National debt stock down 1.4 per cent

DAR ES SALAAM: THE national debt stock decreased by 1.4 per cent in July, reaching 41.8 billion US dollars, driven primarily by a reduction in external debt, according to the Bank of Tanzania’s (BoT) latest monthly economic review.

The external debt accounted for 70.9 per cent of the total national debt, with the stock valued at 29.6 billion US dollars marking a 1.9 per cent decline from the previous month.

According to the Bank report, the decrease was primarily attributed to a reduction in private sector external debt. The external loans disbursed in July amounted to 87.0 million US dollars primarily to the central government.

During the month, external debt service totalled 45.3 million US dollars of which 34.2 million US dollars was for principal repayment and the remainder was for interest payments.

The external debt owed to the central government continued to account for the largest share of the external debt stock, at 83.2 per cent.

Falling national debt also opens up fiscal space for governments to allocate resources to other priorities, such as social programmes, infrastructure, or economic development initiatives.

Lower debt obligations can reduce interest payments, freeing up funds for more productive uses within the economy.

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This, in turn, may promote growth, improve investor confidence and enhance longterm economic stability, especially if the debt reduction is part of a broader strategy to improve public finances.

“The composition of the external debt stock by creditor category remained unchanged from the previous month and the corresponding period last year with multilateral institutions continuing to dominate the portfolio,” the Bank report stated.

The Bank report said transportation and telecommunications economic activities continued to hold the largest portion of the disbursed outstanding external debt, followed by social welfare and education.

The outstanding external debt maintained its currency composition, with the US dollar holding the largest share at 66.8 per cent.

According to the central bank report, domestic debt stock was 32.4tri/- at the end of July, an increase of 526.9bn/- from the previous month’s position, largely attributed to increased utilisation of the overdraft facility.

Treasury bonds continued to account for the largest share of the debt stock, at 76.7 per cent while commercial banks and social security schemes remained the leading creditors to the government.

During the month under review, the government secured 372.1bn/- from the domestic market to fund the budget of which 230.1bn/- was through Treasury bonds and 142bn/- through Treasury bills.

The domestic debt service payments during the month amounted to 250.4bn/- consisting of 32.5bn/- in principal repayments and 217.9bn/- in interest payments.

The outstanding domestic debt of selected State-Owned Enterprises (SOEs) was 76bn/- at the end of July an increase of 2.7bn/- from the position recorded at the end of the previous month.

The primary contributor was the Dar es Salaam Water and Sewerage Authority (DAWASA) whose debt grew by 2.8bn/-.