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Tanzania is now forced to fund its budget while donor aid freezes the bites



External support for Tanzania's 2018/19 budget has dried up as the country continues to cross swords with international donors for governance issues.

According to official data from the central bank, donors only released 0.016% of the funds promised for government projects during the year until November 2018, forcing the government to dig deeper into its pockets to keep it running such projects.

The Bank of Tanzania's monthly economic review for December 2018 shows that Tsh625.1 billion ($ 271.005.000) on Sh625.2 billion ($ 271.048 million) spent on development activities in November came out of state coffers. Donors contributed with Tsh100 million ($ 43,353).

Foreign relations

The administration of President John Magufuli was last year at loggerheads with international donors on a widely perceived authoritarian leadership.

The key issues include the closure of the political and democratic space, the reduction of civil rights and the swelling of dissident voices, along with highly conservative positions on issues related to LGBT rights and student pregnancies.

Analysts say that Tanzania risks damaging its relations with key development partners such as the European Union and the World Bank because of such difficult political positions.

"Given that the Magufuli government has already had to face jail terms for the implementation of the projects, we note that the authoritarian policies and criticism of international observers could risk losing more subsidized loans in the future," he said the global rating agency Fitch Ratings in a recent report on Tanzania.

The World Bank and the EU have been at the forefront of recent international pressure on Dar es Salaam to alleviate repression.

The EU recalled its Tanzanian ambassador after a highly publicized debate on the issue of LGBT rights in early November, with the follow-up to the European Parliament in December with a statement criticizing the increase in civil rights abuses and the reduction of democratic space in the country.

The EU now says it is conducting a complete overhaul of its relations with Tanzania.

The World Bank, in October of last year, withdrew a $ 300 million educational loan to Tanzania due to concerns over the government's stiff position on female pregnancies, as well as the controversial Statistical Act, which prohibits criticism official government statistics.

But the Washington-based lender backed off after his vice president for Africa Hafez Ghanem visited Dar es Salaam for talks with President Magufuli.

Ghanem said that the money was made available again, but only after "the government assured us that there would be no more discrimination against people of any ethnicity, religion or sexual orientation".

Hard times

Finance Minister Philip Mpango revealed Tanzania's state of health report at the end of the year, said the country is going through difficult times due to an increasing number of development partners reducing financial aid.

But the dr. Mpango reiterated that Tanzania would not sacrifice its sovereignty and will bow to Western demands for the adoption of gay rights in the country in exchange for such aid.

The dott. Mpango said that development partners pledged 2.65 billion Tsh ($ 1.17 billion) to support the government's 2018/19 budget, but by November 2018 had made only 54% available, or Tsh928.7 billion ( $ 315.5 million), which was expected from them between July and November.

"The decrease in assistance is mainly the result of severe conditions imposed by donors and prolonged negotiations, as well as delays in the implementation of some projects that also delay the disbursement of funds for the subsequent phases", said dr. Mpango.

The BoT data cited by the minister show that donors have promised support of Tsh3.97 billion ($ 1.69 billion) in 2017/18, of which Tsh2.66 billion ($ 1.042 billion) have been remitted by the end of that fiscal year, equal to 63 per cent of the total.

Support for foreign donor budgets as a percentage of total public revenues has declined gradually in recent years, from 19.3% in 2010/11 to 5.2% in 2015/16, with the downward trend expected to continue in 2018 / 19.

Fitch Ratings said: "Decreased aid flows will put more pressure on the medium-term budget, forcing the Tanzania Revenue Authority to find such funds from other sources.

However, we see this as a positive credit overall, as it will reduce dependence on inflows of foreign aid that may be a source of volatile income ".

Foreign policy reports

Magufuli continues to upset many observers, being very different from all his predecessors in his approach to economic diplomacy, a pillar of Tanzanian foreign policy since the days of founding president Mwalimu Julius Nyerere.

It remains a largely mysterious figure in international circles due to an apparent reluctance to travel abroad.

More than three years after taking over the presidency, he only ventured into Rwanda, Uganda, Kenya and (the farthest) Ethiopia – making him the exact opposite of his immediate predecessor Jakaya Kikwete.

This is beyond the fact that its austerity policies and rigid anti-corruption position have both won many admirers in the global arena.


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