Zanzibar’s debt set to soar to Sh4.6 trillion in five years, warns ACT-Wazalendo

Unguja. The opposition party ACT Wazalendo has raised concerns about Zanzibar’s escalating debt, predicting a potential surge of nearly 2400 percent following the unveiling of the 2024/2025 budget in June.

Reading the government budget speech on June 13, 2024, the Minister of Finance and Planning, Dr. Saada Mkuya, stated that government budget for the year 2024/25 was projected to reach Sh5.182 trillion, up from Sh2.840 trillion in 2023/24 marking a 121.3 percent jump.

Addressing supporters at a rally at Mchangani Grounds, the party’s National Chairman, Othman Masoud Othman, expressed alarm that Zanzibar’s budget of Sh5 trillion heavily relies on borrowing, potentially pushing the country’s debt to Sh4.6 trillion within five years.

“Our domestic revenue can only raise Sh1.5 trillion, leaving us to borrow the remaining Sh3.5 trillion,” he stated.

Masoud highlighted that this projection represents a 2400 percent increase from the Sh153 billion debt inherited by the current administration in 2020 from previous governments.

In June, the House of Representatives was informed that Zanzibar’s national debt, comprising loans acquired through the Government of the United Republic of Tanzania (SMT) and directly from foreign banks and development partners, had reached Sh1.105 trillion.

According to Deputy Minister of State, Office of the President, Finance, and Planning, Juma Makungu Juma, the Revolutionary Government of Zanzibar had secured six loans totaling Sh813.63 billion. Additionally, guarantees amounting to Sh185.73 billion were provided for 14 institutions.

Juma emphasized that these borrowings had significantly contributed to national development efforts, funding major projects.

 The accumulation of these loans has resulted in a substantial increase in the national debt, which stood at Sh1,105.09 billion as of March 2024, marking a 609.3 percent rise from 2020.

“Despite the growing debt, the government assures effective management of repayment. Strategies have been implemented to ensure timely repayment, with borrowing directed towards development projects aimed at enhancing national income,” he reassured.