Tanzania plans higher spending next fiscal year, infrastructure focus

But officials have flagged risks from the war in Ukraine, which sent prices for commodities such as wheat and oil soaring. Nchemba told parliament that spending from July 2022 to June 2023 would be 41.48 trillion shillings ($17.84 billion), up from 37.98 trillion shillings in the current year.

Tanzania plans a 9% increase in overall government spending in the next fiscal year and will prioritise infrastructure projects like railways, roads and power generation, Finance Minister Mwigulu Nchemba said on Tuesday. The economy of the southern African country has been rebounding from the COVID-19 pandemic, which hit important sectors such as tourism hard. But officials have flagged risks from the war in Ukraine, which sent prices for commodities such as wheat and oil soaring.

Nchemba told parliament that spending from July 2022 to June 2023 would be 41.48 trillion shillings ($17.84 billion), up from 37.98 trillion shillings in the current year. Some 3.03 trillion shillings will be borrowed from external non-concessional sources and 5.78 trillion shillings from domestic non-concessional sources. To cushion the impact of inflation, Nchemba said value added tax on locally produced fertiliser and refined edible oil would be zero-rated for one year. Subsidies on fuel products introduced earlier this year will be continued to support consumers.

Nchemba proposed a reduction in the royalty rate on gold sold to local refiners to 4% from 6%, to promote domestic refining of the precious metal. Earlier in the day, he said the economy was forecast to grow 4.7% in 2022 and 5.3% a year later. Nchemba also pledged the government would cut back on unnecessary spending. Among the areas targeted for cuts are domestic and international travel and buying of new government vehicles. Virtual meetings will be encouraged.

"Government spending must reflect the plight of those of the citizens who are suffering," Nchemba said. "President (Samia Suluhu) Hassan is displeased by this extravagance." ($1 = 2,325.0000 Tanzanian shillings)