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Should Tanzania take on commercial debt?

Uwazi at Twaweza has urged the Government to ensure that borrowed funds are effectively used to benefit the population which will bear the repayment burden.

In the 2010/11 budget the Finance and Economic Affairs Minister, Mustafa Mkulo, announced government’s plan to borrow commercially for infrastructure financing.

“This stands out as a bold attempt to break away from the aid dependency syndrome. At the same time it raises questions,” note Rakesh Rajani, Head of Twaweza and Rose Aiko, Research Analyst at Uwazi. The Uwazi analysis shows that at present for every shilling it collects as tax revenue, Tanzania spends 1.9 shillings. Unless the money is well used and brings returns greater than the cost of paying and servicing the debt, observe Rajani and Aiko, Tanzania could sink back into an unsustainable debt spiral. Read more on this article. This Day also provides a related story, depicting Tanzania's debt growing bigger.

Read more: Tanzania economy

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