Tanzania debts increases further

By Mnaku Mbani

The stock of external debt reached USD 16,403.1 million at the end of July 2016, an increase of USD 5.4 million and USD 1,026.4 million from the stock registered at the end of preceding month and the corresponding period in 2015, respectively. Both increases were on account of new disbursements.According to the Bank of Tanzania Monthly Review for August shows that the external debt by borrower category depicts that central government was the largest borrower at USD 13,192.3 million, but the stock decreased by USD 17.7 million from the stock at the end of June 2016 due to exchange rate fluctuations.

 On annual basis, the central government external debt increased by USD 1,041.9 million (equivalent to 8.6 percent), on account of new disbursements. The composition of external debt by creditor category remained almost unchanged as it was at the end of preceding month, except for export credit.

Disbursements received in July 2016 was USD 52.1 million, out of which USD 45.5 million was received by the Government and USD 6.6 million, by the private sector. On annual basis, the debt inflows was USD 1,725.6 million, of which the Government received USD 1,147.1 million.

As regards external debt service, USD 23.7 million were paid in July 2016, of which USD 4.7 million were principal repayment while USD 19.0 million were interest payments.

On annual basis, the external debt service was USD 1,027.1 million, out of which USD 678.1 million was principal repayment and USD 364.0 million was interest payments. External debt service by the Government during the year ending July 2016 was USD 468.0 million.

Mwanwhile Government domestic debt stock reached TZS 10,115.6 billion at the end of July 2016, an increase of TZS 102.8 billion from the end of June 2016. The debt stock increased by TZS 2,641.6 billion (35.2 percent) from TZS 7,499.7 billion in July 2015 . The increase in borrowing was largely due to relatively lower than expected disbursements from external sources that necessitated reliance on domestic borrowing.

Treasury bonds continued to account for the largest share of government domestic debt, albeit at a lower proportion than a year before, accounting for 60.5 percent The decrease in the share was due to under-performance of long-term bonds, partly a reflection of tight liquidity in the market which compelled investors to switch preference to short-term debt instruments.

In terms of holders of domestic debt categories, commercial banks continued to lead, accounting for 44.0 percent of financing domestic debt instruments followed by pension funds at 23.0 percent.