).
Key issues to be considered in the credit rating exercise comprise
economic growth rate, control of financial markets and inflation rate and
Balance of Payment (BoP).
However, economists are worrying that given the state of the economy,
low tax collection ratio to GDP and ballooning of national debt, the country
might get a poor rating rate thus tarnish its ambition to issue an
international bond.
“Short of that (collecting more taxes) the country’s creditworthiness
will be highly reduced,” Dr Honest Ngowi, an Economist with Mzumbe University,
said.
The economy is expected to grow by 6.8 per cent in 2012, the inflation
is slightly below 20 per cent, exchange rate stands at between 1,560/- and
1,590/- a US dollar.
The country shelved plans to issue the sovereign bond over the past two
years after the global economic crisis squeezed credit markets and raised the
cost of borrowing.
Source: The Daily News,www.dailynews.co.tz, reported by Abduel Elinaza
0 comments :
Post a Comment