The Tanzanian government has unveiled its budget for the fiscal year 2023/24, allocating a substantial sum of Sh10.48 trillion to service the national debt.
This amount marks a significant increase of 15 percent from the previous year’s approved allocation of Sh9.1 trillion.
Finance and Planning Minister, Dr Mwigulu Nchemba, announced that out of the total budget of Sh15.94 trillion for his ministry, Sh10.48 trillion will be dedicated to debt repayment.
While the Parliament’s Budget Committee expressed satisfaction with the government’s progress in debt servicing, they urged authorities to ensure that loans are channeled towards development projects to maximize their benefits to the Tanzanian economy.
In his address to the Parliament, Dr Nchemba emphasized the priority of revenue collection, aiming to secure Sh40.8 trillion in revenues to implement the 2023/24 budget.
This ambitious target implies that 25.686 percent of all ministry collections will be allocated to debt repayment, meaning that nearly Sh26 out of every Sh100 collected will be used to service the government’s debt.
However, Dr Nchemba assured the House that Tanzania’s national debt is sustainable in the short, medium, and long term.
According to the government’s debt sustainability analysis, the debt-to-GDP ratio currently stands at 31.8 percent, well below the prescribed ceiling of 55 percent. As of April 2023, out of the Sh9.1 trillion allocated for debt servicing in the current fiscal year, Sh7.4 trillion had already been paid.