Tanzania: The Government must stop domestic debt

Dar es Salaam, Tanzania: 

The ACT Wazalendo Party has advised the Government to come up with a special strategic budget plan that will help end the domestic debt of 30 percent. The effects of not having a plan which will continue to hurt the people.

The monthly report of the Central Bank of Tanzania (BoT) shows that within one year, domestic debt has increased by 10 percent from Sh18.6 trillion to Sh26.6 trillion, an increase that he said had never happened in the past 20 years.

Speaking today January 15, 2023, the shadow minister of finance and planning of the party, Emmanuel Mvula said that the growth of the debt is due to the Government borrowing more from local banks, social security funds, insurance and individuals by providing them with bonds.

“The government has borrowed 27 percent of the domestic debt and of that debt 28 percent has been borrowed from financial institutions, 18 percent comes from insurance and the other percent from individuals. For the past 20 years there has been a growth in this,” he said.

He said the growth of the national debt, especially the domestic debt, its effects go directly to the people while explaining that the domestic debt should not exceed 20 percent and as a country we are 10 percent more.

“Another effect is to let it be known that we use a lot of money to pay the debt, our internal collections are used to pay the debt. We spend Sh900 billion a month to pay the national debt. Every month we pay and of that Sh600 billion is used to pay the domestic debt and Sh300 billion is used to pay the foreign debt,” said Mvula.
He said that due to this situation, the government spends more money to pay debts than to make progress and because it borrows from local banks, causing these institutions to fail to lower interest rates for the private sector and ordinary people who need loans.

“In order to get the money to pay the debt, you see there is an influx of taxes, another effect is that we are going to borrow from the social security funds, which means we are going to affect those funds and thus retirees will not be paid their pensions.
“These debts cause a great burden to the people. Based on that information, ACT Wazalendo is making a proposal to eliminate this debt, the Government should come up with a special strategy to end the debt in this year’s budget and since we are going to prepare the budget, we want the Government to come up with a strategy to end the debt,” he said.