Government resorts to PPPs for funding development projects in 2016/17 budget

Minister for Finance and Planning Dr. Philip Mpango

The Government has unveiled plans to use Public-Private Partnerships (PPPs) to fund and execute development projects in a bid to reduce the load in implementing such projects. This was said in Dodoma recently by the Finance and Planning Minister Dr. Philip Mpango when he announced the government plans to spend about Tzs 22.992 trillion for recurrent and development budget for 2016/17.

 

The government’s decision to use PPPs in executing its development project may be an indication of its determination to fully involve the private sector to drive the economy.

In Tanzania, PPPs are governed by the Tanzania Public Private Partnership Act No. 18 of 2010, and the Public Private Partnership Regulations (Regulations) which was passed in 2011.

 

The PPPs as a contract between public bodies and private organisations, bring together the expertise and resources of the two sectors, with the intention of providing services or infrastructure at a better value for money.

 

PPPs have benefits for both sides — public and private sector in such areas as access to finance, especiallywhen the government faces cash constrains. The PPPs gives the government an opportunity to reallocate resources; access to technology, people and skillsfrom the private sector; and enhances government to transfer risks to the private sector. It balancescost and risk for the public sector and risk and reward for the private sector.

 

PPPs also provide for investment opportunities sincewithout PPPs, few private companies could work on major capital infrastructure projects an act which helps them develop knowledge, experience and skills for future reapply into the private sector.

Likewise, there is business development benefit when partnering with the public sector since companies from the private sector can work with government institutions such as courts, prisons, schools or waste management service providers.

The announced budget is an increase of 2.2 per cent compared to the budget of Tzs. 22.495 trillion which was budgeted for in 2015/16 fiscal year which comes to an end on June 30, this year.

 

Dr. Mpango explained that donor dependency will be reduced by 9.3 per cent in 2016/2017. The Development partners are expected to contribute to the budget about Tzs. 2.107 trillion as loans and grants in the next financial year. The contribution has been cited as 9.3 per cent less when compared to the pledges made in the current fiscal year.

He said that the government expects to collect Tzs 14.139 trillion from taxes, including Treasury Vouchers. This collection is equivalent to 13.2 per cent of the Gross Domestic Product (GDP). According to the plan, the collection will be an increase of 15 per cent when compared to this year’s estimates of Tzs 12.307 trillion.

Dr.  Mpango further said that during year 2016/17, the government plans to spend Tzs 16.807 trillion on recurrent expenditure.

 

He said that out of the Tzs 16.807 trillion expenditure, Tzs 6.651 trillion will be used for salaries and another Tzs 6.182 trillion will be spent on development projects.

Minister Dr. Mpango said that the government expects to raise Tzs 4.810 trillion from internal sources, which is about 77.8 per cent of the total amount allocated to fund development projects. Dr. Mpango said that in the next fiscal year big portion of the money earmarked for development will be spent on improving social services and the remaining amount will be invested as equity in some revenue generating projects.

He elaborated that in the next fiscal year the internal revenues from taxes, non-revenue sources and collections from local government authorities are estimated at Tzs 15.801 trillion, equivalent to 68.7 per cent of total obligations, compared to 62.2 percent earmarked for this year.

 

The Treasury expects to collect taxes amounting to Tzs 14.106 trillion as well as Tzs 1.110 trillion and Tzs 584.4 billion from non-revenue and collections from local authorities, respectively. According to Dr. Mpango, the government will borrow Tzs 1.782 trillion from foreign sources in commercial loans, Tzs 3.300 trillion from domestic sources, and Tzs 2.766 trillion as matured payments for treasury bills and bonds.

 

Sources: CTI, Newspapers and internets