Dodoma, 10 June, 2021 - The Minister of Finance and Planning of the United Republic of Tanzania, Hon. Dr. Mwigulu Nchemba (MP) has assured Tanzanians and investors that Tanzania’s economy will grow at an average of 5.6 percent this year almost twice the projections of the International Monetary Fund (IMF) for sub-Sahara African countries.
Dr. Mwigulu Nchemba said that despite the outbreak of the Covid 19 last year, Tanzania was one of the few countries in the world that had positive economic growth.
He said Tanzania's GDP was 4.8 percent compared to 7.0 percent growth in 2019 compared to other countries that registered negative growth.
He noted that the sectors that contributed significantly to the high growth rate of 2020 included the construction sector which was 9.1 percent, information and communication 8.4 percent, transportation and conservation which registered 8.4 percent, administrative services 7.8, technical activities 7.3, minerals and gemstones stones 6.7, health and social services 6.5
"The average per capita income was estimated at 2.6 million shillings equivalent to 1151 US dollars in 2020 compared to 2.5 million Tanzanian shillings equivalent to 1118.9 US dollars in 2019 which is an increase of 3.1 percent," he said.
According to the Minister, the government’s comprehensive strategy includes controlling the inflation rate to remain below 5.0 percent, increase internal revenue collection by at least 15.9 percent of GDP and raise tax revenue to 13.5 percent from 12.9 percent in 2020/21.
Presenting the 2020 State of National Economy and the National Development Plan in the Parliament today, the Minister highlighted that the objective is to cut down the budget deficit (including grants) to less than 3.0 percent of GDP. This, he said is in accordance with the agreement reached by East African Community member states.
He further noted that the state also intends to get a foreign exchange reserve at the rate that meets demands for imports of goods and services for not less than four months.
Minister Nchemba, with the traditional briefcase, appeared before the National Assembly in the country’s capital Dodoma and presented his first budget since he was appointed the Minister for Finance and Planning on March 31, this year. He replaced his predecessor Hon. Dr. Philip Mpango, who was nominated the Vice President by H. E. President Samia Suluhu Hassan.
This is the first budget under Her Excellency President Samia Suluhu Hassan’s administration. The ambitious 36.26tri/- budget, is expected to mainly focus on the implementation of key strategic development projects as well as propelling the industrial economy and poverty reduction agendas.
During his budget speech in Parliament, Dr. Nchemba said that the government’s main focus in the next financial year will remain on key flagship projects currently underway. They include the much-anticipated Julius Nyerere Hydropower Project (JNHPP) which upon completion in June next year will produce about 2,115 Megawatts of electricity.
The government would also continue improving the national airline, Air Tanzania Company Limited (ATCL), with the procurement of more new planes to expand its fleet.
The budget will also finance the ongoing construction of the Standard Gauge Railway (SGR), the construction of the Hoima- Tanga oil pipeline, the Liquefied Natural Gas (LNG) project in Lindi Region, Ruhudji Megawatts 350 and 222 Megawatts Rumakali Hydropower projects respectively.
Presenting the National Development Plan and the Budget Ceiling for 2021/2022, Dr. Nchemba told legislators that the government would dwell into improving road infrastructures by building more major bridges and flyovers including Kigongo-Busisi (Mwanza), Tanzanite (Dar es Salaam) and Kamata Interchange in Dar es Salaam, among others.
Other priorities include; catalyzing an inclusive and competitive economy, strengthening industrial production capacity and customer service, boosting business and investment, catalyzing people’s development as well improving human resources in the country.
The government plans to spend 36.3tri/- in the next financial year, with 63 percent of the budget meant for recurrent expenditure. This is an increase of 4 percent from 34.88tri/- allocated in the 2020/21 budget.
To meet the target, the minister said, the money is expected to be sourced from tax and non-tax revenues, Local Government Authorities (LGAs), aid and grants from Development Partners (DPs) as well as local and external Concessional Loans.
“Development budget include 10.4tri/- (about 78.2per cent) will be sourced from internal revenue sources and 2.9tri/- (21.8per cent) will be from external sources,’’ he insisted adding:
“About 10.7tri/- an equivalent of 29.5per cent of the total budget has been allocated for loans servicing as well as several ongoing projects and those that have been completed.’’
The Minister insisted that the money had been allocated in the normal vote but not for payment of allowances or salaries.
He said the government would continue implementing several initiatives in strengthening internal revenue collection as well as footing bills for unavoidable costs like perfecting all flagship projects, government debt, salaries for public servants, loans for students of higher learning institutions, free basic education as well as office costs, among others.