SPEECH BY THE MINISTER FOR FINANCE
HON. DR. WILLIAM
AUGUSTAO MGIMWA (MP.),
INTRODUCING TO THE
NATIONAL ASSEMBLY, THE
ESTIMATES OF GOVERNMENT REVENUE AND
EXPENDITURE
FOR THE FISCAL YEAR 2012/2013
INTRODUCTION:
1.
Madam Speaker, I beg to move that
this esteemed House now resolves to debate and approve Government proposals for
Revenue and Expenditure estimates for Fiscal Year 2012/13. Together with this
speech, there are four volumes of books which provide detailed explanation of
the budget estimates: volume one presents revenue estimates; volume two
describes recurrent expenditure estimates for Ministries, and Government
independent Departments while volume three provides recurrent
expenditure estimates for Regions and Local Government Authorities, and volume four
presents development expenditure estimates for Ministries, Government
independent Departments, Regions and Local Government Authorities. In addition,
there is a Finance Bill of the year 2012 which is part of this budget.
2.
Madam Speaker, allow me at the
outset, to take this opportunity to express my sincere gratitude to His
Excellency Dr. Jakaya Mrisho Kikwete, the President of the United Republic of
Tanzania for having confidence in me by appointing me to be the Minister for
Finance. I commit to undertake the responsibilities conferred on me with full
dedication and faithfulness.
3.
Madam Speaker, I wish to congratulate
the following for having been appointed by His Excellency the President to be
Ministers as follows: Hon. Prof. Sospeter Mwijarubi Muhongo (MP), Hon. Eng.
Christopher Kajoro Chiza (MP), Hon. Dr. Harrison George Mwakyembe (MP), Hon.
Dr. Fenella Ephraim Mukangara (MP), Hon. Amb. Khamis Sued Kagasheki (MP), and
Hon. Dr. Abdallah Omari Kigoda (MP). Further, I would like to congratulate the
following for being appointed to be Deputy Ministers in various Ministries:
Hon. Janet Zebedayo Mbene (MP), Hon. Saada Mkuya Salum (MP), Hon. Dr. Seif
Suleiman Rashid (MP), Hon. George Boniface Simbachawene (MP), Hon. January
Yusuf Makamba (MP), Hon. Dr. Charles John Tizeba (MP), Hon. Amos Gabriel Makalla (MP), Hon. Angela
Jasmine Kairuki (MP), Hon. Stephen
Julius Maselle (MP) and Hon. Eng. Dr. Binilith Satano Mahenge (MP). I also congratulate
Hon. James Mbatia (MP) for being appointed by His Excellency the President to
be a Member of Parliament.
4.
Madam Speaker, Further, I wish to
congratulate Hon. Alhaji Adam Kimbisa (MP), Hon. Shy Rose Banji (MP), Hon.
Abdulah Alli Hassan Mwinyi (MP), Hon. Charles Makongoro Nyerere (MP), Hon. Dr.
Twaha Issa Taslima (MP), Hon. Nderkindo Perpetua Kessy (MP), Hon. Bernard
Musomi Murunya (MP), Hon. Anjela Charles Kizigha (MP) and Hon. Maryam Ussi
Yahaya (MP) who have been elected to represent us in the East African
Legislative Assembly. It is my belief that they will ably represent us for the
benefit of our nation.
5.
Madam Speaker, the preparation of this budget involved various stakeholders and
Institutions. I would like to thank those who have contributed in
one way or another to the successful preparation of this budget. I would like
in a special way to thank the Parliamentary Finance and Economic Affairs
Committee under the chairmanship of Hon. Andrew John Chenge, Member of
Parliament for Bariadi West, together with other Parliamentary Sectoral Committees
of for their constructive advice during the scrutinization of the proposals of
this budget. Likewise, I thank all Honorable Members of Parliament for their
advice and recommendations that have been taken into consideration in this
budget.
6.
Madam Speaker, I am grateful to Hon. Stephen Wasira (MP), Minister of State in the
President’s Office, responsible for Co-ordination for his cooperation during
the preparation of this budget. Further, I would like to thank the Deputy
Ministers for Finance, Hon. Janet Zebedayo Mbene (MP) and Hon. Saada Mkuya
Salum (MP) for their support. I thank the Permanent Secretary, Mr. Ramadhani M.
Khijjah, Deputy Permanent Secretaries, Mr. Laston T. Msongole, Dr. Servacius B.
Likwelile and Mrs. Elizabeth Nyambibo for their immense contribution in the preparation
of this budget. Moreover, I would like to thank Prof. Benno Ndulu, Governor of
the Bank of Tanzania; Dr. Phillip Mpango, Executive Secretary in the
President's Office - Planning Commission; Mr. Harry Kitilya, Commissioner
General of the Tanzania Revenue Authority and Dr. Albina Chuwa, Director
General of the National Bureau of Statistics.
I would also like to thank the Attorney General’s Office for the timely
preparation of the 2012 Finance Bill and various related documents which are
integral part of this budget.
7.
Madam Speaker, I would like to
express my gratitude to the Heads of Departments and the Heads of Institutions
that are under the Ministry of Finance and all members of staff of the Ministry
of Finance for their cooperation. I would also like to thank the Government
Printer for the timely publication of this budget. Finally, I am indebted to
the experts and all those who made professional proposals regarding policies,
strategies and tax related measures which, to a large extent, have been taken
on board in the preparation of this budget.
8. Madam Speaker, Tanzania
was the host of the 2012 Annual Meetings of the Board of Governors of the
African Development Bank which took place from 28th May – 2nd
June 2012 and were officially opened by His Excellency Dr. Jakaya Mrisho
Kikwete, the President of the United Republic of Tanzania. The Meetings were
held successfully at the Arusha International Conference
Center and were attended by 2,350
delegates from within and outside Tanzania . The meetings provided an
opportunity for marketing Tanzania ’s
economic potentials. Moreover, local participants from the private sector had
the opportunity of getting a better understanding of the operations of the AfDB
and how to access financing facilities of the AfDB Bank. I would like to urge
the private sector to make good use of the opportunities offered by the African
Development Bank.
9. Madam Speaker, the 2012/13 budget aims at addressing the economic challenges facing
the economy, including; increasing the opportunities for economic growth,
increase availability of food in the country, reducing inflation and
strengthening revenue collection and management of expenditure, employment
creation especially for the youth, investing in
energy infrastructure specifically construction of the gas pipeline from
Mtwara to Dar es Salaam, roads, ports
and railways in order to reduce the cost of doing business and increase
productivity; as well as payment of domestic and external debts.
REVIEW OF FISCAL POLICY
IMPLEMENTATION FOR 2011/12
10.
Madam Speaker, the budget
frame for 2011/12 was a continuation of Government efforts to achieve the
objectives of the Tanzania Development Vision 2025. Moreover, the budget emphasis was on the
implementation of priorities of the first Five Year Development Plan (2011 –
2015/16); The National Strategy for Growth and Reduction Poverty Phase II
(MKUKUTA II); The Millennium Development Goals (MDGs) 2015; the Joint
Assistance Strategy for Tanzania (JAST); National Debt Strategy; together with
strengthening Tax Administration and the National Debt Strategy and Public
Expenditure Management.
11.
Madam Speaker, the basis and objectives
of the budget for year 2011/12 aimed at achieving the Government’s goals of
addressing the challenges of mitigating the high cost of living for citizens;
continued with efforts to strengthen domestic revenue collection mechanism;
creating conducive investment climate for attracting local and foreign
investments; to develop the private sector in order to widen the tax base; to finalize
the preparations of the national identity cards project; to allocate resources
and implement projects in areas that stimulate economic growth.
12.
Madam Speaker, other areas that were taken into
consideration in the 2011/12 budget included the need to: implement specific
plans and strategies that foster economic growth; mobilization of concessional
and
non-concessional loans; speeding-up the implementation of Public Private Partnership Act to widen opportunities for executing development projects; Housing and Population Census 2012; establishment of postal codes and address system and the implementation of Formalization of the Informal Sector Programme popularly known as MKURABITA; ensure that revenues from retention schemes are collected accordingly and remitted to the Consolidated Fund Services (CFS); as well as sustaining the achievements in the social sectors, particularly education and health which have experienced great expansion and improvement of services.
non-concessional loans; speeding-up the implementation of Public Private Partnership Act to widen opportunities for executing development projects; Housing and Population Census 2012; establishment of postal codes and address system and the implementation of Formalization of the Informal Sector Programme popularly known as MKURABITA; ensure that revenues from retention schemes are collected accordingly and remitted to the Consolidated Fund Services (CFS); as well as sustaining the achievements in the social sectors, particularly education and health which have experienced great expansion and improvement of services.
Measures
for Implementation of the Budget for year 2012/13
Mitigation of High
Cost of Living
13.
Madam Speaker, in the implementation of the Budget for year
2011/12, the Government took various measures aimed at addressing the
challenges facing citizens with a view to mitigating high cost of living caused
by the increase of price of goods and services.
Measures taken included revising the calculation methods of prices for
petroleum products and publishing monthly indicative prices; including
introduction of the bulk procurement system for petroleum products. These measures have reduced the pace of
increase in prices of petroleum products in the country.
14.
Madam Speaker, the Government spent
shillings 296 billion to implement the Emergency Power Plan to address the
problem of shortage of electricity by using leased power generating
plants. Also, the Government spent
United States Dollars (US Dollars) 183 million to finance the construction of a
100 MW power generating plant in Dar es Salaam and a 60 MW plant in Mwanza.
Construction of the Dar es Salaam
plant has been completed; and is being tested at the moment. The Mwanza plant
is still under construction.
15.
Madam Speaker, the Government spent
shillings 27 billion to finance the purchase and distribution of 120,000 tons
of maize to the market in order to mitigate food shortages in some areas. Moreover, the Government issued permits for
importation of 200,000 tons of sugar without paying import duty in order to
address the shortage of sugar and price increases. Furthermore, the Government
raised the interest rate charged by the Central Bank to financial institutions
from 7.58 percent to 12.58 percent. In addition, the Government raised the rate
of deposits which the commercial Banks are obliged to keep with the Central
Bank from 20 percent to 30 percent. These measures have helped to control
inflation.
Economic Empowerment and Employment Creation
16.
Madam Speaker, in order to address the problem of unemployment, the Government has
taken various measures to create employment.
17.
These measures include improving
the policy and legal environment to facilitate the growth of private sector, to
expand financial services, including recapitalization of the Tanzania
Investment Bank, Tanzania Women’s Bank, Tanzania Postal Bank, and Twiga
BankCorp; and facilitating the establishing the Mortgage and Lease Financing
Company. Other measures taken included implementation of construction of
infrastructure projects, specifically roads, electricity, agriculture and
telecommunication and to empower people through various empowerment programmes.
Moreover, several other institutions contributed to employment creation. These
include TASAF, SELF, Small Industries Development Organization (SIDO),
Community Banks and Guarantee Schemes managed by the Bank of Tanzania. In the
year 2011/12, the Government employed 25,000 primary and secondary school
teachers, 4,499 agricultural and livestock extension officers and 4,499 medical
specialists in the health sector.
18.
Madam Speaker, the Government continued with efforts to reduce the bureaucracy in
clearance of goods from the port by introducing an electronic system for
submission of relevant import documents prior to the arrival of goods. This arrangement is aimed at reducing
congestion of cargo and loss of documents and has resulted in significant
reduction in time spent as well as importation and exportation costs. The Government has also reduced the number of
road blocks within the country from 50 to 15, with the exception of weighbridge
and customs transit points.
Improving Domestic Revenue Collection System Revenue
Policies
19.
Madam Speaker, in the year 2011/12, the Government continued with reforms in the
system for collecting domestic revenues from tax and non tax sources by taking
administrative and policy measures, including changing tax rates and amending
tax laws.
20.
Madam Speaker, the Government amended the Value Added Tax Act, CAP 148 in order to
improve productivity in agriculture, livestock, trade and tourism sectors. The amendments included exempting Value Added
Tax (VAT) on spare parts for agricultural implements and machinery, poultry
feeds, yarn for weaving fishnets; along with introduction of tax refunds on
goods bought locally by departing non-residents.
21.
Madam Speaker, the Government abolished exemption of Value Added Tax on sale and lease
of residential houses owned by National Housing Corporation (NHC) and tax
relief on Non Governmental Organizations except for equipments donated to
orphanage centres and schools.
22. Madam Speaker,
the Government
also amended the Income Tax Act, CAP 332 by abolishing the withholding tax on
transportation of fish exports. This was
done to encourage use of transportation services for fish products originating
from within the country instead of doing so through neighbouring
countries. Moreover, amendments were
made to The Excise (Management and Tariff) Act, CAP 147 by reducing excise duty
on Heavy Fuel Oils (HFO) used by industrial plants and machinery in order to
reduce the production costs.
23.
Madam Speaker, the Roads and Fuels Tolls Act, CAP
220 was amended by granting exemption of toll imposed on fuel on bunkering
services and other equipments used in the exploration of gas and petroleum in
order to reduce the costs. Moreover, the East African Community Customs
Management Act 2004, was amended following the ratification by Ministers for
Finance of Member States to make various amendments with a view to develop the
industrial, transportation, livestock, trade and tourism sectors. In addition, the amendments were also aimed
at improving community health and to strengthen protection and safety of
citizen and their properties.
24.
Madam Speaker, other
measures taken included motivating and ensuring that Electronic Fiscal Devices
are used effectively, strengthening administration of tax blocks, increasing
the number of tax payers service and payment centres, updating tax payment
systems, improving the valuation system
and strengthening tax audit on tax
payers accounts.
Trend of Revenue Collections
25.
Madam Speaker, in the financial year
2011/12, the Government planned to raise funds amounting to shillings 13,525.9
billion from different sources and spend the same amount for recurrent and
development expenditures. The revenue
sources were as follows: domestic revenue was estimated to reach shillings 6,775.9
billion; revenue from Local Governments was estimated to reach shillings 350.5
billion; budget support grants and loans for development project and sector
basket funds was estimated to reach shillings 3,054.1 billion; domestic and
foreign non-concessional loans were estimated at shillings 1,664.9 billion; the
rollover of matured treasury bills and bonds was estimated at shillings 810.9
billion.
26.
Madam Speaker, with regard to domestic
revenues, including revenues from Local Authorities, the collection up to April
2012 reached shillings 5, 684.5 billion. This amount is equivalent to 80
percent of estimates of collecting shillings 7,126.4 billion for year 2011/12.
27.
Madam Speaker, collection from taxes reached shillings 5,227.5 billion equivalent to 84
percent of the target of collecting shillings 6,228.5 billion. On the basis of tax revenue collection trends
during the first ten months of year 2011/12, by the end of year 2011/12 the
Government expects to collect a total of
shillings 6,307.8 and hence meeting the target.
28.
Madam Speaker, non-tax revenue reached shillings 451.6 billion which is 83 percent of
the annual target to collect 547.1.
Based on this trend, the Government is optimistic to meet the planned
target by June, 2012.
29.
Madam Speaker, revenue from Local Governments reached shillings 143 billion, equivalent
to 40.8 percent of the target to collect shillings 350.5 billion per
annum. Up to June 2012, the Government
expects to collect a total of shillings 200 billion from this source, which is 57
percent of the annual target. The target
is not likely to be achieved because of the delays in starting the
implementation of the imposition of business licence fees.
Domestic
Loans
30.
Madam Speaker, in the period between July 2011 and April 2012, the Government borrowed
shillings 526 billion to pay for the rollover of matured treasury bonds which
is 64 percent of the annual target of borrowing shillings 819.1 billion. Moreover, the Government planned to borrow shillings
393.4 billion, equivalent to one percent of Gross Domestic Product (GDP) to
finance development projects. Up to April, 2012 the Government had borrowed
shillings 232.6, equivalent to 59 percent of annual estimates.
External
Non Concessional Loans
31.
Madam Speaker, in year 201/12 the Government estimated to raise United States Dollars
(US Dollars) 822 million, equivalent to shillings 1,271.6 billion from non-concessional
loans. During the period between July
2011 and April 2012, the Government signed a loan agreement for US Dollars 320
million with Standard Bank of South
Africa . Up to March 2012, a total of US
Dollars 229 million had been spent on payment of roads construction arrears for
financial year 2010/11. Moreover, the
Government signed a loan agreement worth Euros 61 million with HSBC Bank to
finance the power generation plant with capacity of 60 Megawatts (MW) at
Nyakato Mwanza. The Government has also
signed a loan agreement worth US Dollars 350 million with Credit Suisse Bank of
United Kingdom .
US Dollars 200 million was received in early June 2012. The balance of US Dollars 150 million will be
made available for spending in Financial
year 2012/13.
32.
Madam Speaker, the Government has
secured a Consultant who will advise the country in the preparations for
Sovereign Credit Rating. These
preparations will enable the country to be evaluated and are expected to be
completed by early 2013. The completion of this exercise is expected to boost
confidence of Lenders and hence enable the Government to access loans with less
stringent conditionalities and on a timely basis.
Expenditure
Policies
33.
Madam Speaker, in the year 2011/12, the Government continued to implement expenditure
policies based upon availability of domestic revenues, grants together with
domestic and external loans. Moreover,
the Government continued to improve management and control of public funds,
including controls in the payments of salaries, expenditure in development
projects and subsidy on agricultural inputs, public procurement and to continue
controlling the accumulation of arrears. The Government has prepared a strategy
for paying and controlling debts arising from accumulation of arrears for
employees; contractors; suppliers; and other debts. The debts will be paid
after verification by the Internal Auditor General.
The
Public Financial Management Reform Programme
34.
Madam Speaker, the Government continued
with implementation of the Public Financial Management Reform Programme (PFMRP)
in the Central and Local Governments. In
the implementation of the Programme, the Government has installed the IFMS
system in 133 Local Government Authorities.
Moreover, the Government conducted training on the interbank settlement
system to employees in the Accounting cadres from 20 Regions, Sub-Treasuries,
Office of the Parliament, Prime Minister’s Office – Regional Administration and
Local Government (PMO – RALG) and the Office of Registrar of
Co-operatives. Also the Government
conducted training to Accountants from Ministries, Independent Departments and
32 Embassies on the preparation of Government’s financial statements in
accordance with International Public Sector Accounting Standards (IPAS) on accrual
basis.
35.
Madam Speaker, as a result of these
reforms, the financial management in Ministries, Independent Departments,
Region, Institutions and Local Governments Authorities has continued to
improve. This situation manifests itself
in the report of the Controller and Auditor General for the year 2010/11, in
which unqualified audit reports for Ministries, Independent Department and
Regional Secretariat has improved from 71 percent to 85 percent. While the
qualified report have dropped 64 percent in year 2009/10 to 56 percent in year
2011/12.
36.
Madam Speaker, For our Diplomatic Missions
abroad, unqualified Audit reports have increased from 71 percent in 2009/10 to
85 percent in 2010/11 and there were no qualified reports in 2010/11. In the Local Authorities, unqualified audit
reports have increased from 49 percent in 2009/10 to 54 percent in 2010/11 and
qualified reports decreased from 64 percent in 2009/10 to 56 percent in
2010/11.
37.
Madam Speaker, in the year 2011/12, the Government opened six bank accounts for each Local
Authority for their operations. These accounts are for revenues; deposits;
recurrent expenditure; salaries; development; and Road Fund. The aim of this
measure is to reduce operational costs, unnecessary bureaucracy in use of
funds, difficulties in reporting, accumulation of unspent funds and
control of unauthorized expenditures.
Trends
in Expenditure
38.
Madam Speaker, on the side of expenditure in the year 2011/12, the Government
estimated to spend a total of shillings 13,525.9 billion; shillings 8,600.3
billion were allocated for recurrent expenditure and shillings 4924.6 billion
for development expenditure.
Recurrent
Expenditure
39.
Madam Speaker, during the period between July, 2011 to April 2012, recurrent expenditure reached shillings
7,349.8 billion, equivalent to 85. 5 percent of the annual estimates as per
exchequer releases. Out of that amount,
payment of salaries to Government employees, Regional Secretariats, Local
Government Authorities, Public institutions and Parastatals was shillings
2,760.5 billion equivalent to 84.4 percent of the annual target of shillings
3,270.3 billion. Interest payment on
domestic and external loans was shillings 308.7 billion per annum. The payment of external loans was shillings
57.3 billion equivalent to 85.7 percent of annual estimates. The Government spent shillings 526 billion on
paying for matured short term treasury bonds and bills. The Government has
continued to accord priority to repayment of debts to avoid accumulation of
interest.
40.
Madam Speaker, Other Charges for Ministries, Independent Government Department and
Agencies, Regions and Local Authorities reached shillings 2,384.9 billion which
is 72.8 percent of annual estimates of shillings 3,275.1 billion. Out of Other Charges, shillings 284.1 billion
was spent on higher education loans which is 89 percent of the annual budget of
shillings 317.4 billion. This benefited
93,176 students. Furthermore, the
Government paid a total of shillings 44.0 billion as claims for primary and
secondary school teachers as verified by the Internal Auditors General.
Development
Expenditure
41.
Madam Speaker, regarding development expenditure, shillings
2,657.2 were spent on financing development projects compared with annual
estimates of shillings 4,924.6 billion. Local funds were shillings 1,201.6
billion compared with annual estimates of shillings 1,871.5 billion equivalent
to 64.2 percents. This shortfall is a
result of delays in securing on time external non concessional loans. A total of shillings 663.8 billion was spent
to finance infrastructural projects, out of which shillings 296 billion was
spent on electricity projects and shillings 367.8 billion was spent on roads
projects. The component of development expenditure that was financed by foreign
funds was shillings 1,450.4 or 47 percent of the annual target of shillings
3,054.1 billion.
National Identity Cards and Physical Addresses
42.
Madam Speaker, the Government has continued with its plan to implement the National
Identity project, which among other things, will help in making available
various services including financial services. The project is being implemented
in tandem with the introduction of physical addresses. Such Identities will be
issued for Zanzibar and Dar es Salaam region in the first quarter of
2012/13.
Population and Housing Census and Poverty
Survey
43. Madam Speaker, recognizing the
importance of Population and Housing Census, the Government continued to fund
the preparation stage, whose implementation has reached 95 percent. Up to now,
the Government has already spent Tshs. 23.6 billion on the preparations. The
Census is planned to take place on 26 August 2012. Also, the Government will
continue to fund the Household Income and Expenditure Survey. The Survey
started in October 2011 and is expected to end in September 2012, and the
report is expected in July 2013. This survey will give a clear picture of the
status of poverty, especially income poverty from the year 2007 to 2012. This
will assist in identifying the income poverty trend and the reasons for such
trend.
National
Strategy for Growth and Reduction of Poverty-MKUKUTA II
44.
Madam Speaker, During 2011/12, the Government continued with the
implementation of MKUKUTA II, which focuses on three clusters: Growth for
Reduction of Income Poverty, Quality of Life and Social well-being, and
Governance and Acountability in line with the Millennium Development Goals
2015. Various sectors through their policies, strategies and programmes
contribute towards the achevement of desired outcomes. Thus, the implementation
of MKUKUTA II reqquires the collaboration of different sectors both at the planning and implementation
stages.
45.
Madam Speaker, MKUKUTA provides a coordination framework for rallying Government and other
stakeholders efforts in the fight against poverty. Poverty is multidimensional,
covering both income and non-income dimensions. It is true that income poverty
has been declining marginally, However, the Government is taking various
measures to reverse the situation, including creating enabling environment for
people’s engagement in production activities as well as investing in education,
health, infrastructure, and financial sector.
46.
Madam Speaker, overall, the economic performance is relatively
positive, showing resilience amidst the global economic shocks. During 2011,
the Tanzania economy recorded a growth rate of 6.4 percent compared with 7.0 recorded
in 2010. Per capita income increased to 869,436 compared with shs. 770,464 in
2010. On average, the increase in per capita income has improved purchasing
power of people in particular the poor, as a result, access and ownership of
assets such as quality houses, mobile phones, motorcycles, and bicycles has
increased significantly.
47.
Madam Speaker, During the period under review, the Government continued with the implementation of various
programmes with the view to improving the quality of life and social well being
of Tanzanians. The implementation of these programmes has shown positive
results in the the sectors of education, health and water. In the education
sector, the enrollment and completion rates have imporved significantly at all
levels of education. For instance, the net enrolment rate for primary and secondary schools were 94 and
35 percent in 2011 respectively. Similarly, maternal and child care services
have improved as DHS 2010 shows, due to the implementation of the National Road
Map to Accelerate Reduction of Maternal, Newborn and Child Deaths in Tanzania
(“One Plan”) launched in 2008. Access to clean and safe drinking water in the
country has been improving too, due to
the implementation of the Water Sector Development Programme launched in 2007.
48.
Madam Speaker, in order to improve good governance and
accountability, the government, has consitently taken various measures
including, among others, streghthening the legal sector by empoying magistrates
at primary courts, strengthening legal systems as well as raising public
awareness about human rights isssues and the participation in the African Peer
Review Mechamism. The government continued also to strengthen public financial
management systems, including strengthening the capacities of Audit Offices at
Ministries, Regional secretariats and Local Government Authorities.
Financial
Sector
49.
Madam Speaker, the Government continued to implement various reforms in the financial
sector to ensure that the sector effectively contributes to economic and social
activities as well as economic growth. These reforms have resulted into
impressive performance including, increased number of banks to 49 in April 2011
from 43 the previous year, increased number of simcards registered for banking
to 21,184,808 in 2011from 10,663,623 in 2010, and Microfinance institutions
increased to 150 in 2011.
50.
Madam Speaker, the Government continued to extend credits through agricultural window at the Tanzania
Investment Bank (TIB). By March 2012, a total of 81 loans worth shs. 22.9
billion were extended, out of which, 42 loans were extended to SACCOS and 32
loans to companies, and 7 loans to micro finance institutions. Credits extended
to microfinancing institutions and SACCOS benfited rural small farmers.
51.
Madam speaker, the Government continued with the implementation
of the Cooperative Reforms Programme in order to strengthen and empower
cooperatives to expand financial services and reach out, in particular to rural
areas. Until 2011, the number of SACCOS
has increased to 5,346 from 5,314 in 2010, while membership has grown by 6.7
percent, reaching 970,665 from 917, 889 in 2010. Shares,savings and deposits by
members have also increased to shillings 399.0 billion in 2011 from shillings
236.8 billion in 2010. Credits extended to members increased too, reaching
shillings 627.2 billion in 2011 from shillings 539.2 billion equivalent to an
increase of 16.3 percent.
52.
Madam speaker, credits to private sector increased to 23.3
percent compared to 21.9 percent in
2010. This increase goes hand in hand with the increase in domestic financial
assets and fall in foreign financial assets in banks. The credits to private
sector were distributed to various sectors, including personal loans 21.9
percent, commercial loans 19.9 percent, manufacturing 11.9 percent, agriculture
11.8 percent and transport and communication 7.9 percent.
53.
Madam Speaker, in order to improve access to credits, the Government has recruited a
consultant to advise in establishing a Credit Reference Bureau and Credit
Reference Data bank in oder to expand credit availiability. The consultant has
started with the installation of equipments and training of potential users.
This is all aimed at improving the environemnt for availlability of medium to
long term credits for housing, agricultural development, and investment.
Regulations for development financing banks have been prepared and gazzetted in
Government Gazzete of March 2012.
54.
Madam Speaker, During 2011/12, the Government continued with reforms of the National Social
Security systems by evaluating the funds investments, life of funds, as well as
preparing guidelines for investments.
The Government has also reviewed the acts for the Social Security Regulatory
Authorities and social security acts for the purpose of strengthening supervion
of the sector.
Public-Private
Partnership
55. Madam Speaker, this august House
passed the Public Private Partnership (PPP) Act No. 18 of 2010 so as to provide
room for the private sector to invest in public infrastructures and operate
them with a view to provide public services at reasonable cost, at the same
time addressing peoples’ economic and social needs. During the 2011/12 the
government has established PPP desks in each public institution and has issued
operational guidelines for the appraisal of PPP Projects. In addition, the
government has identified pipeline projects that will be subjected to
pre-feasibility appraisals with a view to identify the most suitable projects
that can be implemented using the PPP arrangement.
56. Madam Speaker, the implementation of
public – private partnership in our country is guided by two legislative
instruments – the PPP Act No. 18 of 2010 and the Public Procurement Act (PPA)
No. 6 of 2004 as amended in 2011. The later law was amended so as to incorporate
provisions that provide guidance for public institutions to procure private
investors who are willing to enter into partnership with the public
institutions. The government is in the final stage of approving PPA Regulations
whose issuance completes the legislative framework required to implement
public-private partnerships in the country. The government will ensure that
there is compliance with all legislative and regulatory requirements in
approving and supervising PPP projects.
57. Madam Speaker, during the 2012/13 the government will conduct training and capacity
building to all employees involved in implementing the PPP program. In
addition, the government will select from the pipeline list, few PPP projects
to be implemented as learning examples. The government will begin the process
by carrying out pre-feasibility study of construction projects in road,
railways, ports, airports, water, and office accommodation.
58. Madam Speaker, I would like to take
this opportunity to encourage ministries, independent departments, local
government authorities, executive agencies, and public corporations to seize
this opportunity to enter into partnerships with the private sector in the
construction of infrastructure projects in line with the legislative and regulatory
framework.
National Debt
59.
Madam Speaker, given its commitment to
the development of key infrastructure, the Government continues to raise
domestic and external loans for financing of development projects. As a result by March 2012, National Debt Stock
comprising of External and domestic debt reached Shillings 20,276.6 billion
compared with Shilling 17,578.9 billion, at end March, 2011 equivalent to 15.4
percent increase. Out of the National Debt Stock, Shilling 15,306.9 billion is
External debt stock and Domestic debt was Shilling 4,969.7 billion. The External debt stock comprised of public
debt of Shilling 12,342.5 billion and the Private Debt amounting to Shilling
2,964 billion. The new loan resources mobilized from concessional and
non-concessional sources for infrastructures development in the country and
interest in arrears to Non- Paris Club Creditors which have not concluded
bilateral agreements for debt relief are major attributes for the increase of
External debt stock. During the period under reference, Public domestic debt stock increased by 10.5
percent from Shilling 4,496.5 billion as at March, 2011 to Shilling 4,969.7
billion as at March, 2012. The increase in domestic debt stocks is
attributed to the rising need for new domestic loans to finance the prioritized
development expenditures, issuance of the Treasury Bills and Bonds for
liquidity management and developing the domestic financial Market.
60.
Madam Speaker, considering the need for
prudent management of Public Debt, in February, 2012 the Government conducted a
Debt Sustainability Analysis (DSA) which includes guarantees issued to
Ministries, Independent Departments and Agencies (MDAs), Parastatals and Public
Enterprises. The results of DSA exercise indicate that, the Public debt is
sustainable.
MANAGEMENT OF PARASTATAL ORGANIZATIONS
61.
Madam Speaker, in ensuring that Government Institutions,
Agencies and Parastatals are properly discharging their obligations, the
Government issued Circular No. 1 of year 2012 instructing Parent Ministries,
Boards of Directors to enter into Performance Contracts, with effect from
January 2012. Moreover, Management Audit was carried out in some Public
Institutions and Parastarals in order to assess the compliance with rules and
regulations, legislations; and various Directives; issued by the Government
which include accountability and Good Governance, financial management and
recruitment procedures. This exercise is continuous and is aimed at improving
the operations of Parastatals and Public Institutions. Furthermore, the
Government has verified 170 privatized Parastatals. Out of which, 41 were
making profits, 66 making losses and 63 were under receivership. The loss
making Parastatals, will be placed under receivership with the aim of
scrutinizing and proposing measures to be taken including liquidating some of
them.
THE BUDGET
FOR 2012/2013
62. Madam Speaker, the 2012/13 budget
takes into account the priorities set in
the Annual Development Plan of 2012/2013, National Strategy for Growth and
Poverty Reduction phase two (MKUKUTA II), the Millennium Development Goals
(MDGs) 2015, the CCM Election Manifesto 2010, and the public sector reform programmes. The goal is
to realize the objectives of the Tanzania Development Vision 2025.
63. Madam Speaker, in line with these guiding frameworks, this budget takes
into account challenges emanated from implementation of 2011/2012 budget. The
challenges includes availability of reliable electricity supply; increase in
world market oil prices; food shortages in some parts of the country; increase
in prices of goods and services; late disbursement of local development
funds due to bureaucratic procedures on accessing non
concessional loans; the increase in accumulated domestic arrears particularly
from contractors, suppliers and civil servants. The budget also takes into
consideration world economic trends and the regional and international treaties
and commitments. The Government will take measures to address the challenges.
Objectives and Targets of
the 2012/13 Budget
64. Madam
Speaker, the focus
of 2012/2013 budget is to achieve the following:
(i)
To increase real GDP growth rate to 6.8 per cent in 2012 from 6.4 percent of 2011;
(ii)
To improve economic infrastructure, including
electricity, roads, railways and ports;
(iii)
To increase access to financial services;
(iv)
To increase domestic revenues to 18 percent of GDP
in 2012/2013 compared to the likely outturn of 16.9 percent in 2011/2012;
(v)
To continue with efforts to curb inflation to a single digit;
(vi)
To maintain
a stable and market determined exchange
rate;
(vii)
To increase credit to private sector to 20 percent
of GDP by end June 2013 in line with measures to curb inflation;
(viii)
To maintain foreign exchange reserves to cover 4.5
months of imports of goods and services.
(ix)
To strengthen Public and Private Partnership (PPP)
arrangement with a view to widen opportunities for implementing development projects;
(x)
To improve business environment for Small and
Medium Enterprises;
(xi)
To safeguard and sustain achievements realized in
the social sectors;
(xii)
To strengthen good governance and accountability;
and
(xiii)
To develop the country’s capability to endure
economic and financial crisis and effective participation in regional and
international arrangement.
Basis of the Government
budget for 2012/2013
65. Madam Speaker, to achieve the above
mentioned objectives, the basis for the Government budget for the 2012/2013 are
as follows:
(i)
To continue sustaining the stability of
macroeconomic and social indicators;
(ii)
Availability of reliable electricity and
promote the use of natural gas;
(iii)
Strengthened implementation of monetary and fiscal
policies;
(iv)
To continue strengthening the relationship with
Development Partners;
(v)
To continue implementing Decentralization by Devolution policy;
(vi)
To continue implementation of public sector
reforms including strengthening public
finance management; and
(vii)
To continue to improve business environment and
increase productivity and investment opportunities.
Revenue Policies
66. Madam Speaker, the Government will
continue with its efforts to strengthen domestic revenue collections by taking
various measures in the areas of tax and non-tax revenue; and through expansion
of revenue base. Moreover, the Government will continue to strengthen revenue
collection mechanisms as well as reducing tax exemption in order to finance to
a larger extent the recurrent expenditure by domestic revenues.
Revenue policies that will be considered in
2012/13 budget include:
i)
To improve collection and administration of
non-tax revenue by reviewing mechanism of issuance of receipts and licenses, as
well as improving the retention rates by Ministries, Departments, and
Government Institutions;
ii)
To expand tax base through formalization of
informal sector in order to capture it into the tax net;
iii)
To continue with a review of legislation establishing Agencies/Public
Institutions that collect revenues with the aim of increasing their respective
contribution to the Consolidated Fund Services (CFS);
iv)
To continue reviewing various legislations
granting tax exemptions with the aim of controlling and reducing them;
v)
To review the mechanism of collecting property tax
in cities, municipalities, towns, districts and townships with a view to
improve them;
vi)
To review sources of revenue and collection mechanism in the Local
Government Authorities with a view to increase revenue; and
vii)
To build capacity of the Ministry of Finance,
Ministry of Energy and Minerals, Tanzania Petroleum Development Corporation,
Tanzania Revenue Authority and Tanzania Mineral Audit Agency (TMAA) in order to
enhance their respective capabilities to
administer revenues collections in the
areas of minerals, gas and petroleum.
Measures to Improve Production and Services
Delivery
67. Madam Speaker, the Government has
received recommendations from various stakeholders including Honourable Members
of Parliament on the need to improve business environment in the fishing,
manufacturing, agriculture, livestock keeping, and tourism sectors. The planned
measures include the following:
i)
To review the incentives granted to local industries which use local inputs including textile and edible
oil industries;
ii)
To put in place
better mechanism of identifying spares for machinery and plants exempted
from taxes in order to remove
inconveniences to importers;
iii)
To review tax rates applicable to agriculture and
fishery sectors with a view to harmonize
and reduce them;
iv)
To review the rationale and the applicable rates
of Skills Development Levy and Motor Vehicle Licenses. In doing so ,the
government aims at expanding tax base, reducing tax burden to employers and expanding employment opportunities in the
country. Moreover the review of motor vehicle licenses will take into account
the motive behind such licenses; and
v)
To review the Value Added Tax (VAT) with the view
to changing it to conform to international best practices.
68. Madam Speaker, the Local Government Authorities are urged
to raise their own source revenue collection by taking into consideration the
available opportunities. Moreover, the Prime Minister’s Office–Regional Administration
and Local Government (PMO-RALG) in collaboration with German’s for
International Development Co-operation (GIZ) will finalize and install the
Integrated Property Rating Information Management System (IPRIMS) in order to
improve revenue collection from property tax. I urge all Honourable Members of
Parliament and other leaders from different levels to exert pressure to enable
Local Government Authorities to collect property tax and other revenues
effectively. The aim is to increase their capacity to provide services and
bring about sustainable development to citizens.
69. Madam Speaker, taking into
consideration the revenue policies outlined above, the Government targets to
collect domestic revenues (excluding LGAs own source) amounting to shillings 8,714.7
billion equivalent to 18 percent of (GDP). Out of this amount, shillings
7,080.1 billion is tax revenue and shillings 644.6 billion is non-tax revenue.
Revenue from Local Government Authorities is projected at shilings 362.2
billion equivalent to 0.7 percent of GDP.
Domestic Borrowing
70.
Madam Speaker, the Government will continue with its arrangement to borrow from domestic
market for financing development projects and paying for rollover of maturing
Treasury Bills and Bonds. In 2012/13 budget, the Government intends to borrow
shillings 1,632 billion from domestic market. Out of this amount, shillings
483.9 billion equivalent to 1 percent of GDP is for financing development
projects and shillings 1,148.1 billion will be used to finance the rollover of
maturing Treasury Bills and Bonds. The level of borrowing has taken into
consideration macroeconomic indicators in order to avoid crowding out of
private sector.
Grants and New
Concessional Borrowing
71. Madam Speaker, the Government will
continue to collaborate with Development Partners to ensure that all grants and
concessional loans are timely disbursed for the implementation of the
government budget. In 2012/13, the Government is expecting to receive shillings
3,156.7 billion as grants and concessional loans. Out of this amount, shillings
842 billion equivalents to US Dollar 495 million is GBS loans and grants while
shillings 2,314.2 billion is project grants and loans including basket funds.
72. Madam Speaker, Development Partners
continued to support the country’s development agenda despite the ramifications
of the global economic crisis and natural calamities they had experienced. I
wish therefore, to recognize our Development Partners as follows: United
Kingdom, Norway, Canada, United States of America, Netherlands, Belgium, China,
Finland, France, Germany, Ireland, Japan, South Korea, Denmark, Spain, Sweden,
Switzerland, India, Italy, World Bank, African Development Bank, European
Union, Global Funds, International Monetary Fund (IMF), BADEA, Kuwait Fund,
NODIC Fund, OPEC Fund, Saudi Fund, and United Nations Agencies. We very much
thank them.
External Non -
concessional Borrowing
73.
Madam Speaker, it is the Government’s
policy to solicit concessional loans from Multilateral Institutions and donor
countries for financing development budget. Nevertheless, taking into account
huge requirement of funds to develop infrastructure projects in 2012/13, the
government expects to borrow external non concessional loans amounting to
shillings 1,254.1 billion equivalent to US Dollar 746 million. These funds will be used to finance various
development projects as identified in the 2012/13 Annual Development Plan,
which include Government counterpart fund for construction of gas pipeline from
Mtwara to Dar es Salaam, water pipeline from Lower Ruvu to Dar es salaam and road construction
projects. The decision to continue borrowing on concessional and non
concessional terms will take into consideration the country’s debt sustainability.
Expenditure Policies
74.
Madam Speaker, in the year 2012/13, expenditure policies will be based on the following:
i) Expenditure will be in
line with revenues collections (cash budget);
ii) To maintain budget deficit
after grants not exceeding 5.5 percent of GDP;
iii) Votes to align expenditure
to ceilings as passed by the Parliament;
iv) Accounting Officers
continue to comply with the Public Finance Act and Public Procurement Act; and
v) The Government to continue
compiling all domestic arrears for the purpose of verification and arrangement
for their payment.
Recurrent
Expenditure
75. Madam Speaker, recurrent expenditure
policies for the year 2012/13 are aimed at, among others to finance the
payments of: salaries, domestic and external debt services, improvement of
economic and social services; higher education students loans; primary and
secondary schools examinations; procurement and distribution of medicines;
requirement of Constitution Review Commission; maintenance of Government
assets; purchase of food for national reserve; recurrent expenditure component
for completed projects; as well as to continue with payment to various claims
raised by employees and suppliers.
76. Madam Speaker, in order to address
the challenges of accessing to long-term loans, low agricultural productivity
and unemployment, the Government has set aside funds for the following areas:
shillings 30 billion for the Tanzania Investment Bank; shillings 40 billion for
the Agricultural Development Bank thereby increasing its capital to shillings
100 billion. Moreover, shillings 7.5 billion has been allocated to revive the
compulsory National Service, whereby in the first phase 5,000 youths are
expected to be recruited. In addition, the Government has allocated a total of
shillings 70.7 billion for recurrent and development expenditure for newly established
Regions, Districts and Councils.
Development Expenditure
77. Madam Speaker, during the FY
2012/13, the Government will implement development expenditure policies based
on priorities identified in the Development Plan for FY 2012/1332. The proposed
budget for FY 2012/13 has considered the following priority areas:
78.
Madam Speaker, in the 2011 Economic Survey and National Development Plan for FY
2012/13 speech, the Minister of State, President’s Office, Public Relations and
Coordination, Hon. Stephen Masatu Wasira, outlined the national strategic
projects and projects in strategic areas for economic growth. This budget takes
into account such priorities:
a)
Infrastructure
i)
electricity - emphasis will be placed on the availability of
electricity by increasing generation, transmission and distribution capacities whereby a total of TShs 498.9
billion has been allocated for this purpose. Further, the Government will
implement the gas pipeline construction project from Mtwara to Dar
es Salaam using a loan amounting to USD 1,225.3 million from the
Exim Bank of China .
The loan will be managed by the Tanzania Petroleum Development Corporation
(TPDC).
ii)
transportation – strengthening the
central railway line which involves renovation of the train engines and wagons.
On roads, priority projects include roads that will open up economic
opportunities. On air and water transportation, projects to be implemented
include rehabilitation of airports and development of the port at Lake Tanganyika . A total of TShs 1,382.9 billion has been
allocated for this area.
iii)
clean and safe water-
increasing the availability of clean and safe water in urban and rural areas.
TShs 568.8 billion has been allocated for this purpose.
iv)
Information and Communications Technology (ICT) – strengthen communications through ICT so as to improve access
to various services including information access to domestic and external
market, revenue collection, health services, education, financial services,
etc. A total of TShs 4 billion has been allocated in this area.
b)
Agriculture, Fisheries
and Livestock
79. Madam Speaker, in collaboration with
the private sector, the Government will invest in rice and sugarcane farming in
the major valleys of Wami, Ruvu, Kilombero and Malagarasi as well as increasing
productivity and value; transform the agricultural system and promote
agro-forestry. This includes effective development of fisheries and livestock
farming by improving the investment climate; by so doing, it will reduce income
poverty.
80. Madam Speaker, in order to increase
the production of food crops and ensuring food security, the Government will
strengthen the implementation of Kilimo Kwanza policy by ensuring adherence of
all its pillars; agricultural inputs reaches the intended on time, agricultural
extension officers have their own farms as examples to educate farmers on
modern farming methods; put emphasis on irrigation farming; improve and
strengthen markets for crops through Mixed Crops Board which has started its
operations; and Regions to continue allocating land and villages surveying and
formalizing their land for local and foreign investors. TShs 192.2 billion has
been allocated for this purpose.
c)
Industrial Development
81.
Madam Speaker, the
Government intends to develop industries that utilize domestically produced raw
materials, industries that add value to minerals, large cement factories, and
electronic and Information and Communications Technology (ICT) as well as
improving the business environment and to allocate specific areas for
investments in urban and rural areas, and promote partnerships between public
and private sectors. This action goes hand in hand with improving and
strengthening small enterprises in the country. A total of TShs 128.4 billion
has been allocated in this area.
d)
Human resources and
social services development
82. Madam Speaker, during the fiscal year 2012/13, the government plans to improve the
quality of education at all levels, particularly in the areas of research,
vocational education, health, science; and special skills on mining, gas,
uranium, iron and oil. This action involves laboratories renovation and
availability of laboratory facilities. TShs. 84.1 billion has been allocated in
this area.
e)
Tourism
83.
Madam Speaker, the Government will continue to improve services delivery in this area,
including the promotion of tourism and improvement of the tourist environment
as well as providing tourism training, identifying new tourism areas and
enhancing tourism colleges.
f)
Financial Services
84. Madam Speaker, the Government will
continue to strengthen financial services particularly the savings and credit
systems such as Savings and Credit Cooperative Societies (SACCOS), Village
Community Banks (VICOBA) and Community Banks so as to enable people to access
credits for businesses and productive activities. TShs. 2.6 billion has been
allocated to enhance the capital of Tanzania Women’s Bank, Small Enterprises
Loan Facility (SELF) and the Economic Empowerment Fund. Further the Ministry of Finance is promoting
the Development of micro finance institutions in the Country, in order to
effectively perform this function the Government will elevate the current
financial services section in the Policy Analysis Department to a full fledged
Department.
Public Financial
Management
85.
Madam Speaker, the Government will continue to implement the fourth phase of the
Public Financial Management Reform Programme and ensure adherence to the Public
Finance Act and Public Procurement Act in order to enhance transparency and
accountability in public expenditure.
Areas that the Programme will focus include: to finalise upgrading of
Integrated Financial Management System (IFMS) in order to control use of public
finances in the Central Government and Local Government Authorities; training on inter-bank settlement system for
the Parliament Office employees, Regional Secretariat, Co-operative Department,
Prime Minister’s Office – Regional Administration and Local Government and
Sub-Treasuries in all regions. In addition, the
Government will continue to facilitate training on preparation of accounts by
using International Accounting Standards in order to increase transparency in
public financial expenditure; strengthen capacity of the Government’s Internal
Auditor Department in order to ensure use of public finance procedures and
regulations are followed properly; and strengthen capacity for the Central
Government, Regions and Councils to prepare budget plans, revenue collection,
resource management, improvement of communication and submission of budget
execution reports.
86. Madam Speaker, with regards to fund
transfers to the Councils, the Government will continue to improve transfer
procedures and provide timely information concerning expenditure of transferred
funds. In addition, all un-spent funds
during previous fiscal year will be reported to the Parliamentary Committees
and Local Councillor Meetings in order to enhance transparency and
accountability to the general public.
87. Madam Speaker, in 2012/13 fiscal
year, the Government will conduct verification exercises for employees in
Ministries, Departments, and all Regions and Council Secretariats in order to
eliminate ghost workers from the Government employees’ payroll. In addition, employing authorities and
accounting officers are instructed to stop salary payments to persons that have
resigned or been terminated, retired, died or on leave without pay in order to
control loss of public funds.
88. Madam Speaker, the Government will
continue to put emphasis on audit of revenue and expenditure of public funds in
Ministries, Institutions, Agencies, Regions and Local Government Authorities in
order to confirm if revenue planned to be collected is available and also funds
transferred from the Treasury are reaching
the Regions and Councils and finance approved activities. The Government will improve control and
management of public funds that are collected or transferred to Regions and
Councils.
Management of Public Enterprises
89.
Madam Speaker, in addressing the Public enterprises management challenges, the
Government continues to strengthen the Office of the Treasury Registrar by
reviewing the Treasury registrar Ordinance (1958) and Treasury Registrar Powers
and Functions (2000) Cap. 370 as amended in year 2010 with a view to
consolidate the two into one Law. This
action aims to give more legal powers to the Treasury Registrar Office to
closely monitor the performance of Public Enterprises in order to increase
their productivity.
Curbing Inflation
90.
Madam Speaker, our economy is facing
several challenges including high inflation rates which declined from 19.8
percent in December, 2011 to 18.7 percent in April, 2012. The main causes of high inflation rates are
high electricity tariff, high prices of oil and food - especially rice and
sugar prices. For example, during April,
2012 food contributed 24.7 percent while electricity and fuel contributed 24.9
percent of inflation. Core
inflation, which excludes food and energy prices, is still at single digit of
8.8 percent. Therefore Government
efforts will be directed towards controlling the rising food and energy prices.
91. Madam Speaker, immediate measures
that the Government will take include issuance of sugar and rice imports
permits and continue to strengthen the National Food Reserve. In additional, the Government will invest in
rice and sugarcane farming in the great valleys of Kilombero, Wami, Kagera and
Malagalasi together with agricultural irrigation schemes. Other measures include continuing to
strengthen transport and market infrastructure, agricultural marketing system
in high food production areas especially the Southern highlands and boarder
regions. In respect to electricity, the
Government will continue to develop alternative sources of energy such as
natural gas, solar energy, wind and sugarcane energy in order to reduce use of
fuel as source of energy.
Expanding Employment Opportunities
92. Madam speaker, in order to increase
youth employment opportunities, the Government will continue to widen access to
financial services including establishment of Agricultural Bank and increasing
the capital of the Tanzania Investment Bank, Tanzania Women Bank, Tanzania
Postal Bank and Twiga Bancorp. Other
measures for increasing employment opportunities include constructing and
upgrading of roads, electricity, agriculture and communication infrastructure
networks. Further, the private sector
will be encouraged to utilize private sector development window offered by The African
Development Bank. The Government will
also employ 71,756 in education, health, agriculture and other sectors.
REFORM OF THE TAX STRUCTURE, FEES, LEVIES AND
OTHER REVENUE MEASURES
93. Madam Speaker, In recent years, the
government has made significant reforms in the tax structure aiming at widening
the tax base and maximizing domestic revenue. The reforms include the amendment
of tax laws, regulations and improvement of tax administration procedures.
These measures have contributed to the improvement in collection of tax and non
tax revenues. However, despite these achievements, there remains a challenge of
increasing domestic revenues so as to reduce budgetary dependence on foreign
aid. In that respect, the Government will continue to undertake policy and
administrative measures to improve revenue collection and tax administration.
94. Madam Speaker, To maintain
improvement of the tax structure, I propose to make various reforms in the tax
laws as follows:-
(a) The Value Added Tax Act, CAP 148;
(b) The Income Tax Act, CAP 332;
(c)
The Excise (Management & Tariff) Act, CAP 147;
(d) The Export Levy Act, Cap 196;
(e) The Gaming Act, CAP 40;
(f)
The Motor Vehicle Registration and Transfer Tax
Act, CAP 124;
(g)
The Airport Departure Service Charges Act, CAP 365;
(h)
Motor-vehicle Exemptions through Tax Laws and
Government Notices (GNs)
(i)
Minor Amendments in various Tax Laws and Financial
Management Laws;
(j)
Amendments of the Fees and Levies charged by
Ministries, Regions and Independent Departments
(k)
The East African Community Customs Management Act,
2004
A.
The Value Added Tax Act, CAP 148
95. Madam Speaker, I propose to make
amendments in the Value Added Tax Act, CAP 148 as follows:-
(i)
Introduce
Value added Tax rate of 10 percent for selected VAT relieved beneficiaries.
This measure will compel all beneficiaries enjoying special relief under the
third schedule of the Value Added Tax Act to pay VAT for their taxable supplies
requirements at a reduced rate of 10 percent instead of 18 percent and will
affect among others, private companies, individuals and TIC Certificate holders
except those who are enjoying exemptions under the existing agreements.
Furthermore, it will affect Non governmental organizations except those which
are providing donations such as food supplies and medicaments to children and
orphanage care centers and schools.
(ii)
Amend
item 19 of the second schedule to the VAT Act in order to include “Electronic
Fiscal Devices” in the list of exempt items. The measure intends to make the
product affordable to the business community and encourage its use for the
improvement of compliance.
(iii)
Exempt Value Added Tax on various equipments
(Compressed Natural Gas and Piped Natural Gas) that will be used for storage,
transportation, and distribution of natural gas. This measure is intended to
promote the usage of natural gas in various sectors of the economy including
motor vehicles, domestic and industrial use. The measure is also expected to
preserve forests, reduce environmental degradation and encourage production of
gas cookers in the country.
96. Madam Speaker, the gas related
equipments for which the exemption is sought are as follows: -
(i)
CNG vehicles conversion kits;
(ii) High pressure vessels (CNG and LPG cylinders);
(iii) Natural Gas Compression plants equipments;
(iv) Natural gas pipes (Transportation and Distribution pipes);
(v)
CNG storage cascades;
(vi)
CNG transportation trailers;
(vii)
Natural gas metering equipments;
(viii)
Pipeline fittings and valves;
(ix)
CNG Refueling/filling equipment; and
(x)
PNG/CNG accessories
(xi)
Gas Receiving Unit
(xii)
Condensate Stabilizer
(xiii)
Flare Gas
System
(xiv)
Air &
Nitrogen System
(xv)
Condensate
Tanks and Loading Facility
(xvi)
System piping
on pipe rack
(xvii)
Instrumentation
(xviii) Gas Cooker which is specifically designed for gas
The VAT measures together will increase Government revenue by TShs. 22,565.1 million.
B.
The Income Tax Act, CAP 332
97. Madam Speaker, I propose to make
amendments in the Income Tax Act, as follows: -
(i)
Introduce a NIL band for turnover below Tshs.
3,000,000 to exempt low-income earners. This measure is aimed at protecting the
government revenue and ensures that, the individuals whose turnover is below
Tshs. 3,000,000 are not taxed under the presumptive scheme. Currently, traders
whose turnover does not exceed Tshs. 3,000,000 pay Tshs. 35,000
The current and proposed rates are as follows: -
Current rates
|
Turnover
|
Tax payable where records are incomplete
|
Tax payable where records kept are complete
|
(i)
|
Where
turnover does not exceed Shs. 3,000,000/=
|
Shs. 35,000/=
|
1.1% of
the annual turnover
|
(ii)
|
Where
turnover exceeds Shs. 3,000,000/= but does not exceed Shs. 7,000,000/=
|
Shs. 95,000/=
|
Shs.
33,000/= plus 1.3% of the turnover in excess of Shs. 3,000,000/=
|
(iii)
|
Where
turnover exceeds Shs. 7,000,000/= but does not exceed Shs. 14,000,000/=
|
Shs. 291,000/=
|
Shs.
85,000/= plus 2.5% of the turnover in excess of Shs. 7,000,000/=
|
(iv)
|
Where
turnover exceeds Shs. 14,000,000/= but does not exceed Shs. 20,000,000/=
|
Shs. 520,000/=
|
Shs.
260,000/= plus 3.3% of the turnover in excess of Shs. 14,000,000/=
|
Proposed rates
|
|||
|
Turnover
|
Tax payable where records are
incomplete
|
Tax payable where records kept are
complete
|
(i)
|
Where turnover does not exceed
Shs 3,000,000/=
|
Zero
percent (0%)
|
Zero
percent (0%)
|
(ii)
|
Where turnover exceeds Shs 3,000,000/= but does not exceed
Shs 7,500,000/=
|
Shs.
100,000/=
|
2% of the turnover in excess of
Shs 3,000,000/=
|
(iii)
|
Where turnover exceeds Shs 7,500,000/= but does not exceed Shs 11,500,000/=
|
Shs.
212,000/=
|
Shs. 90,000/= plus 2.5% of the
turnover in excess of Shs 7,500,000/=
|
(iv)
|
Where turnover exceeds Shs 11,500,000/= but does not exceed Shs 16,000,000/=
|
Shs.
364,000/=
|
Shs. 190,000/= plus 3.0% in excess
of Shs 11,500,000/=
|
(v)
|
Where turnover exceeds Shs 16,000,000/= but does not exceed Shs 20,000,000/=
|
Shs.
575,000/=
|
Shs. 325,000/= plus 3.5% in
excess of Shs 16,000,000/=
|
(ii)
Introduce a 10 percent Withholding tax on interest
income earned by the non-residents from banks as is the case with residents.
The proposed measure is intended to create a fair playing field to all
taxpayers.
(iii)
Abolish exemption currently provided under “sec.
54(2) of the Income Tax Act” to a resident corporation which holds 25 percent
shares or more so that dividends of the corporation will now be taxed at a
reduced rate of 5 percent. This measure is aimed at creating fairness and
equity to all dividend earners.
(iv)
Impose capital gain tax on sale of shares relating
to local company by the parent/offshore company. This measure is intended to
control tax avoidance malpractice.
(v)
Adjust PAYE threshold as a result of enhancement
of salary scales from Tshs 135,000 to Tshs 170,000.
(vi)
Introduce exemption of Income Tax to the Dar es Salaam Stock
Exchange (DSE);
(vii)
Exempt holders of gaming licenses from paying
Income Tax on their incomes in respect of which income tax had already been
paid under the Gaming Act Cap. 41. The aim is to avoid double payment from
license holders who have already paid that tax.
(viii)
Exempt withholding tax chargeable by foreign banks
on interests payable to strategic investors. This measure is expected to
encourage investment in the country.
The Income Tax
measures will reduce Government revenue by TShs. 105,672.3 million.
C.
The Excise (Management & Tariff) Act, CAP 147
98. Madam Speaker, I propose to
make amendments in the Excise (Management & Tariff) Act as follows:-
(i)
Abolish
Excise Duty on HFO. This measure is intended to reduce the cost of production,
promote industrial growth and bring fairness among the business community in
the East African Community.
(ii)
Introduce
Excise Duty on Music and Film Products (DVD, VCD, CD, Video Tape and Audio Tape
e.t.c). This measure is aimed at assisting operators in this subsector to
formalize their businesses, prevent piracy of the artist works and enable them
to benefit from their works. The Tanzania Revenue Authority will issue stamps
for the products in order to control production and earn revenue to both the
Government and operators. This measure will become operational from 1st
January, 2013 to allow time for the review of the relevant laws and
regulations.
(iii)
Abolish
exemption of Excise Duty on imported non-utility motor vehicles for all
beneficiaries. However, this measure will not affect those who are currently
enjoying Value Added Tax exemptions like mining companies holding agreements
with the Government that provide tax exemption, Diplomats and Diplomatic
Missions, Religious organizations and Donor Funded Projects.
(iv)
In
order to protect local industries producing fruit juices against unfair
competition from imported fruit juices, I propose to introduce excise duty of
shillings 83 per litre on imported fruit juices while locally produced fruit
juices will attract excise duty of shillings 8 per litre.
(v)
Amend the fuel levy exemption that was granted
during the 2011/12 budget for the fuel to be used by the oil and gas explorers
to include excise duty as it was intended.
(vi)
I propose to adjust the specific duty structure on
soft drinks, beers, spirits, cigarettes and wine as follows: -
a)
Carbonated soft drinks from shillings 69 per litre
to shillings 83 per litre; being an increase of shillings 14 per litre;
b)
Wine with domestic grapes content exceeding 75
percent, from shillings 145 to shillings 420
per litre; being an increase of shillings 275 per litre;
c)
Wine produced with more than 25% imported grapes
from shillings 1,345 per litre to shillings 1,614 per litre; being an increase
of shillings 269 per litre;
d)
Spirits from shillings 1,993 per litre to
shillings 2,392 per litre; being an increase of shillings 399 per litre;
e)
Beer made from local un-malted cereals from
shillings 248 per litre to shillings 310 per litre; being an increase of
shillings 62 per litre; and
f)
Other beers from shillings 420 per litre to
shillings 525 per litre; being an increase of shillings 105 per litre.
(vii)
The Excise Duty rates on cigarettes are amended as
follows:-
(a)
Cigarettes without filter tip and containing
domestic tobacco more than 75% from shillings 6,820 to Shillings 8,210 per
thousand cigarettes; equivalent to an increase of shillings 1,390 per thousand
cigarettes or shillings 1.40 pre cigarette;
(b)
Cigarettes with filter tip and containing domestic
tobacco more than 75% from shillings 16,114 to shillings 19,410 per mil;
equivalent to an increase of shillings 3,296 or shillings 3.30 per cigarette;
(c)
Other cigarettes not mentioned in (a) and (b) from
shillings 29,264 to shillings 35,117 per mil; being an increase of shillings
5,853 per thousand cigarettes or shillings 5.8 per cigarettes;
(d)
Cut rag or cut filler from shillings 14,780 per
kilogram to shillings 17,736 per kilogram; being an increase of shillings 2,956
per kilogram; and
(e)
The excise duty rate on “cigar” remains at 30
percent.
(viii)
Impose Excise Duty on Natural Gas for industrial
use at the rate of shillings 0.35 per Cubic feet.
(ix)
Increase Excise Duty on Airtime from 10 percent to
12 percent.
The excise duty
measures together are expected to increase Government revenue by Shs. 144,054.9
million.
D.
The Export Levy Act, Cap 196;
99. Madam Speaker, I propose to make
amendments in the Export Levy Act by
increasing an export duty on raw hides from 40 percent or shillings 400 per
kilogram to 90 percent or Tshs. 900 per each kilogram, whichever is greater.
This measure is intended to promote local processing of hides and skins as well
as value addition to our exports. The measure will also increase employment and
earn revenue to the Government.
The Export Levy
measures are expected to increase Government revenue by TShs. 26,431.8 million.
E.
The Gaming Act, Chapter 41;
100. Madam Speaker, I propose to make
amendments in the Gaming Act as follows:-
(i)
Increase Gaming Tax for Casino from shillings 13
percent of gross gaming revenue to 15 percent of gross gaming revenue;
(ii)
Introduce gaming tax on sports betting at a rate
of 6 percent of the total stakes;
(iii)
Introduce gaming tax on “SMS Lotteries” at a rate
of 43 percent;
(iv)
Introduce gaming tax of 15 percent on Internet
Casino;
(v)
Establish
clause in the Game of chance Act which will explicitly state that,
“Gaming Tax shall be a final tax”
The measure is expected to increase the Government
revenue by Tshs. 6,360 million
F.
The Motor Vehicle Registration and Transfer tax Act, CAP 124
101. Madam Speaker, I propose to make
amendments in the Motor Vehicle Registration and Transfer Tax Act, as
follows:-.
Introduce
personalized plate numbers for shillings
5,000,000 for three years. The measure intends to generate more revenue to the
government.
This measure is expected to increase the
Government revenue by Tshs. 50 million
G.
The Airport Departure Service Charges
Act, CAP 365
102. Madam Speaker, I propose to make
amendments in the Airport Departure Service Charges Act, by increasing Airport
Service Charges from the current rate of United
States Dollar 30 to United States Dollars 40 for passengers travelling outside
the country and from shillings 5,000 to shillings 10,000 for local travel
passengers.
The measure is expected to increase the Government
revenue by shillings 11,597.7 millions
H.
Tax Laws and Government Notices (GNs) granting Exemptions on
Motor-Vehicles
103. Madam Speaker, I propose to make amendments in the law that grants motor
vehicle exemptions to various beneficiaries through Government Notices so that importation motor vehicles aged more
than 8 years from the year of manufacture will now be subjected to the
excise duty of 20 percent. The
measure is intended to discourage importation of obsolete vehicles and
preserve/protect environment.
I.
Minor Amendments in various Tax Laws and Financial Management Laws
104.
Madam Speaker, I further propose to
make minor amendments to various tax laws with a view to simplifying revenue
collection.
105.
Madam Speaker, I propose to amend the East African Development Bank (EADB) Act, CAP.231
with a view to firstly, to provide immunity
status to the properties owned by the Bank including houses, deposits, monies,
and bank accounts against legal proceedings, court decisions and
nationalizations/acquisitions acts. Secondly,
to give it a corporate status as it is with the International Monetary Fund
(IMF), the World Bank and Africa Development Bank to enable it to be afforded
priority whenever crises occur in the financial market. Thirdly, to empower the Minister for Finance to implement the
decisions of the EADB’s governing board, by amending the schedule to this Act
through Government Notice and subsequently inform the Parliament. Fourthly, define the bank’s properties
as including its houses, financial deposits entrusted to EADB for
supervision.
J.
Amendments of the Fees and Levies charged by Ministries, Regions and
Independent Departments
106.
Madam Speaker, I recommend amendment of rates of fees and
penalties charged by Ministries, Regions and
Independent Departments in order to rationalize with the current level of
economic growth.
K.
The East African Community Customs Management Act, 2004
107.
Madam Speaker, During the
Pre-budget consultations held in Kampala, Uganda on 18th May 2012,
the Ministers for Finance from EAC Partner States proposed and agreed to make
amendments and changes in the EAC Customs Management Act, 2004 (EAC CMA 2004)
and Common External Tariff (CET) for the Financial year 2012/13. The main objective of the proposed changes is
to enhance industrial production, improve transportation, health services,
livestock development and communication sectors.
108.
Madam
Speaker, the
changes in the Common External Tariff (CET) which were recommended and agreed
by the Ministers for Finance are as follows:
(i)
Extend the stay of application of CET rate of 35
percent on Wheat grain under HS Code 1001.90.20 and HS Code 1001.90.90 and
apply the CET rate of 0 percent for the period of one year. This measure is
intended to reduce cost relating to the importation of wheat grain in the
country as local production capacity does not satisfy the demand.
(ii)
Increase the CET rate on galvanized wire of HS
Code 7217.20.00 from 0 percent to 10 percent. The measure is intended to
rationalize with the tariff structure which is based on the degree of
processing, because galvanized wire is a product of the hot rolled steel wire
rods under HS Code 7213.20.00 which attracts the CET rate of 0 percent.
(iii)
Split the tariff line under HS Code 2106.90.91 in
order to grant exemption of import duty to food supplements and mineral premix
used in fortification of food supplements for feeding infants. The measure is
intended to encourage processing of these food products in the region, and make
them affordable with a view to fight malnutrition.
(iv)
Reduce the CET rate on Set Top Boxes from 25
percent to 0 percent under the HS Code 8528.71.0. The measure is intended to
facilitate the smooth transition of the EAC Partner States to move from analog
to digital technology by December 2015.
(v)
Reduce the CET rate on electricity under HS Code
2716.00.00 from 10 percent to 0 percent. The measure is intended to reduce the
cost of importing electricity into the East African Community Partner States.
(vi)
Reduce the CET rate on inner glass flask used in
thermos under HS Code 7020.00.90 from 25 percent to 0 percent. The measure is
intended to encourage assembling of thermos in the country and these products
are not manufactured in the region.
(vii)
Split the tariff line under HS Code 8523.80.00 in
order to apply the CET rate of 0 percent on software instead of 25 percent. The
measure is intended to encourage development of ICT in the region and
contribute to the economic growth.
(viii)
Grant duty remission to soap manufacturers using
Palm Stearin, RBD under HS Code 1511.90.40 by charging a duty rate of 0 percent
instead of 10 percent. This measure is intended to promote growth stand-alone
soap manufacturing industries by reducing cost relating to the importation of
Palm Stearin, RBD which is the main raw material in manufacturing of soap. The
measure will also make soap more competitive in the local market.
(ix)
Grant duty remission to soap manufacturers using
LABSA as raw materials from 10 percent to 0 percent under HS Code 3402.11.00;
HS Code 3402.12.00; and HS Code 3402.19.00 for the period of one year. The
measure is intended to encourage growth and production of soap manufacturing
especially to small industries producing soaps in the country.
(x)
Reduce the CET rate from 10 percent to 0 percent
on cathodes and selections of cathodes under HS Code 7403.11.00.
(xi)
Continue applying the CET rate of 25 percent
instead of 35 percent on cement under HS Code 2523.90.00 for the period of one
year.
(xii)
Grant duty remission to lubricants producers using
castor oil and its fractions under HS Code 1515.30.00 as raw material from the
CET rate of 10 percent to 0 percent.
(xiii)
Split HS Code 7308.90.90 to provide for road
guards rails and to apply the CET rate of 10 percent instead of 25 percent. The
measure is intended to supplement local demand as local production capacity is
still insufficient to meet the demand the growing demand of the products.
109.
Madam Speaker, the Ministers for Finance also agreed to make amendments in the EAC
Customs Management Act, 2004 as follows:-
(i)
Amend paragraph 30 (b) of the Fifth Schedule Part
B in order to provide exemption of import duty to machinery and spare parts
used in mining activities. The exemption should not include spare parts for
motor vehicles that will be imported by the mining companies.
(ii)
Amend paragraph 22 (a) of the Fifth Schedule Part
B of the EAC CMA to include “refrigerated trailer”. Refrigerated Trailers
should be accorded the same treatment as refrigerated trucks which are exempt
from import duty to encourage distribution of fresh products like meat and
milks.
(iii)
Grant duty remission to producers/manufacturers of
medical diagnostic kits. The inputs for use in the manufacture of medical
diagnostic Kits attracts import duty while the finished Kits are exempted from
import duty under the 5th Schedule of EAC CMA 2004.
(iv)
Amend Part B of the 5th Schedule to add
beekeeping equipments in order to grant exemption of import duty to honey
refiners, honey strainers, Honey pumps, Hive tools, Queen rearing equipments
and Protective gears. The measure is intended to encourage growth of beekeeping
industry in the country.
(v)
Continue granting exemption of import duty to
Armed Forces Canteen Organization for the period of one year.
(vi)
Amend the EAC CMA 2004 to provide duty remission
to producers of nutritious food/products for feeding infants facing
malnutrition and persons suffering from HIV/AIDS in the country. The measure is
intended to ensure availability of these products through encouraging local
production.
110. Madam Speaker, I
propose to make further amendments in various tax laws as follows: -
(i)
Abolish of Import duty exemption on all non-utility motor vehicles with
3000cc and above for all beneficiaries. However, this measure will not affect
Donor Funded Projects currently enjoying exemptions under the existing
Agreements with the Government, Diplomats and Diplomatic Missions.
(ii) Reduce tax exemptions originally
granted to goods known as “Deemed capital goods” from 100 percent to 90
percent. This means an investor shall be
obliged to pay 10 percent of the due tax.
The import duty measures together will reduce Government revenue by
Tshs. 12,805 million.
111. Madam Speaker, All
these tax reform measures have taken into account the government’s objective to
improve economic growth and increase revenue collections so as to eventually
reduce budgetary dependence on aid.
In order to implement the Government objective, the revenue measures
are aimed at gradually reducing tax exemptions to 1 percent of the Gross
Domestic Product as it is the case with the other EAC Partner States.
L.
Effective Date for Implementation of New Revenue Measures.
112. Madam Speaker, unless stated
otherwise, the new revenue measures shall become effective on 1st
July 2012.
V. The Structure of 2012/13 Budget
113. Madam Speaker, consistent with
macroeconomic and fiscal policy objectives, the Government projects
to raise shillings 15,119.6 billion in 2012/13 fiscal year. Out of this amount, shillings 8,714.8 billion
are tax and non-tax revenue which is equivalent to 18 percent of GDP. In additional, Local Government own revenue
sources are projected at shillings 362.2, equivalent to 0.7 percent of GDP.
114.
Madam Speaker, during the
fiscal year 2012/13, Development
Partners will continue to support the
Government budget in the form of grants and concessional loans amounting to
shillings 3,156.7. Out of this amount,
shillings 842.5 billion is General Budget Support and shillings 2,314.2 billion
are grants and loans for development projects, including basket funds and Millennium Challenge Account funds.
115. Madam
Speaker, the Government plans to borrow shillings 2,886.1 billion from
both domestic and external sources to bridge the financing gap. Out of this
amount, shillings 1,148.1 billion will be for rolling over of maturing
Government securities, shillings 483.9 billion equal to 1 percent of GDP and
shillings 1,254.1 billion will be raised from non-concessional loan.
116. Madam
Speaker, during the financial year 2012/13, the Government plans to
spend shillings 15,119.6 billion for both recurrent and development
expenditure. Out of the total amount,
shillings 10,591.8 billion is allocated for recurrent expenditure including
shillings 3,781.1 billion for wages and salaries for Government Ministries,
Departments and Agencies employees; while shillings 2,745.1 billion is
allocated for Consolidated Funds Service (CFS).
On the other hand, shillings 4,527.8 billion is allocated for
development expenditure. Out of this
amount, shillings 2,213.6 billion is from domestic sources and shillings
2,314.2 billion will be raised from external sources.
117. Madam Speaker, the summary of the
budget frame for 2012/13 is as shown in the table below.
Revenue
|
Shillings Million
|
||
A.
|
Domestic
Revenue
|
|
8,714,671
|
|
(i) Tax Revenue (TRA)
|
8,070,088
|
|
|
(ii) Non Tax Revenue
|
644,582
|
|
|
|
|
|
B.
|
LGAs
own Source
|
|
362,206
|
C.
|
General
Budget Support
|
|
842,487
|
D.
|
Foreign
Loans and Grants including (MCA (T)
|
|
2,314,231
|
E.
|
Domestic
Borrowing
|
|
1,631,957
|
F.
|
Non-Concessional
Borrowing
|
|
1,254,092
|
|
|
|
|
|
TOTAL
REVENUE
|
|
15,119,644
|
|
|
|
|
|
Expenditure
|
|
|
G.
|
Recurrent
Expenditure
|
|
10,591,805
|
|
(i) Consolidated Financial Services
|
2,745,056
|
|
|
(ii) Wages and Salaries
|
3,781,100
|
|
|
(iii)
Other charges
|
4,065,649
|
|
|
Ministries 3,311,399
|
|
|
|
Regions 49,701
|
|
|
|
LGAs 704,549
|
|
|
H.
|
Development
Expenditure
|
|
4,527,839
|
|
(i) Local
|
2,213,608
|
|
|
(ii) Foreign
|
2,314,231
|
|
|
TOTAL
EXPENDITURE
|
|
15,119,644
|
Conclusion
118.
Madam Speaker, through this budget, the
Government is set to implement the 2012/2013 Development Plan, which directs
investment of national resources in few priority areas with a view to
accelerate economic growth and reduction of poverty. The Government will continue to encourage the
private sector to invest in priority areas. In addition, every citizen is
called upon to participate effectively in the utilization of available
opportunities by providing services and engaging in productive activities in
order to increase income.
119.
Madam
Speaker, successful implementation of the 2012/2013 budget is
predicated upon high degree of discipline by Ministries, Departments, Agencies
and Local Authorities in revenue collection and use of public funds. All unproductive and unnecessary expenditures
should be avoided. Private sector has
high potential to contribute to economic growth. It is therefore important for the Ministries,
Departments, Regions and Local Authorities to give opportunities to the private
sector to contribute effectively to growth of our National economy.
120.
Madam Speaker, the 2012/2013 budget Session is being held few months before we carry
out the population and housing census; scheduled for 26 August 2012. The slogan
for this year’s census is “Census for Development, Get Prepare to be
Counted”. I wish to encourage Honorable Members of
Parliament and leaders at all levels to sensitize the public to participate in
this important exercise whose results are important for providing statistics
that would enable the Government to prepare development plans reflective of the
needs of the people for effective planning.
121.
Madam Speaker, I would like to take this opportunity to thank voters in Kalenga
constituency for electing me as their Member of Parliament and for the
cooperation they are extending to me. I
promise to continue working with them to bring about development to our
constituency. Lastly, I would like to
thank my lovely wife and family for supporting me as I continue carrying out my
new responsibilities.
122.
Madam Speaker, I beg to move.
Table 2a: Budget Frame for 2006/07
- 2012/13
|
||||||||
TSh Million
|
||||||||
|
2006/07
|
2007/08
|
2008/09
|
2009/10
|
2010/11
|
2011/12
|
2011/12
|
2012/13
|
|
Actual
|
Actual
|
Actual
|
Actual
|
Actual
|
Budget
|
likely
|
Budget
|
|
|
|
|
|
|
|
|
|
I. TOTAL RESOURCES
|
4,504,371
|
5,269,042
|
7,055,811
|
8,965,856
|
10,398,716
|
13,525,895
|
13,102,288
|
15,119,644
|
Domestic revenue
|
2,739,022
|
3,634,581
|
4,240,074
|
4,645,213
|
5,577,986
|
6,775,952
|
6,959,554
|
8,714,671
|
LGAs Own Sources
|
|
|
|
0
|
158,280
|
350,497
|
200,000
|
362,206
|
Programme loans and grants
|
746,783
|
990,452
|
936,422
|
1,224,096
|
900,825
|
869,414
|
910,219
|
842,487
|
Project loans and grants
|
675,030
|
844,970
|
797,376
|
1,134,708
|
1,209,192
|
1,889,878
|
1,685,613
|
1,465,461
|
Basket support Loans
|
47,331
|
200,628
|
151,370
|
258,067
|
220,681
|
296,000
|
252,000
|
159,220
|
Basket support Grants
|
111,560
|
197,953
|
263,866
|
194,071
|
334,609
|
392,000
|
444,000
|
255,916
|
MDRI (IMF)
|
119,002
|
114,200
|
67,997
|
22,403
|
0
|
0
|
0
|
0
|
MCA (T)
|
0
|
0
|
11,733
|
19,930
|
196,114
|
476,259
|
507,000
|
433,634
|
Non-Bank Borrowing/ roll over
|
212,475
|
-19,795
|
1,108
|
714,315
|
720,249
|
810,902
|
810,902
|
1,148,107
|
Bank Borrowing
|
25,533
|
-316,755
|
212,567
|
559,769
|
1,244,330
|
393,360
|
402,000
|
483,851
|
Adjustment to Cash
|
-172,364
|
-377,192
|
275,298
|
167,298
|
-317,498
|
0
|
0
|
0
|
Privatisation Funds
|
0
|
0
|
45,000
|
9,659
|
0
|
0
|
0
|
0
|
Non-Concessional borrowing
|
0
|
0
|
0
|
0
|
153,948
|
1,271,634
|
931,000
|
1,254,092
|
EPA Resource
|
|
|
53,000
|
16,327
|
0
|
0
|
0
|
0
|
|
|
|
|
|
|
|
|
|
II. TOTAL EXPENDITURE
|
4,504,371
|
5,269,042
|
7,055,811
|
8,965,856
|
10,398,716
|
13,525,895
|
13,102,288
|
15,119,644
|
|
|
|
|
|
|
|
|
|
RECURRENT EXPENDITURE
|
3,167,160
|
3,458,070
|
4,925,443
|
6,354,550
|
7,649,679
|
8,600,286
|
8,742,203
|
10,591,805
|
|
|
|
|
|
|
|
|
|
CFS
|
469,654
|
583,799
|
682,183
|
1,473,779
|
1,625,883
|
1,910,376
|
2,102,862
|
2,745,056
|
Debt service
|
245,253
|
324,880
|
269,947
|
1,040,997
|
1,116,572
|
1,194,652
|
1,387,138
|
1,934,914
|
Others
|
224,400
|
258,919
|
412,237
|
432,782
|
509,311
|
715,724
|
715,724
|
810,141
|
|
|
|
|
|
|
|
|
|
Recurrent Exp. (excl. CFS)
|
2,697,506
|
2,874,271
|
4,243,260
|
4,880,770
|
5,827,682
|
6,689,910
|
6,639,340
|
7,772,901
|
o/w Salaris and wages
|
976,094
|
1,134,709
|
1,608,591
|
1,723,414
|
2,346,378
|
2,835,186
|
2,768,000
|
3,147,063
|
Parastatal PE
|
|
|
|
349,188
|
457,665
|
435,107
|
515,941
|
634,037
|
Designated
|
0
|
0
|
0
|
0
|
0
|
414,238
|
414,238
|
379,790
|
LGAs Own Sources
|
|
|
|
0
|
158,280
|
350,497
|
200,000
|
362,206
|
Other Charges
|
1,721,412
|
1,739,562
|
2,634,669
|
3,157,356
|
3,323,024
|
3,089,990
|
3,257,102
|
3,883,843
|
|
|
|
|
|
|
|
|
|
DEVELOPMENT EXPENDITURE
|
1,337,211
|
1,810,972
|
2,130,368
|
2,611,306
|
2,749,037
|
4,925,609
|
4,360,086
|
4,527,839
|
Local
|
503,291
|
567,421
|
906,023
|
1,004,530
|
984,555
|
1,871,472
|
1,471,472
|
2,213,608
|
Foreign
|
833,920
|
1,243,551
|
1,224,345
|
1,606,776
|
1,764,482
|
3,054,137
|
2,888,613
|
2,314,231
|
|
|
|
|
|
|
|
|
|
GDPmp
|
19,444,835
|
22,865,041
|
26,474,231
|
30,321,314
|
35,026,679
|
39,336,000
|
41,120,371
|
48,385,096
|
Table
2b: Budget Frame for 2006/07 - 2012/13 as a Percentage of GDP
|
|
|
|
|||||||||
|
|
|
|
|||||||||
|
2006/07
|
2007/08
|
2008/09
|
2009/10
|
2010/11
|
2011/12
|
2011/12
|
2012/13
|
||||
|
Actual
|
Actual
|
Actual
|
Actual
|
Actual
|
Budget
|
likely
|
Budget
|
||||
|
|
|
|
|
|
|
|
|
||||
I. TOTAL RESOURCES
|
23.2%
|
23.0%
|
26.7%
|
29.6%
|
29.7%
|
34.4%
|
31.9%
|
31.2%
|
||||
Domestic
revenue
|
14.1%
|
15.9%
|
16.0%
|
15.3%
|
15.9%
|
17.2%
|
16.9%
|
18.0%
|
||||
LGAs
Own Sources
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.5%
|
0.9%
|
0.5%
|
0.7%
|
||||
Programme
loans and grants
|
3.8%
|
4.3%
|
3.5%
|
4.0%
|
2.6%
|
2.2%
|
2.2%
|
1.7%
|
||||
Project
loans and grants
|
3.5%
|
3.7%
|
3.0%
|
3.7%
|
3.5%
|
4.8%
|
4.1%
|
3.0%
|
||||
Basket
support Loans
|
0.2%
|
0.9%
|
0.6%
|
0.9%
|
0.6%
|
0.8%
|
0.6%
|
0.3%
|
||||
Basket
support Grants
|
0.6%
|
0.9%
|
1.0%
|
0.6%
|
1.0%
|
1.0%
|
1.1%
|
0.5%
|
||||
HIPC
relief - Multilateral
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
||||
MDRI
(IMF)
|
0.6%
|
0.5%
|
0.3%
|
0.1%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
||||
MCA
(T)
|
0.0%
|
0.0%
|
0.0%
|
0.1%
|
0.6%
|
1.2%
|
1.2%
|
0.9%
|
||||
Non-Bank
Borrowing
|
1.1%
|
-0.1%
|
0.0%
|
2.4%
|
2.1%
|
2.1%
|
2.0%
|
2.4%
|
||||
Bank
Borrowing
|
0.1%
|
-1.4%
|
0.8%
|
1.8%
|
3.6%
|
1.0%
|
1.0%
|
1.0%
|
||||
Adjustment
to Cash
|
-0.9%
|
-1.6%
|
1.0%
|
0.6%
|
-0.9%
|
0.0%
|
0.0%
|
0.0%
|
||||
Privatisation
Funds
|
0.0%
|
0.0%
|
0.2%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
||||
Non-Concessional borrowing
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.4%
|
3.2%
|
2.3%
|
2.6%
|
||||
EPA Resource
|
0.0%
|
0.0%
|
0.2%
|
0.1%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
II. TOTAL EXPENDITURE
|
23.2%
|
23.0%
|
26.7%
|
29.6%
|
29.7%
|
34.4%
|
31.9%
|
31.2%
|
||||
|
|
|
|
|
|
|
|
|
||||
RECURRENT
EXPENDITURE
|
16.3%
|
15.1%
|
18.6%
|
21.0%
|
21.8%
|
21.9%
|
21.3%
|
21.9%
|
||||
|
|
|
|
|
|
|
|
|
||||
CFS
|
2.4%
|
2.6%
|
2.6%
|
4.9%
|
4.6%
|
4.9%
|
5.1%
|
5.7%
|
||||
Debt
service
|
1.3%
|
1.4%
|
1.0%
|
3.4%
|
3.2%
|
3.0%
|
3.4%
|
4.0%
|
||||
Others
|
1.2%
|
1.1%
|
1.6%
|
1.4%
|
1.5%
|
1.8%
|
1.7%
|
1.7%
|
||||
|
|
|
|
|
|
|
|
|
||||
Recurrent
Exp. (excl. CFS)
|
13.9%
|
12.6%
|
16.0%
|
16.1%
|
16.6%
|
17.0%
|
16.1%
|
16.1%
|
||||
o/w
Salaris and wages
|
5.0%
|
5.0%
|
6.1%
|
5.7%
|
6.7%
|
7.2%
|
6.7%
|
6.5%
|
||||
Designated
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
1.1%
|
1.3%
|
1.3%
|
||||
LGAs
Own Sources
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.5%
|
1.1%
|
1.0%
|
0.8%
|
||||
Other
Charges
|
8.9%
|
7.6%
|
10.0%
|
10.4%
|
9.5%
|
0.9%
|
0.5%
|
0.7%
|
||||
|
|
|
|
|
|
|
|
|
||||
DEVELOPMENT
EXPENDITURE
|
6.9%
|
7.9%
|
8.0%
|
8.6%
|
7.8%
|
0.0%
|
0.0%
|
0.0%
|
||||
Local
|
2.6%
|
2.5%
|
3.4%
|
3.3%
|
2.8%
|
12.5%
|
10.6%
|
9.4%
|
||||
Foreign
|
4.3%
|
5.4%
|
4.6%
|
5.3%
|
5.0%
|
4.8%
|
3.6%
|
4.6%
|
||||
|
|
|
|
|
|
|
|
|
||||
Source: Ministry of Finance
|
|
|
|
|
|
|
|
|
||||
Table 3: External Resources for
National Budget 2011/12 and 2012/13
|
||||||||||||
|
|
|
Tsh
Million
|
|||||||||
|
|
2011/12
|
2012/13
|
|||||||||
General Budget Support
|
Grants
|
700,791
|
622,503
|
|||||||||
Concessional Loans
|
168,623
|
219,984
|
||||||||||
|
Total
|
869,414
|
842,487
|
|||||||||
|
|
|
|
|||||||||
Baskets Funds
|
Grants
|
392,000
|
255,916
|
|||||||||
Concessional Loans
|
296,000
|
159,220
|
||||||||||
|
Total
|
688,000
|
415,136
|
|||||||||
|
|
|
|
|||||||||
Projects
|
Grants
|
1,148,878
|
696,458
|
|||||||||
Concessional Loans
|
741,000
|
769,003
|
||||||||||
MCC Projects
|
476,259
|
433,634
|
||||||||||
Total
|
2,366,137
|
1,899,095
|
||||||||||
|
GRANT TOTAL
|
3,923,551
|
3,156,718
|
|||||||||
Source: Ministry of Finance
|
|
|
|
|||||||||
note that some graphic has been removed because of non-compatibility, we are sorry if that troubles you!!!
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