Govt admits it’s broke as development projects stall

We are fighting, we are struggling, we send money where we can at that small rate of five per cent of development money but we have been operating on our own money”  Finance Minister Saada Mkuya 

Dodoma. The government has admitted that it has been operating on a shoestring budget for the past six months.

Parliamentary committee reports and MPs have confirmed that many development projects have stalled due to a shortage of funds.

Finance minister Saada Mkuya said on Saturday that the government has largely been depending on Tanzania Revenue Authority (TRA) collections to run its affairs for the past six months.

However, averaging Sh800 billion monthly, the collections are only enough to meet first charges account which involves salaries and servicing national debt, leaving other expenditures in limbo.

Numerous reports tabled by parliamentary committees last week indicate only one thing – the government has failed to finance development activities.

In their contributions, numerous MPs hammered on the reality of the situation by complaining that government has not released funds for development projects in their constituencies.

Ms Mkuya finally admitted on Saturday that government finances were in serious trouble.

It was apparent that the decision by donors to withhold their general budget support of nearly Sh1 trillion pending the outcome of the Tegeta Escrow account scandal has affected the government’s fiscal plans.

“In the past six months, the government has continued to work on the little it collects from its own sources. It is this small amount we have also struggled to disburse for development activities. But in this last six months, the government has continued to depend on its own collections.

“We are fighting, we are struggling, we send money where we can at that small rate of five per cent of development money but we have been operating on our own cash,” said Ms Mkuya when responding to the views of MPs and House committees.

Ms Mkuya argued that what happened during the first six months of this financial year should serve as a lesson to Tanzanians that they need to do away with donor dependency in managing the national budget.

First hints that the government was in a precarious financial state were dropped by the Budget Committee, whose annual report noted that financing development budget has been problematic.

Committee deputy chairperson Kidawa Salehe said when tabling the report that the Finance ministry also diverted the ring fenced money for rural electrification endeavour as well as roads improvement schemes.

The electricity money was collected from Sh50 per litre of fuel sold in the country as a special levy to specifically boost rural electrification.

But, she said that though Sh180.7 billion was collected as fuel levy between July and November 2014, the ministry remitted only Sh144.4 billion to  the Rural Energy Agency (Rea).  On the other hand, Sh19.6 billion meant for Rea was earned from customs processing fee but only Sh12.2 billion was remitted. The total amount of money which the ministry diverted from the Rural Energy Agency is Sh43.9 billion.

The committee also noted that many ministries hadn’t received any significant amounts needed to fund development projects.

Ms Salehe noted, for instance, that the ministry of Water, which is considered one of the most crucial sectors, received only 16.8 per cent of its development budget in the half year period.

On the other hand, she said, as of December last year, the Transportation ministry received only Sh51.657 billion or 17.99 per cent of its development budget during the same period.

The committee also hinted on the ministry issuance of float exchequer, noting that sometimes it takes up to a year before money for these exchequers is issued to the targeted.

Committee chairman Mr Festus Limbu (Magu Urban-CCM), wondered how the exchequer could take such a long time while the government uses cash budget system.

The Infrastructure Committee also noted in its annual report that ministries for Transport, Work and Communications, Science and Technology had yet to receive enough development money allocated in their budgets.

“A large part of development money set aside through the 2014/15 budget has not been released in the first six months thus affecting activities of these ministries especially in the implementation of development projects,” noted Mr Peter Serukamba, the committee chairman.

Mr Serukamba, who also serves as Kigoma Urban MP (CCM), said his committee was shocked upon noting that even money which was supposed to be returned to some institutions as retention was not remitted by the Treasury.

The leader of Official Opposition in Parliament, Mr Freeman Mbowe, blamed the government for spending colossal amounts of money in multiple activities which would have been synchronised.