Joseph Isangura
The Tanzanian government to maintain external debt servicing below the current limit of 11.1 percent of the gross domestic product (GDP) and to prevent it from escalating to the critical threshold of 15 percent.
Oran Njeza, the Chairman of the Budget Committee of the National Assembly, presented these recommendations during a session yesterday, addressing the proposed national development plan for 2025/26.
In his report, Njeza referenced Treasury data indicating that by June 2024, the country’s external debt had surged to 64.93 trillion Tanzanian shillings. This contributed to a total government debt of 96.88 trillion shillings, a significant increase from 81.98 trillion shillings in the same period the previous year. The reported increase represents an 18.18 percent rise, equating to an additional 14.90 trillion shillings. The committee also noted that the domestic debt currently stands at 31.9 trillion shillings.
Despite the rising figures, the committee’s analysis suggests that the government debt remains sustainable in the short, medium, and long term. However, the committee emphasized the importance of prudent fiscal management to ensure that debt levels do not compromise the country’s economic stability.
This concern comes at a crucial time as the government prepares its budget for the next fiscal year. The committee’s insights are intended to guide policymakers in making informed decisions that balance the need for investment in national development with the imperative of fiscal responsibility.
The committee’s recommendations reflect a growing awareness of the potential risks associated with high debt levels, particularly in light of global economic uncertainties. Maintaining a sustainable debt-to-GDP ratio is seen as essential for fostering investor confidence and ensuring the long-term viability of public finances.
As the government deliberates on its fiscal strategies, stakeholders, including financial analysts and civil society organizations, are likely to pay close attention to these developments.
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The importance of maintaining manageable debt levels is underscored by the need for ongoing economic growth and stability in Tanzania.
The call for vigilance regarding external debt levels highlights the broader economic challenges that Tanzania faces Balancing these priorities with sustainable financial practices will be crucial as the nation moves forward into the next fiscal year.
