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Treasury says donors` budget support cut timely

20th May 2012
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Permanent Secretary at the Ministry of Finance Ramadhan Khijjah

The Ministry of Finance has welcome the recent announcement by a group of donors to cut down their financial support for the coming financial year saying the decision was communicated timely to help planners work on the prospective gap.

The national Treasury says it important for the technocrats and decision making officials who are currently working on the budget for 2012/13 financial year to consider all sources of revenue and take a serious note on the cut down funds for General Basket Support (GBS).

Permanent Secretary at the Ministry of Finance Ramadhan Khijjah told The Guardian on Sunday that the government was scrutinising revenue sources as well as expenditure to ensure smooth running of government and various projects.

“We expected this for the coming financial year, it makes us reposition on what we expect to collect internally, we also wish to remind all who have plans to cut their aids to serve us timely and useful information for the purpose of planning and avoid disrupting the budget afterwards,” noted the PS.

He added: “We also need specific information for the same purpose of planning since you may find that some of the development partners reduce the support but they decide to channel more funds to the development projects”.

A week ago a group of 12 development partners under the umbrella of European Union issued a statement that they intend to give Tanzania $495 million (Sh776 billion) in budget support, which is Sh93.4 billion less than the amount remitted during the current financial year.

This reduction in aid funds is viewed as a blow to government whose budget is donor dependent by more that 40 percent.

With less than a month before the next budged is presented to the Parliament in Dodoma policymakers and planners are working hard for alternative sources of revenue, for initial estimates had indicated that the government expected Sh846 billion budget support for 2012/13 financial year. Donors had offered Sh869.4 billion for the FY 2011/12 Budget.

Twelve donors who provide general budget support to Tanzania are the African Development Bank, Canada, Denmark, the European Commission, Finland, Germany, Ireland, Japan, Norway, Sweden, Britain and the World Bank.

This year’s budget speech is expected to be read in Parliament on Thursday June 14. The one for the ending financial year is Sh13.4 trillion.

Economists have constantly criticized the government for passing budgets that are to a large extent financed with foreign loans and grants instead of domestic revenue.

They argue that donor dependence hurts the country, particularly at times when the donor nations undergo economic difficulties such as the recent euro-economic debt crisis that saw some of them failing to honour their financial commitments to donor dependent countries.

SOURCE: GUARDIAN ON SUNDAY
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