Magufuli's big headache

12Sep 2018
By Financial Times Reporter
Financial Times
Magufuli's big headache
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PRESIDENT John Magufuli has publicly revealed why his government is struggling to secure external financing for ambitious flagship infrastructure projects, including the standard gauge railway (SGR) line and the proposed Stiegler's Gorge hydropower plant.

PRESIDENT John Magufuli.

The president said the government has been forced to start implementing the massive projects using its own resources by boosting revenue collection and tightening fiscal discipline.

The internal financing of the projects comes after the state encountered obstacles from "imperialistic" forces and greedy lenders who were looking to make "super profits" by charging the government exorbitant interest rates for loans, he revealed.

The International Monetary Fund (IMF) said last year that Tanzania's revenue projections were "potentially over-optimistic" and advised the government to delay implementation of some large projects until the availability of revenues is confirmed.

However, Magufuli insisted that all the landmark infrastructure projects, including the SGR, Stiegler's Gorge and purchase of new planes for Air Tanzania Company Limited (ATCL), would be implemented come what may.

The revelation comes as the government faces a key challenge in closing the infrastructure financing gap for the Second Five Year-Development Plan (2016/17 to 2020/21), which is estimated at 107 trillion/-.

Out of the total cost of implementing the national development plan, the government is required to come up with close to 60 trillion/-, which translates to an annual spending commitment of around 11.8 trillion/- towards public infrastructure projects.

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