Tanzania Budget 2018/19: Hihlights

Tanzania’s Minister for Finance And Planning, Hon. Dr. Philip I. Mpango has presented to the national assembly the Estimates of Government Revenue and Expenditure (the Budget) for 2018/19.

In his speech, Minister Mpango recalled that as in 2017/18 Budget, the theme of the 2018/19 Budget will be “to build an industrial economy that will stimulate employment and sustainable social welfare”, in accordance with the Tanzania Development Vision 2025; National Five Years Development Plan 2016/17 – 2020/21 and the CCM Manifesto 2015 – 2020.

The main goals are poverty eradication, transforming Tanzania into an industrial economy and Tanzania endeavor to be a middle-income country by 2025.

Macroeconomic Policy Targets
Minister Mpango highlighted the macroeconomic targets for 2018/19 budget are as follows:

(i) Attain real GDP growth of 7.2% in 2018 up from the growth of 7.1% in 2017;

(ii) Continue to contain inflation at single digit;

(iii) Domestic revenue including Local Government Authority (LGAs) own sources is projected at 15.8% of GDP in 2018/19 up from the likely outturn of 15.3% in 2017/18 and the actual outturn of 15.6% in 2016/17;
(iv) Tax revenue is estimated at 13.6% of GDP in 2018/19 up from the estimate of 13.0% in 2017/8 and the actual outturn of 13.3% in 2016/17;

(v) Total Government expenditures are projected at 24.5% of GDP in 2018/19 from the estimate of 23.0% in 2017/18 and the actual performance of 22.2% in 2016/18;

(vi) Budget deficit to be 3.2% of GDP in 2018/19 compared to the likely outturn of 2.1% in 2017/18 and the actual deficit of 1.5% in 2016/17.

Priority Areas for 2018/19
In his speech, Minister Mpango stressed that the 2018/19 budget of TZS 32.4 trillion will put more emphasis on implementation of flagship projects, namely:

(i) Agriculture: More funds will be allocated in improving irrigation infrastructure, warehouses and markets, strengthening the supply of agricultural inputs and implement, improving extension services, improving researches and dissemination of findings to the people and development of livestock and fisheries sub-sectors.

(ii) Industries: The Government will direct more efforts in the implementation of a Blueprint for Regulatory Reform to Improve Business Environment for Tanzania in order to attract private sector investments particularly in textiles, leather and meat, fish, edible oil, medicines and medical equipment, food and animal feeds and in the mining sector.

(iii) Social Services: Water: To increase availability and distribution of clean water particularly in villages and sewerage systems, drilling of boreholes in arid and semiarid areas and construction of strategic dams.
Education: The Government will continue to finance free basic education, increasing number of experts in rare and specialized skills in areas of minerals, oil and gas, specialist doctors (cardiologists and kidney specialists) as well as the provision of loans to higher education students. Heath: Financial resources will be allocated to increase distribution of medicines, medical equipment and reagents in health centers, dispensaries and referral hospitals.

(iv) Infrastructure: Construction and rehabilitation of supportive infrastructure especially increasing electricity generation from different sources; to continue with the construction of new central line railway of the standard gauge; construction of roads connecting regions and rural roads; to improve air and marine transport;

(v) Other priorities: Ease of land acquisition and ownership; to improve communication services; finance and tourism and to improve defense and security, good governance and justice.

Policy and Strategies to Increase Revenue
In order to increase and strengthen domestic resources mobilization, revenue policies for the year 2018/19 will focus on widening tax base; strengthen management of existing sources especially by intensifying the use of electronic collection systems and other administrative measures.

In widening the tax base, there are two main measures that the Government will undertake, namely formalization of the informal sector and improve investment environment in order to foster new sources of revenue from such investments.

For this, Minister Mpango reminded that the Government prepared a Blueprint for Regulatory Reform to Improve Business Environment for Tanzania.

The recommendations of the Blueprint which strongly proposed to be implemented in the financial year 2018/19 include simplification of payment of taxes, levies and different fees, and to shorten the time and bureaucratic procedures in the registration of businesses and companies.

In addition, the Government seeks to improve collaboration with Development Partners as grants and concessional loans have been declining from an average of 26.3% of the actual budget in 2010/11 to 10.4% in 2016/17.

The 2018/19 Budget is in line with Tanzania’s 2017/18 Budget that revolved around the theme “Industrialization for Job Creation and Shared Prosperity”, which in turn represented a continuation of the 2016/17 theme “‘Industrial Growth for Job Creation.”