The Tanzanian government has announced plans to secure approximately Sh10 trillion in commercial loans to finance its national budget for the fiscal year 2024/2025.
This move comes as part of efforts to meet budgetary requirements amid growing economic demands.
The proposed Sh9.6 trillion in domestic and external non-concessional loans will constitute 19.5% of the total budget, which amounts to Sh49.35 trillion. The breakdown of these loans includes Sh2.99 trillion from external sources and Sh2.59 trillion from domestic sources for financing, with an additional Sh4.02 trillion from domestic sources for rollover purposes.
The country’s debt currently stands at Sh91.7 trillion, marking a significant 19.1% increase within just one year. This surge in debt highlights the challenges faced by the government in managing its finances amidst economic pressures and the need for development initiatives.
ReadMore;Tanzania’s National Debt Reaches Sh91.7 Trillion
The decision to seek commercial loans has raised concerns among economists and financial experts regarding the sustainability of Tanzania’s debt burden. Critics argue that heavy reliance on commercial loans could strain the country’s financial resources in the long term, potentially leading to debt distress.
Furthermore, questions have been raised about the allocation of borrowed funds and their impact on socio-economic development. Advocates emphasize the need for transparency and accountability in the utilization of borrowed funds to ensure they contribute effectively to national development goals.
The government, however, defends its borrowing strategy as necessary for financing key infrastructure projects, social programs, and other priority areas essential for the country’s growth and prosperity.
As the government moves forward with its borrowing plans, there is a management and measures to enhance revenue generation.
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