Dar es Salaam. The government said yesterday it was taking several steps to ensure that Tanzania’s debt remains sustainable.
Treasury Permanent Secretary Emmanuel Tutuba told The Citizen that with ongoing vaccinations against Covid-19, the government remains optimistic that the tourism sector and other economic activities are on track to recover. recover.
This, he said, would bring new vigor to the country’s debt service capacity and thus bring it back to moderate levels.
The World Bank said in its 17th Tanzania Economic Update, that a joint IMF-World Bank Debt Sustainability Analysis (DSA) that was conducted in September 2021, concluded that the risk of external debt distress Tanzania had moved from low to moderate.
According to the World Bank, this mainly reflects the collapse of tourism exports during the Covid-19 pandemic amid rising non-concessional borrowing and rising debt servicing.
Read: Tanzania’s national debt rises by $3.9 billion in one year
“The results of the analysis underscore the importance of boosting revenue mobilization and maximizing concessional borrowing.
In its 17th Tanzania Economic Update, the World Bank issued several recommendations for Tanzania to ensure that the level of over-indebtedness does not reach high levels of distress. Measures include: improving public investment management and pursuing only investment projects that provided clear socio-economic benefits and improving the coverage and transparency of public sector debt statistics, among others.
Mr Tutuba said with the ongoing national Covid-19 jab program the situation today was significantly better than at a time like this last year.
“The vaccines have boosted hopes for the recovery of the tourism sector and other economic activities,” he said.
In its January 2022 monthly economic review, the Bank of Tanzania said the country’s tourism sector – which has been badly hit by travel restrictions – is on track to recover.
Tourist arrivals jumped 48% to 918,603 for the full calendar year 2021. As a result, hospitality revenue hit a 12-month high of $1.396 billion from $714.5 million recorded during the corresponding period in 2020.
An increase in these revenues coupled with an increase in exports of manufactured goods – particularly sisal, tobacco, horticultural and fishery products – boosted the performance of Tanzania’s external sectors, with total exports of goods and services reaching 9, $81 billion in the year ending December 2021. from $8.55 billion in 2020.
Mr. Tutuba said that as part of efforts to improve the balance of payments, the government was also trying to reduce imports and create an enabling environment for increased exports of commodities such as minerals and commodities. traditional.
Economists remained optimistic that with ongoing efforts to improve the business climate, it was only a matter of time before the economic growth rate – currently forecast to hover around 4.5% and 5.5% in 2022 – back to its usual 6%. in the near future.
“President Samia Suluhu Hassan understands that we are an interconnected world and that there is a comparative advantage that we can take advantage of to be part of it. I think the future remains bright,” said Humphrey Moshi, professor of economics at the University of Dar es Salaam.
The arrival of more investors, as well as the ongoing implementation of infrastructure megaprojects, will lead to the broadening of the tax base and thus allow the country to raise enough to service its debts and for future development efforts.
The country, he said, should come up with measures that will ensure that it protects the economy from the negative impacts of the ongoing Russian-Ukrainian war.
Another economist, Dr Donath Olomi, said: “We need to intensify the use of PPP (public-private partnership) arrangements instead of relying too heavily on loans.