WHY 2015 IS SET TO BE A ROUGH AND TOUGH YEAR

Tanzanians usher in the New Year hoping for the best, but commentators highlight uncertainty 

Dar es Salaam. It’s the start of 2015 today. President Jakaya Kikwete sees it as full of challenges while economists predict that it will be a “rough and tough” one in terms of government expenditure.

Mr Kikwete’s views are based on the fact that Tanzania will hold its general election in October, this year – a development that exposes the country to more pressing challenges than those witnessed in 2014.

“This being an election year might come with tougher challenges and temptations compared to those that we witnessed in 2014,” said President Kikwete who will be retiring from the country’s top office after the October elections.

For the nation to come out of the elections intact, the President urged Tanzanians to remain united, exercise the highest level of tolerance and be patriotic as they have always been. 

Basing on the anticipated 2015 challenges, economists predict that the year will be a “rough and tough” one in terms of government spending following some major immediate past events that will definitely have lots of bearing on this year’s key developments.  Last October, development partners including the World Bank, Finland, Sweden, Denmark, the European Commission, Ireland, Germany, Britain, Norway, Canada, Japan and the African Development Bank announced to withhold $558 (about Sh850 billion) million pledged for 2014/15 Budget until they are satisfied with the outcome of the investigations over the Tegeta escrow account scandal.

Between 2008 and 2013, MCC implemented a compact of investment projects in water, roads and electricity throughout the country at the total value of $698 million. That compact programme led to the construction of over 3,000 kilometres of power lines, 450 kilometres of trunk roads, two water treatment plants and an airport runway, according to the MCC website. At the same time, the government had two important assignments that in no way it could escape from. These were the Constituent Assembly for the preparation of the new constitution and the local government elections held in December.

Government reports also indicate that revenue collections by the Tanzania Revenue Authority (TRA) had fallen short of target by 13 per cent during the first quarter of the current fiscal year. But according to President Kikwete, the shortfall fell to 10 per cent during the first five months of the current financial year (see related story on Page 3).

“All these are posing a difficult spending environment ahead of the referendum and the general election. 2015 is going to be rough and tough in terms of expenditure,” says Dr Honest Ngowi, a senior lecturer of economics at the Business School of Mzumbe University, Dar es Salaam campus. Tanzania is scheduled to hold a referendum for the Proposed Constitution in April and the general election at the end of October.

“The quality of the referendum and elections will be very low given the environment. If I can suggest the way forward, the government should postpone the referendum until after the general election so that it can get time to effectively prepare itself for the historic event,” says Dr Ngowi.

Being an election year, analysts fear that there will be much cosmetic expenditure in many projects promised in the campaigns preceding the previous election so as to please the voters.

“In 2015, a sort of firefighting expenditure like the current mass construction of laboratories in secondary schools is expected to intensify. This will obviously put another stress on the main Budget and may actually shake it,” says Prof Samwel Wangwe, executive director of the Policy Research for Development (Repoa).

He is surprised by the way the government handled talks with the donors to the extent of their reaching such a difficult decision of withholding the Budget support they had committed themselves to.

“The government should have a policy dialogue with donors openly so that they get to know what it’s up to. The year may be bad for the late or suspended disbursement of funds,” he says.

He also advises the government to timely pay the private sector contractors so that they pay taxes on time as well and improve revenue collections.

On the referendum and general election in 2015, he says they can be done at minimum cost and if the government feels overwhelmed, the referendum can be shelved until 2016.

CREDIT SOURCE: THE CITIZEN