Monday, May 5, 2014

Too much expenditures haunts set budget

A renowned economist has warned that, over expenditure on government’s revenues will continue haunting the annual set budget allocations in the country. Professor Ibrahim Lipumba made a concern on Monday this week in Dar es Salaam when contributing a point 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 International Monetary Fund (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 grown up to 7 percent and despite of this its people continue to be poor. Professor Lipumba issued a concern a day before the Minister for Finance Saada Mkuya unveiled a 19.6 tr/- draft national budget for the 2014/15 fiscal year which shows that, about 70 percent of it is expected to go to recurrent expenditure. In the draft, Saada noted that, in the 2014/2015 financial year, the government plans to borrow 4.275trn/- to fill the revenue gap. Recurrent expenditure has increased to 14.2trn/- compared to 12.6trn/- in the 2013/2014 financial year. Basing on the experiences of the budget in the country, Prof. Lipumba noted that, the problem currently affecting the set government budget is too much expenditure for unnecessary things and yet the country has fewer sources of income. He said, the yearly increase of national budget is not useful to Tanzanians if the government is not ready to reduce unnecessary expenditures. According to him, government’s plans on its budget is mostly focusing on too many expenses which are unnecessary rather than looking at the investments potentials, a channel through which it could accumulate more revenues.  

Professor Ibrahim Lipumba

In his presentation, Prof. Lipumba made a reference of such extravagant use of tax payers’ money is together with the Sh. 60 billion used to establish Constitutional Review Commission (CRC), and yet the government has failed to honour the recommendations issued by the CRC team. However, Prof. Lipumba suggested that, in order to get away from the deficit, the government has a reason to waive  all tax exemption imposed amounting to Sh. 1.8 trillion which is equivalent to 5 percent of the National Gross Domestic Product (GDP). Another contributing factors of the over expenditure is due to many projects which are supervised by the government which he noted that many of them are too expensive beyond estimation  which are increased at between 30 and 50 percent rates more than their actual costs. Commenting on the Tanzania’s economic and financial growth, a representative of the IMF in the country Thomas Baunsgaad said, despite increase on economic growth, the country has not yet successfully 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.  According to him, if African countries want to get away with poverty stricken situation there should be formed strategic policies which could help alleviate the situation. He insisted that, some of these policies must ensure the growth of the agricultural sector to utmost level as well as policies which could enable increase employment in industrial sector, and that which could enable the availability of electricity supply to the people and also to create a conducive environment for trading.

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