Excerpts of Budget 2012/2013
World EconomyAccording to International Monetary Fund, the world economy grew by 3.9 percent in 2011, compared to 5.3 percent in 2010. the low growth was due to the economic crisis in the Euro area caused by financial fragilities, particularly, losses in the banking sector, rising fiscal deficits and instabilities in the Arab countries.
Africa’s economic growth slowed down to 2.7 percent in 2011 compare to 4.6 percent in 2010, mainly due to political unrest in the North African countries. Growth in the Sub-Sahara African countries slowed to 5.1 percent in 2011 compared to 5.3 in 2010.
The real GDP grew by 6.4 percent in 2011 compared to 7.0 percent in 2010. The slowdown in growth is largely attributed to drought conditions in some parts of the country which adversely affected agricultural production. Electricity outage contributed to low performance in manufacturing and other economic activities that rely on electricity. Despite the slowdown in overall growth, communication, financial intermediation, construction and education sub-sector recorded higher growth rates ranging between 6 percent and 19 percent.
The growth rate of the agriculture sector, which employs about 75 percent of the labour force declined from 4.2 percent in 2010 to 3.6 percent in 2011, whereas population growth rate continued to be high at 2.9 percent.
In the 2011 the GDP was Tshs 37.5 trillion at current prices. With an estimated population 0f 43.2 million people for Mainland Tanzania in 2010 and 44.5 million people in 2011 per capita income for 2011 was Tshs 869,437.3 compared to Tshs 770,464.3 in 2010 equivalent to an increase of 12.8 percent in per capita income.
The annual average inflation rate rose from 5.5 percent in 2010 to 12.7 percent in 2011.
The annual inflation rate which excludes food and energy for the year ended April 2012 rose to 9.0 percent compared to 5.7 percent in April 2011. This is attributed to the rise in the price of oil, transport costs and imported inflation from the trading partners particularly China and India. The annual inflation rate for food increased to 24 percent in the year ended April 2012 compared to 9.2 percent in year ended April 2011. The annual inflation rate for energy increased from 22.1 percent registered in year ended April 2011 to 24.9 percent in April 2012.
Overall the average lending rate charged by commercial banks decreased slightly to 14.21 percent in December 2011 from 14.92 percent in December 2010.
The value of the Tanzanian shillings in 2011 declined by 10.3 percent to an average of Tshs 1,579.5 per US Dollar compare to Tshs 1,432.3 in 2010. At the end of December 2011, the exchange rate was Tshs 1,587.6 compared to Tshs 1,469.9 in December 2010.
By March 2012 the exchange rate stood at Tshs 1,588 to 1 US Dollar.
Foreign Direct Investment
In 2011, the value of Foreign Direct Investment increased by 97 percent to USD 854.2 million compared to USD 433.9 million in 2010. This increase was attributed to large investments on exploration of gas in Mtwara and Coast Regions amounting to more than USD 300 million. Sectors that received large number of foreign investment projects were manufacturing, tourism, commercial building and transport.
Based on the Population and Housing Census of 2002, the population of Tanzania in 2011 was estimated at 44.5 million as compared to 43.2 million in 2010.
As for electricity projects, resources have been allocated for construction of natural gas pipeline (Mtwara – Dar es Salaam) and power generation plants at Kinyerezi (150 MW & 240 MW). In terms of transmission, funds have be allocated for the construction and strengthening of transmission lines (220kV North – West Grid, 400kV Iringa – Shinyanga and 132kV Makambako – Songea). in addition, resources have been allocated for promoting rural electrification.
During the period of July 2011 – March 2012, total domestic revenue collections (including collections from LGAs) amounted to Tshs5,180.6 billion, equivalent to 98 percent of estimates of Tshs 5,217.2 billion for the period. Out of that, tax revenue collections amounted to Tshs 4,765.5 billion, equivalent to 104 percent of estimates of Tshs 4,585.5 billion for the period. The increase in Tax revenue collections was a result of administrative taken by Tanzania Revenue Authority.
During the period July 011 – March 2012, non-tax revenue collections reached Tshs 272.1 billion equivalent to 57 percent of estimates of collecting Tshs 473.5 billion. Collection by LGAs amounted to Tshs 143 billon, equivalent to 60 percent of estimated of Tshs 237.8 billion for the period. The underperformance of non tax revenue was due to low contribution of executive agencies, regulatory authorities and institutions to the Consolidated Fund. The Government intends to review non-tax collection by the Ministries, Departments and Agencies in order to improve collection o this important source of revenue.
Government expenditure for 2010/11 amounted to Tshs 9,439.4 billion, equivalent to 87.0 percent of estimates. Total expenditure for the first three quarters of 2011/12 (up to March 2012) was Tshs 8.676.8 billion, equivalent to 97.5 percent of the period estimates of Tshs 8,895.8 billion.
The national debt stock increased to Tshs 20,276.6 billion during the period ending March 2012 from Tshs 17,578.9 billion during the corresponding period in 2011, equivalent to an increase of 15.4 percent. Out of that, Tshs 15,306.9 billion was external debt, of which Tshs 12,342.5 billion was public debt and the remaining amount was private debt. As of March 2012, domestic debt amounted to Tshs 4,969.7 billion compared to Tshs 4,496.5 billion.
Macroeconomic targets and assumptions for 2012/2013
Attain real GDP growth of 6.8 percent in 2012 and continue to grow persistently to 8.5, by 2016.
- Reduce inflation and maintain it at single digit in the medium term.
- Increase domestic revenue collection as a ratio of GDP to 18.0 percent in 2012/13 from the likely outturn of 16.9 percent in June 2012.
- Contain the growth of M3 to the tune of 18.0 (percent by June 2013 consistent with GDP growth and inflation targets.
- Maintain official foreign reserves sufficient to cover a minimum of 4.5 months’ worth of imports of goods and non-factor services.
- The ratio of export of goods to GDP in 2011/12 is projected at 23.1 percent and further up to 24.3 percent of GDP in 2012/13.
- Reduce interest rate spread.
- The growth of credit to the private sector is projected at 20.0 percent by June 2013.
- Maintain a market determined exchange rate
Key national strategic investment projects
Major strategic projects that will be implemented include construction of the Kurasini Logistical/Trade Hub and strengthening the Central Railway Line. In additional, funds have been allocated for finalising a feasibility study of railway construction in strategic area namely Mtwara-Mbamba Bay/Mchuchuma and Liganga railway line, Dar Es Salaam-Isaka-Kigala-Keza/Geita-Msongati railway line and the Tanga (Mwambani)-Arusha-Musoma railway line.
As for electricity project, resources have been allocated for construction of natural gas pipeline (Mtwara- Dar es Salaam) and power generation plants at Kinyerezi (150 MW & 240 MW). In terms of transmission, funds have been allocated for the construction and strengthening of transmission line (220kV North-West Grid, 400kV Iringa-Shinyanga and 132kV Makambako-Songea). In additional, resources have been allocated for promoting rural electrification.
For the road sector, strategic projects include construction of roads which open up economic opportunities, link Tanzania with neighboring countries and reduce traffic congestion in cities as well as construction of bridge and ferries.
With regard to agriculture and industry, projects that will be implemented include cultivation of sugarcane and paddy in Wami, Ruvu, Kagera, Kilombero and Malagalasi basins, projects under SAGCOT, ASDP and other irrigation projects. Projects in industry will include Mchuchuma coal and Liganga iron ore, completion of Biolarvicide Plant at Kibaha, Soda ash in the Engaruka Basin and development of Special Economic Zones and Export processing Zones (SEZs and EPZs).
Priority projects in the education sector will include construction of lecture rooms, libraries and hostels at Dar es salaam, Sokoine, Dodoma, mzumbe and Ardhi Universities, MUCCOBS, DUCE and MUCE, development of vocational education training colleges (VETA), construction of Muhimbili University campus at Mlonganzila, facilitating implementation of Secondary Education Development Programme (SEDP), rehabilitation of infrastructure in five teachers’ training colleges and rehabilitation of Dodoma regional library. Further, the Government will provide for training in specialized fields namely gas and oil, and uranium.
In the health sector, programmes and projects that will be implemented include, the health sector management plan, facilitation of reduction of maternal mortality, construction and rehabilitation of health facilities including Muhimbili National Hospital, Ocean Road Cancer Institute, Cardiac centre at Muhimbili National Hospital and rehabilitationof Mtwara, Lindi and Mara regional hospitals.
For livestock and fisheries, priority programmes and projects in2012/13 will include continued implementation of ASDP, establishment of livestock identification and traceability framework and implementation of environmental management for marine organisms in coastal areas.
For forests and wildlife, projects that will be implemented include promotion of investment in value-addition for bee-keeping products, wildlife and forests products and building institutional capacity for management of carbon emission.
For energy and minerals, projects that will be implemented are construction of the regional mining offices at Mtwara, Dodoma, Geita and Arusha, construction of the Tanzania Mineral Audit Agency, Rural Electrification Agency offices and strengthening of exploration and mining research institution.
Forelands, housing and human settlement, projects that will be implemented include development of Kigamboni Satellite City, whereby Government will compensate land and properties and establishment of the land bank for agricultural activities particularly food production.
For air and marine transport, projects that will be implemented include rehabilitation of Kigoma, Mafia, Tabora, Songwe, Mpanda, Arusha and Bukoba airports, development of berth number eight on Lake Tanganyika and maintenance of Government aircrafts. Moreover, in the area of weather forecasting, activities that will be implemented include purchase of equipment and radar for the Tanzania Meteorological Agency and provision of modern equipment to the meteorological information centres.
For technology and innovation development, projects that will be implemented include promotion and innovation of farm implements through strengthening of the Centre for Agriculture Mechanisation and Rural Technology (CAMARTEC) and strengthening capacity of Tanzania Industrial Research development Organization (TIRDO) for quality and standards of products needed in the market.
With the regards to good governance, activities that will be implemented in 2012/13 include provision of infrastructure and working facilities for the Ethics Secretariat and PCCB, building legal sector professional capacity and improving the working environment and procurement of facilities for institutions of maintaining law and order.
The Government will continue to register Tanzania citizens and enable them to acquire national identity cards.
In relation to labor and employment in 2012/13 more support will be given to micro credit schemes to better enable them to advance soft loans to youth, women and special groups and so foster opportunity for self employment.
SOURCE: Tanzania 2012/2013 Budget Speech – Related Link