Professor Ibrahim Lipumba warned early this
week in Dar es Salaam that over expenditure in government’s revenues will
continue haunting the annual budget allocations in the country. He was
contributing during the inauguration of a report on economic growth for
sub-Saharan countries in Africa for the month of April 2014.
The report, which was presented by the IFM in collaboration with Report on Poverty Alleviation (REPOA), highlighted the situation of economic and financial growth for African countries within south of Sahara,Tanzania included.
According to the report, the economic growth of sub-Saharan counties has increased from 4.9 percent in 2013 to 5.5 percent in April 2014. The report also indicates that Tanzania’s economy has increased to 7 percent but its citizens continue to be poor.
Professor Lipumba’s remarks came a day before the Minister for Finance Saada Mkuya unveiled a Sh19.6 trillion draft national budget for the 2014/15 fiscal year which shows that, about 70 percent of it is expected to go to recurrent expenditure.
Saada noted that in the 2014/2015 financial year, the government plans to borrow Sh4.275trillion to fill the revenue gap. Recurrent expenditure has increased to Sh14.2trillion compared to Sh12.6trillion in the 2013/2014 financial year.
Prof Lipumba noted that the problem currently affecting government budget is too much expenditure for unnecessary things and yet the country has few sources of revenue, saying the annual national budget increase means little for Tanzanians if the government will not reduce unnecessary expenditure.
He said the government usually focuses on expenditure, some of which is unnecessary rather than looking at investments potentials, citing Sh60 billion used to establish Constitutional Review Commission (CRC), and yet the government failed to honour the CRC team recommendations.
To get away from the deficit all tax exemption amounting to Sh1.8 trillion equivalent to 5 percent of the National Gross Domestic Product (GDP should be waived.
According to the professor another factor are projects that are between 30 percent and 50 percen more than their actual costs. IMF representative Thomas Baunsgaad said despite increased economic growth, the country has failed to reduce poverty.
He said the external aid has been increasing now and then an aspect that causes the increased poverty situation in the country. He said Tanzania has a high rate of increased loan from 28 percent to 42 percent of the DGP.
If African countries want to get away from poverty there should be strategic policies which could help alleviate the situation, insisting that the policies must ensure growth agricultural sector as well increase employment in industrial sector.
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