Tanzania debt stands at Sh69.2 trn

The country’s total debt for the period ending September 2020, has reached Tsh69.2 trillion.

Out of which, external debt stock, including public and private sector, amounted to $23,328.5 million (Tsh53.9 trn) and domestic amounted to Tsh15.3 trillion, an increase of Tsh152.5 billion at the end of September 2020.

According to the Bank of Tanzania (BoT) report, external debt declined by $49.1 million (TSh113.3 bn) from the preceding month and an increase of $947.8 million (Tsh2.2 trn) from September 2019.

The decrease in debt was mainly on account of net debt outflows such as repayment of principal amount which outweighed new disbursements.

The government external debt constituted 77.3 per cent. Its expenditure continued to be aligned with the available resources, with total expenditure amounting to Tsh1.9 trillion.

Recurrent expenditure amounted to Tsh1.1 trillion and development expenditure was Tsh795.6 billion.

Locally financed development expenditure accounted for 78.3 per cent of the amount spent on development projects during the month.

The profile of external debt by creditor category remained broadly unchanged, with debt owed to multilateral institutions continuing to account for the largest share of 47.6 per cent.

Debt contracted from commercial sources accounted for 32.1 per cent of total external debt.

The central bank shows that an increase in domestic debt was mostly through issuance of government debt securities—Treasury bills and bonds.

This was more prominent in issuance of Treasury bonds, consistent with the Government Medium-Term Debt Strategy of lengthening maturity to reduce refinancing risk.

This also coincided with investors’ preference for long tenures of debt securities.

In terms of use of borrowed funds, much of it was utilised for transport and telecommunication projects, accounting for 27.3 per cent of disbursed outstanding debt.

Social welfare and education accounted for 18.1 per cent.

Disbursements of external loans amounted to $36.4 million, of which $35.7 million was in favour of the central government.

Debt service was $120.8 million, of which $105.6 million was principal repayment and $15.2 million was interest payment.

Commercial banks, continued to hold the largest share of domestic debt, accounting for 36.8 per cent of the domestic debt, followed by pension funds at 30.2 per cent.

BoT shows that government securities issued for budgetary operations amounted to Tsh421.1 billion in September 2020, of which Treasury bonds amounted to Tsh322.7 billion and the balance was Treasury bills.

Domestic debt service, excluding government overdraft from the Bank of Tanzania, amounted to Tsh345.6 billion, of which Tsh219.0 billion was principal repayment and the balance was interest payment.