Z’bar grapples with Sh12bn budget deficit

A section of the seafront in Zanzibar, whose budget deficit stood at Sh12 billion as of last month. PHOTO | FILE 

By Ludger Kasumuni ,The Citizen Reporter

Friday, January 3  2014 at  11:11

IN SUMMARY

Total resources during the period under review amounted to Sh398.0 billion, out of which Sh266.2 billion or 66.9 per cent was from domestic sources, and the balance was grants, according to the report.

Dar es Salaam. Zanzibar economy has continued to record budget deficit, whereby up to the end of last year budget shortfall stood at more than Sh12 billion.

In its reports circulated by the Bank of Tanzania (BoT) this week as a part of marking Zanzibar Revolution anniversary slated for this January 12, the data shows that the Isles have been recording budget deficit due to imbalance between spending and revenue generation from external and internal sources.

According to the Monthly Economic Review of Bank of Tanzania released in November last year, total resources amounted to Sh96.4 billion, out of which Sh73.4 billion were sourced domestically and the balance was grants.

The report further states that tax revenue amounted to Sh68.6 billion, or 94.7 per cent of the target, while non- tax revenue was above the target by 36.7 per cent.

“Total grants disbursed during the period amounted to Sh23.1 billion, below the estimated amount for the period by 7.8 per cent,” reads part of the report.

The BoT reports further indicate that for the last financial year, the Isles economy had also trapped into the budget deficit of over Sh50 billion.

“During 2012/13, budgetary operations on cheques issued basis recorded a deficit of Sh58.6 billion after grants, compared to a deficit of Sh82.7 billion registered in 2011/12,” reads the BoT report.

Total resources during the period under review amounted to Sh398.0 billion, out of which Sh266.2 billion or 66.9 per cent was from domestic sources, and the balance was grants, according to the report. Economists have attributed such negative trend to inefficient financial management and inability to diversify the economy that in turn leads to a narrow tax base. One of them is a senior lecturer of finance and economics based at the Dar es Salaam campus of Mzumbe University, Dr Honest Ngowi who argues that without economic diversification with high standard of financial discipline the negative trend in budgetary operations can never find remedy.

“Dependency on primary commodities and few sources of revenue generation is risky to the economy. Lack of diversification and public financial discipline to reduce unnecessary expenditures is the major cause for chronic trends in budget deficit,” says Dr Ngowi.

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