The 2012-2013 Tanzania Budget
The minister for Finance Dr William Mgimwa has narrowly escaped a budget crisis; with pressure coming from opposition MP’s demanding a bigger development budget. The ruling party Chama Cha Mapinduzi (CCM) caucus directed its MP’s to withdraw their demands in order to save the government from another budget crisis.
The biggest challenge to the 2012/13 budget is that is overly research based, with minimal taxpayer consultation making its implementation tricky. The Minister’s presentation fell short of outlining how the government plans to plug tax loopholes which cost the nation about TSh 2 trillion annually in uncollected taxes. This is also evident in the increasingly narrow tax base which again escalates tax pressures on the precious few.
Damage Control
In frantic efforts in Dodoma early this week, the government team lead by the Prime Minister Mizengo Pinda succeeded in convincing chairpersons of Parliamentary standing committees to accept the budget proposals as they are, because “it was too late to make any major reallocations for now.” This is also a good indicator that the budget could still face crisis in the parliament in spite of all the efforts.
The estimates for the 2012/13 budget show that the proportion of the development budget will be about 30 % (Sh4.5 trillion) of the total budget of Sh15 trillion, compared to 38 % (Sh4.9 trillion out of Sh13.5 trillion) in the 2011/12 budget.
Budget Priorities:
•To increase real GDP growth rate to 6.8 per cent in 2012 from 6.4 percent of 2011;
•To improve economic infrastructure, including electricity, roads, railways and ports;
•To increase access to financial services;
•To increase domestic revenues to 18 % GDP in 2012/2013 compared to the likely outturn of 16.9 % in 2011/2012;
•To continue with efforts to curb inflation to a single digit;
•To maintain a stable and market determined exchange rate;
•To increase credit to private sector to 20 percent of GDP by end June 2013in line with measures to curb inflation;
•To maintain foreign exchange reserves to cover 4.5 months of imports of goods and services.
•To strengthen Public and Private Partnership (PPP) arrangement with a view to widen opportunities for implementing development projects;
•To improve business environment for Small and Medium Enterprises;
•To safeguard and sustain achievements realized in the social sectors;
•To strengthen good governance and accountability; and
•To develop the country’s capability to endure economic and financial crisis and effective participation in regional and international arrangement.
DEVELOPMENT BUDGET ALLOCATIONS
Electricity-A total of TShs 498.9 billion has been allocated for increasing generation, transmission and distribution capacities.
Energy – Loan allocation of USD 1,225.3 million from the Exim Bank of China to implement the gas pipeline construction project from Mtwara to Dar es Salaam.
Transportation- A total of TShs 1,382.9 billion has been allocated for strengthening the central railway line which involves renovation of the train engines and wagons, rehabilitation of airports and development of the port at Lake Tanganyika and priority road projects that will open up economic opportunities
Clean and safe water- A total of TShs 568.8 billion has been allocated for increasing the availability of clean and safe water in urban and rural areas
Information and Communications Technology (ICT) – A total of TShs 4 billion has been allocated to strengthen communications through ICT so as to improve access to various services including information access to domestic and external market, revenue collection, health services, education, financial services, etc.
Agriculture, Fisheries and Livestock
The government has allocated TShs 192.2 billion, where it intends to work with private sector under PPP to invest in rice and sugar farming. They also intend to use the funds in developing livestock, fisheries and the implementation of Kilimo Kwanza policy by ensuring adherence of all its pillars.
Industrial Development
A total of TShs 128.4 billion has been allocated in this area. The emphasizes has been put on development of industries that utilizes domestics domestic raw materials, especially on manufacturing, ICT and industries that add value to the minerals .The emphasis has also been in improving SMEs and encouraging PPPs
Human resources and social services development
TShs. 84.1 billion has been allocated. The aims is to improve the improve the quality of education at all levels, particularly in the areas of research, vocational education, health, science; and special skills on extractive sector.
Tourism
The government also allocated Tsh 114 billion to improve delivery of this services .including the promotion of tourism, environment, training enhancing tourism colleges.
Financial Services
TShs. 2.6 billion has been allocated to enhance the capital of Tanzania Women’s Bank, Small Enterprises Loan Facility (SELF) and the Economic Empowerment. The Government will elevate the current financial services section in the Policy Analysis Department to a fully fledged Department.
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