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| Dr Mgimwa. |
Economists have raised concern over what they have described as
“insufficient amount of money” set aside for development expenditure in the
2012/13 Budget, warning that it may grossly affect the country’s economic
growth.
The Finance minister, Dr William Mgimwa, presented before the
parliamentary committee on Finance preliminary estimates showing that the proportion
of the development budget would decline to 30 per cent in the 2012/13 fiscal
year, down from the 38 per cent that was allocated in 2011/12.
But members of the committee rejected the estimates. They demanded that
money for development expenditure should be increased to at least 35 per cent
of the total Budget, otherwise they would reject it in total. The 2012 Budget
is scheduled for tabling in Parliament this week.
Speaking with The Citizen in separate interviews yesterday, experts
said the reduction is unhealthy to the country’s economy that requires a more
vibrant infrastructure to grow. Cutting down on development budget proportion is mainly occasioned by
poor remittance and reduction of pledges of aid from donors.
Due to economic difficulties in Europe and North America, donors have
been reducing their pledges. In the 2011/12 Budget, they offered 869.4bn/-, but
for this year’s, they have promised only 776bn/-.
The rate of disbursement is another problem. In the first half of
2011/12, donors remitted only 382.5bn/- out of the 2.4tr/- they had pledged for
development budget. The disbursement was equivalent to 16 per cent. To avoid
these problems, experts said the government should widen its domestic sources
of income, which would help in financing development expenditure.
“I think the problem is on financing. Some 70 per cent of our
development expenditure is externally financed by donors; so when they reduce
their support, we are forced to change our estimates,” says Prof Ammon Mbele of
the University of Dar es Salaam’s Economics Department.
The economics lecturer advises the government to re-strategise in
collecting revenues especially from the mining sector to avoid foreign
dependence.
“Reducing development budget allocation will hurt the economic growth,”
he adds.
Even as the development expenditure proportion is lower than that of
2011/12, the government aims at attaining an economic growth rate of 6.8 per
cent up from 6.4 per cent in the outgoing financial year. However, the planned
growth rate may face a challenge as key sectors of the economy are getting
minimal allocations.
Dr Honest Ngowi, an economics lecturer at Mzumbe University Business
School, says the government was supposed to increase the development budget
proportion and invest heavily in the key economic sectors especially building
infrastructures in order to stimulate economic growth.
“Ours is a poor man’s Budget. The national debt is increasing and then
you have a development that is poorly considered,” says the economist, adding: “This can imply that
the government is borrowing for recurrent expenditure, which is not good.”
His word to the government is: reduce unnecessary expenditures like
buying expensive cars for public officials and widen the tax base to increase
domestic revenue that will finance domestic projects and push the economy. Tanzania’s
economy is constrained by various domestic and external factors.
Prof Humphrey Moshi of the University of Dar es Salaam says lowering
the percentage of money going to development is a bad sign with regards to the
country’s economy.
“The government should reduce
unnecessary expenditures and cut down on importation of things that are locally
available to minimise recurrent spending. Our economy is perpetually affected
by its dependence on rain, it is bogged down by the high inflation rate. All
these issues should be addressed,” says Prof Moshi.
The reduction of the money meant for development comes about five
months after the government announced it would cut down spending by 755bn/- in
this financial year in its ambitious austerity move to reduce the widening
budget deficit caused by low aid inflows from donors, partly due to Eurozone
credit problems.
Tanzania will also receive less aid in 2012/13 as development partners
intend to give the country US$495 million (776bn/-) in budget support, which is
93.4bn/- less than the amount remitted during the about-to-end financial year.
The drop in aid cash announced early last month probably affected the
planning of the 2012/13 Budget, which is donor dependent by about 30 per cent.
Source: The Citizen,http://www.thecitizen.co.tz, reported by By Alawi Masare
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