THE ruling CCM has defended the country’s debt status, saying all loans secured are meant to build a vibrant economy through various mega projects.
Head of the CCM Ideology and Publicity Department Mr Humphrey Polepole told reporters that the current debt is sustainable and that still the country is in a better position to seek more loans if it wishes.
He was giving the CCM assessment on the ongoing campaigns across the country along with responding to some key issues that have been raised in the past 25 days of campaigning for the October 28 polls.
He said some opposition politicians were misleading the public on issues regarding the national debt, saying the country will soon be in the list of countries that may not seek loans.
According to the findings on Debt Sustainability Analysis (DSA) published by the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) early this year, Tanzania’s pub lic debt is sustainable, and that the country remains at low risk of external debt distress.
All debt burden indicators are projected to stabilise at levels consistent with low rollover risk under both the baseline (which assumes a gradual public investment scaling-up) and plausible stressed scenarios.
Mr Polepole said for the past five years Tanzania has recorded great strides in economic growth and that the loans it takes are used in financing major economic projects, which contribute greatly to development.
He said the Gross National Income (GNI) has increased from 52trn/- to 124trn/- in the period of five years.
“It is on record that Mwalimu Nyerere left the State House when the country’s income was 32bn/-, then Mzee Ali Hassan Mwinyi improved it to 1.2trn/- and the late Benjamin Mkapa increased it to 9.5trn/-, then Mzee Jakaya Kikwete left office when the income was 52trn/-,” he said.
According to Mr Polepole, the Fifth Phase Government under President John Magufuli has recorded a tremendous performance in only five years.
He said Tanzania is in a better position to take loan at any time it wishes to do so since borrowing is allowed after making deep analysis by comparing the amount of money needed in comparison to the current national income.
He said the government is capable of borrowing more money because its income is higher by 72tri/- compared to the previous government.
According to the international standard, the ratio between the debt and the Gross National Income for Tanzania in 2019/20 is 27per cent but the threshold for loans provision is 70 per cent.
“This means Tanzania is doing great, we stand at 27 per cent but we still have a great chance to seek loans, the baseline is 70 per cent,” he explained.
He said the government has also been taking loans from various international organisations and that the ratio under international standard shows that Tanzania stands at 16 pe cent while the baseline is 55 per cent.
“We have taken loans from African Development Bank (AfDB) and other international organisations and our debts are sustainable, therefore those who are peddling lies and misleading the public must stop such nonsense,” he noted.
Mr Polepole said the government decided to go for loans after assessing other ways of building the economy. He said one of the strategy for boosting the economy is to increase tax.
However, he clarified that instead of increasing tax the government reduced it from 11 per cent to 9 per cent and then came up with strategies of collecting more by tightening all tax evasion loopholes.
He added that another strategy is through limiting government spending. He said the strategy would not work in Tanzania since such measures end up cutting down money circulation and cause difficult economic situation among wananchi.
The third strategy which has been highlighted in one of the big opposition parties’ election manifesto is through privatising public institutions and placing public resources on bond.
He said the fifth phase government has strived to revive a number of its companies and organisation, and that so far they are contributing largely to the government coffers.
“We have revived ATCL and the company is now doing great. The government is also having shares in Airtel Tanzania and Puma Energy Company, this is how we build our economy, but our dear oppositions are planning to sell this country on bonds,” he said.