Borrow wisely to refrain from sinking into debt trap

22Mar 2016
Victor Karega
The Guardian
Borrow wisely to refrain from sinking into debt trap

THE Tanzania Coalition of Debts and Development (TCDD) has urged the government to borrow responsibly to refrain from sinking the economy into a debt trap.

Christian Gama, a researcher at TCDD cautioned that if the government is telling its people that it has the capacity to pay back the money, that does not mean that the citizens should start borrowing unwisely, adding that Tanzanians are disappointed by their government’s tendency to carry the whole nation into slavery.

“I urged the government to work on this slave mindset so that the nation could have power in administering its affairs, unlike being slaves to the lenders. So, the government in power must deal with this slave mindset,” he urged.

According to him, the government should establish discipline on borrowing and spending.

He pointed out that lack of transparency regarding public debt issues, including exclusion of civil society, even by proxy in circles deciding on what to borrow, from whom and at what price.

This is because financial literacy among Tanzanians is very limited, he added.He articulated that the government should not deny the beneficiaries, who also happen to be the final players, their right to know what they are benefiting from and what they are paying.

He urged the government to ensure that borrowing is strictly exercised in order to leverage its capacity for growth and development.

Public debt, therefore, must be pro-poor and managed in such a way that it brings back the required financial and social return.

For his part, Hebron Mwakagenda, TCDD Executive Direct said Tanzanians face a new debt crisis unless the government moves fast to contain its current borrowing appetite.

He called upon the government to increase productivity and collect more revenues internally to cut borrowing.
This follows an increase in the national debt to 42.3trn/- in December 2015, from 38.716trn/- at the end of March last year.

However, Dr Servacius Likwelile, Finance Permanent Secretary said the government had paid a total of 842.1bn/- debt by February this year.

“Due to the accummulating national debt, every Tanzanian owes about 900,000/- from 700,000 they owed last year,” he said when clarifying a point on the coordination of the national debt.

Mwakagenda pointed out that the decision by the government to keep borrowing at its present eagerness is burdening the economy and its people, saying it was very dangerous if some of the money was used to pay civil servants salaries.

The 2008-2014 research by TCDD shows that five government institutions, including BoT, CAG, Finance ministry, National Planning Commission and the Attorney General Office which coordinate issues of the national debt have made this work difficult and doubtfully.

Although Mwakagenda congratulated President John Magufuli for the good work of strengthening the country’s economy for the benefit of Tanzanians, he criticised his decision to reinstate the External Debts Department to the central bank to monitor borrowing and payments of arrears.

He said Magufuli was advised wrongly since the decision holds back efforts by the government, Finance ministry and Planning Commission to coordinate the national debt easily.

Although the President has a commitment to ensure the country becomes a dependent economy, Mwakagenda urged him to review his decision, adding that if his directive is executed, the national debt issues will continued to be in darkness.

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