Tanzania Draft Budget 2017/18: TZS 12 Trillion for Development Expenditure

The government of Tanzania plans to mobilize and spend TZS 31,712.0 billion in the 2017/18 budget, the Minister for Finance and Planning, Hon. Dr. Philip Mpango explained when presenting to the National Assembly the estimates of government revenue and expenditure for 2017/18.

Of this amount, development expenditure is estimated at TZS 11,999.6 billion equivalent to 38% of the total budget, within the range of 30 to 40 % of the total budget as stipulated in the Five Year Development Plan 2016/17 – 2020/21, Minister Mpango stressed.

75% of the development budget or TZS 8,969.7 billion will be funded locally while the remaining 25% or TZS 3,029.8 billion will come from foreign funds.

62% of the whole budget or TZS 19,712.4 billion is destined to recurrent expenditure, including TZS 7,205.8 billion for wages and salaries, and TZS 9,461.4 billion for public debt and general services.

Development Partners are expected to contribute TZS 3,971.1 billion or 12.5% of the total budget in the form of grants and concessional loans, of which TZS 2,473.8 billion for development projects.

Domestic revenue, including local government’s own sources, is estimated at TZS 19,977.0 billion or 63% of the total budget, or which tax revenue is estimated at TZS 17,106.3 billion or 85.6 % of domestic revenue.

Macroeconomic Objectives For 2017/18
The 2017/18 budget revolves around the theme “Industrialization for Job Creation and Shared Prosperity”, which represents a continuation of the 2016/17 theme “‘Industrial Growth for Job Creation.”

The 2017/18 budget is aimed at achieving the following macroeconomic targets:
i. Attain real GDP growth of 7.1% in 2017 up from the actual growth of 7.0% in 2016;
ii. Continue to contain inflation at single digit in the range of 5.0 – 8.0% in 2017;
iii. Narrow the budget deficit to 3.8% of GDP in 2017/18 from 4.5% in 2016/17;

The plan emphasizes successful implementation of Flagship Projects, which include:
i. Construction of new standard gauge railway line;
ii. Revamping the national air carrier Air Tanzania Limited (ATL);
iii. Mining of coal and iron ore and construction of iron and steel complex in Mchuchuma and Liganga – Njombe;
iv. Establishment of Special Economic Zones; c
v. Construction of a Liquefied Natural Gas (LNG) Plant;
vi. Establishment of Kurasini Trade and Logistics Centre;
vii. Development of Mkulazi Agricultural Farm and Sugar Factory;
viii. Mass training for development of specialized skills for industrialization and human development and fostering science, technology and innovations.

Review Of 2016/17 Budget Implementation
During his speech, Minister Mpango provided a review of the previous budget implementation, recalling that total mobilized resources between July 2016 and April 2017 amounted to TZS 20,710.5, billion, equivalent to 70.1% of an actual budget of TZS 29,539.6 billion.

“In 2016/17 budget, the Government planned to borrow TZS 2,100.9 billion from non-concessional sources to finance development projects but could not be raised due to constraints in the international financial market. However, the Government is in the final stage of negotiations with lenders and USD 500 million is expected by June, 2017”, he added.

He also commented on the liquidity conditions in the economy, recalling that in order to increase liquidity of the commercial banks and allow them to lend at low interest rates to private sector and general public at large, the Bank of Tanzania (BOT) reduced the discount rate from 16.0% as applied since November 2013 to 12.0% from 6 March 2017.