MINISTER for Finance Dr Mwigulu Nchemba on Thursday presented the 2024/25 budget, themed “Sustainable Economic Transformation through Fiscal Consolidation and Investment in Climate Change Mitigation and Adaptation for Improved Livelihoods,” aligning it with Tanzania’s Development Vision 2025 and global commitments.
It emphasises long-term development goals with ambitious macroeconomic targets to enhance economic stability and foster growth.
The budget targets a GDP growth of 5.4 per cent for 2024, up from 5.1 per cent in 2023, driven by anticipated improvements in both domestic and global economic conditions.
It supports this growth with a rise in domestic revenue to 15.8 per cent of GDP and an increase in tax revenue to 12.9 per cent of GDP aimed at enhancing tax compliance and expanding the tax base.
Key financial strategies, as outlined by Dr Nchemba, include maintaining inflation within a 3.0 – 5.0 per cent range, capping the deficit at 3.0 per cent of GDP, and ensuring that foreign exchange reserves cover at least four months of imports.
These measures are intended to serve as a robust safety net against external shocks.
The 2024/25 budget strategically emphasises capital expenditure, allocating 14.755tri/- of the total 49.35tri/- for infrastructure and industrialisation projects essential for sustainable growth and productivity.
This focus on capital over recurrent spending demonstrates the government’s commitment to operational efficiency. With a targeted deficit of 2.9 per cent of GDP, the budget ensures sustainable debt management and economic stability.
Additionally, it diversifies investments into critical sectors like railways, roads, and water, with significant support for the Rural Energy Agency (REA).
These allocations aim to reduce vulnerabilities to sector-specific shocks and foster consistent economic growth, underscoring the government’s dedication to sustainable development and resilience.
The budget, while ambitious, carries potential risks. Its optimistic GDP growth target of 5.4 per cent relies heavily on substantial increases in domestic and tax revenue, which may not be achieved if tax compliance and base expansion efforts falter.
The focus on capital expenditures also poses a risk of underfunding essential services such as healthcare and education. Moreover, a strict deficit cap of 2.9 per cent of GDP could restrict fiscal flexibility, potentially leading to unplanned borrowing or cuts in critical services during economic shifts.
Reflecting on last year’s fiscal management strategies, it’s clear that significant improvements are essential for boosting Tanzania’s economic health. Enhancing tax compliance and administration is critical to preventing evasion and expanding the tax base, thereby securing a robust revenue stream.
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There is also an urgent need for the effective and timely use of funds allocated to infrastructure, healthcare, and education to maximize the impact of these investments.
The government must maintain strict controls over borrowing and debt service to ensure transparency and sustainability, while strengthening economic resilience through diversification to mitigate the effects of external shocks.
Furthermore, increasing transparency and enhancing stakeholder engagement are vital to promoting participatory governance and building public trust.
However, the current budget’s focus on specific sectors like railways and roads risks neglecting other crucial areas, potentially hampering balanced economic development. The lack of detailed diversification plans also leaves the economy vulnerable to external shocks.
Dr Nchemba, representing the government, should tackle these challenges by enhancing transparency and stakeholder engagement. These efforts are critical for building public trust and ensuring effective policy implementation, key factors in sustaining economic growth and promoting stability as Tanzania moves forward.
Kelvin Msangi is an Operation Director at Tanzania Music Rights Society.
Source: allafrica.com
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Air Tanzania Banned From EU Airspace Due to Safety Concerns
Several airports have since locked Air Tanzania, dealing a severe blow to the Tanzanian national carrier that must now work overtime to regain its certification or go the wet lease way
The European Commission has announced the inclusion of Air Tanzania on the EU Air Safety List, effectively banning the airline from operating in European airspace.
The decision, made public on December 16, 2024, is based on safety concerns identified by the European Union Aviation Safety Agency (EASA), which also led to the denial of Air Tanzania’s application for a Third Country Operator (TCO) authorisation.
The Commission did not go into the specifics of the safety infringement but industry experts suggest it is possible that the airline could have flown its Airbus A220 well past its scheduled major checks, thus violating the airworthiness directives.
“The decision to include Air Tanzania in the EU Air Safety List underscores our unwavering commitment to ensuring the highest safety standards for passengers in Europe and worldwide,” said Apostolos Tzitzikostas, EU Commissioner for Sustainable Transport and Tourism.
“We strongly urge Air Tanzania to take swift and decisive action to address these safety issues. I have offered the Commission’s assistance to the Tanzanian authorities in enhancing Air Tanzania’s safety performance and achieving full compliance with international aviation standards.”
Air Tanzania has a mixed fleet of modern aircraft types including Boeing 787s, 737 Max jets, and Airbus A220s.
It has been flying the B787 Dreamliner to European destinations like Frankfurt in Germany and Athens in Greece and was looking to add London to its growing list with the A220.
But the ban not only scuppers the London dream but also has seen immediate ripple effect, with several airports – including regional like Kigali and continental – locking out Air Tanzania.
Tanzania operates KLM alongside the national carrier.
The European Commission said Air Tanzania may be permitted to exercise traffic rights by using wet-leased aircraft of an air carrier which is not subject to an operating ban, provided that the relevant safety standards are complied with.
A wet lease is where an airline pays to use an aircraft with a crew, fuel, and insurance all provided by the leasing company at a fee.
Two more to the list
The EU Air Safety List, maintained to ensure passenger safety, is updated periodically based on recommendations from the EU Air Safety Committee.
The latest revision, which followed a meeting of aviation safety experts in Brussels from November 19 to 21, 2024, now includes 129 airlines.
Of these, 100 are certified in 15 states where aviation oversight is deemed insufficient, and 29 are individual airlines with significant safety deficiencies.
Alongside Air Tanzania, other banned carriers include Air Zimbabwe (Zimbabwe), Avior Airlines (Venezuela), and Iran Aseman Airlines (Iran).
Commenting on the broader implications of the list, Tzitzikostas stated, “Our priority remains the safety of every traveler who relies on air transport. We urge all affected airlines to take these bans seriously and work collaboratively with international bodies to resolve the identified issues.”
In a positive development, Pakistan International Airlines (PIA) has been cleared to resume operations in the EU following a four-year suspension. The ban, which began in 2020, was lifted after substantial improvements in safety performance and oversight by PIA and the Pakistan Civil Aviation Authority (PCAA).
“Since the TCO Authorisation was suspended, PIA and PCAA have made remarkable progress in enhancing safety standards,” noted Tzitzikostas. “This demonstrates that safety issues can be resolved through determination and cooperation.”
Another Pakistani airline, Airblue Limited, has also received EASA’s TCO authorisation.
Decisions to include or exclude airlines from the EU Air Safety List are based on rigorous evaluations of international safety standards, particularly those established by the International Civil Aviation Organization (ICAO).
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The process involves thorough review and consultation among EU Member State aviation safety experts, with oversight from the European Commission and support from EASA.
“Where an airline currently on the list believes it complies with the required safety standards, it can request a reassessment,” explained Tzitzikostas. “Our goal is not to penalize but to ensure safety compliance globally.”
Airlines listed on the EU Air Safety List face significant challenges to their international operations, as the bans highlight shortcomings in safety oversight by their home regulatory authorities.
For Air Tanzania, this inclusion signals an urgent need for reform within Tanzania’s aviation sector to address these deficiencies and align with global standards.
The path forward will require immediate and sustained efforts to rectify safety concerns and regain access to one of the world’s most critical aviation markets.
Source: allafrica.com
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