TCDD executive director, Hebron Mwakagenda
Every Tanzanian is indebted to tune of Sh450,000 thanks to the skyrocketing national debt, which currently stands at Sh21 trillions ($14 billion), which is about half of the country’s Gross Domestic Product (GDP).
The current national debt is Sh 21 trillions of which the external debt is USD 10.5 billion (Sh 15.9 trillion) and internal debt is USD 3.2 billion (Sh 5.1 trillion). Therefore on the basis of the total population of the country which stood at 44.9million by last August, everyone has technically such debt to pay.
The Tanzania Coalition on Debt and Development (TCDD) told the media in Dar es Salaam yesterday that for the short period of five years the national debt has increased by Sh. 15 trillion. In 2007/08 the national debt stood at Tsh6.4 trillion which rapidly increased up to Tsh 21 trillion in 2011.
TCDD is a coalition of civil society organizations (CSOs) dedicated to undertake advocacy activities on policy, budget, debt cancellation, poverty eradication and sustainable human development.
TCDD executive director Hebron Mwakagenda elaborated that the internal debt is rapidly increased because the government has started to take loans from local commercial banks which have high interest, with some of the money used for paying civil servants’ salaries.
TCDD proposed that the government should use other sources of revenue to increase income instead of keeping on borrowing, which at the end of the day hurts the community.
The Controller and Auditor General (CAG) Ludovick Utouh told Parliament that every year the government loses Sh 3 trillion through various loopholes, including tax exemptions and misuse of public funds.
Mwakagenda said if the government will effectively collect money from their sources there would be no need of taking huge loans because the data shows the amount lost per year is the same with the loaned amounts.
“The Economist has expressed worries over the Tanzanian economy as its debt levels have sharply risen to amounts that exceed the Gross Domestic Product,” he stated,
The current national debt has gone beyond international qualification which needs the country to not have debts that exceed their GDP.
TCDD warns that the current debt situation is dangerous for the national economy as there is no debt sustainability, a situation arising from absence of borrowing discipline.
Tanzania needs to learn from various countries like Europe, Ireland, Spain and Greece which reached the point of debt non-sustainability and are now facing a lot of problems.
“In the past Tanzania had accumulated large debts which forced them to seek debt cancellation, thus it is sad to see the current debt is bigger than the one for which debt relief was sought,” the director intoned.
TCDD proposed that the new constitution should put a debt ceiling and should indicate amount limitation for the government to borrow, and that the borrowing permission should come from Parliament.
Tanzania recorded a government debt to GDP proportion of 46.8 percent of the country's Gross Domestic Product in 2012, on the basis of government debt to GDP data compiled by the International Monetary Fund (IMF).
Historically, from 2002 to 2012, the country’s government debt to GDP averaged 50.94 percent, reaching an all time high of 66.6 percent in December 2002, and a record low of 35 percent in December 2008.
Generally, government debt as percent of GDP is used by investors to measure a country’s ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields, the NGO noted.