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Inflation rate hits 7.3pc
2007-04-24 10:13:05
By Juma Thomas, Dodoma
Inflation has reached 7.3 per cent by February this year compared to 6.8 per cent in June, last year, the Minister for Finance Zakia Meghji said yesterday.
Meghji attributed the rise to increasing oil prices in the world market, famine and prolonged power woes that the country experienced last year, as some of the factors that triggered the escalation.
“The GDP was projected to grow to 5.9 per cent in 2006 and 7.3 per cent in 2007, while inflation was estimated to stand at 4 per cent by July 2007,” the minister said.
Presenting a report on implementation of the 2006/2007 budget to MPs at a meeting held here yesterday, Meghji said despite the existence of such problems, the first half of the financial year had seen implementation of the budget going well.
The minister said it was projected that revenue collection should be 14.5 per cent of the GDP in 2006/07 and 14.7 per cent in 2007/08.
Meghji said although indicators in the first four months of the budget showed improvement, increase of oil prices in the world market, famine and power problems that faced the country last year had frustrated the projection.
GDP in 2006 grew at 5.8 per cent compared to 6.8 per cent in 2005.
She said during the 2006/2007 financial year, the government planned to collect 4.850 trillion/- from internal and external sources, for development and recurrent expenditure.
The minister said expenditure in the first half of 2006/07 had reached 2.1 trillion/-, which was 61.5 per cent of the budget.
Out of the money, 1.8trillion is for recurrent expenditure, while 906.519 billion is for development expenditure.
She said revenue collection as of March had reached 259.9bn/- per month, being above the targeted amount.
The minister said it was projected that revenue collection would hit 2.5 trillion/- or above by June this year.
She said loans and grants for general budget support were also projected to meet the target as almost 90 per cent of the money had already been released.
During the meeting, the Minister for Planning, Economy and Empowerment, Dr Juma Ngasongwa, presented budget guidelines for 2007/2008 before the law makers were given the opportunity to discuss the two reports.
Contributing to the reports, John Cheyo (Bariadi East) challenged the government to collect more tax from tourism and mineral sectors in order to increase its revenue and reduce donor dependence, which he said was putting the country at risk.
He said that it was dangerous for an independent country like Tanzania to depend on donors to run the government, adding, “I sometimes ask myself who owns our country? Is it wananchi or the donor community?”
Cheyo said the two sectors had not been contributing enough to the government coffers.
He challenged the government to explore more areas of revenue collection so as to become independent, otherwise the country’s development partners, because of their financial support, would have more power than even the Parliament.
“It is high time we said enough is enough and do away with donor dependence. With the resources we have, I believe we can manage,” he said.
The donor community supports the government budget under the general budget support programme.
In the first half of the 2006/2007 fiscal year, the government received 732.176bn/- from donors as grants and budget support.
Speaking at the meeting, which was chaired by Prime Minister Edward Lowassa, the Member of Parliament for Newala, George Mkuchika, called on the government to distribute the national cake evenly and reduce unnecessary expenditure.
He said it was disheartening to learn that some regions were backward while others enjoyed good infrastructure and social services.
“Every Tanzanian contributes to the national coffers. I therefore expected that everybody should benefit. But this is not the case. Since independence, there has been regional imbalance,” he said.
Hamad Rashid Mohammed (Wawi) underscored the need to have one central public procurement centre, which would be charged with buying all government items, including motor vehicles.
He said the current system whereby every ministry and government department bought its own requirements was too costly and had caused unnecessary government expenditure.
“We have enough revenue to enable us stand on our own, the problem lies with mismanagement of these revenue,” he said.
Charles Keenja (Ubungo) wondered whether the government was spending public funds in the right way.
“I sometimes ask myself if the government is spending our money in the right way, and, is it necessary to spend it that way?” he said.
He called on the government to speed up the process of leasing out the central railway to save the country’s rail network from destruction.
Currently, trains plying the central railway, which are run by the Tanzania Railways Corporation, end in Dodoma and cargo going to Mwanza, Kigoma and neighboring countries is sent to Dodoma for re-loading into railway wagons.
Likewise cargo from those areas going to Dar es Salaam and elsewhere is offloaded in Dodoma and transported by road.
Mgana Msindai (Iramba East) called on the government to give top priority to water, education, roads, health and agriculture in its budget.
“We should strive to use our money to improve these sectors. We should not depend on donors to improve our agriculture, education, water etc,” he said.
Wilson Masilingi (Muleba South) said few investors had shown interest to invest in agriculture. He, however, warned the government not to give incentives to the farming sector like it did to the minerals.
“Perhaps investors in this sector also want to hear what incentives the government is going to offer before they come. We should not give them any incentives,” he said, calling on the government to help local farmers by putting in place the necessary infrastructure for irrigation farming.
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