Tanzania - Commercial Banks have topped the list of leading investors in buying government debt stock, holding 46.8 per cent. The Bank of Tanzania (BoT) comes second, accounting for 26.4 per cent. The central bank said in its monthly economic review for September that the government domestic debt issued during the month amounted to 108.5bn/-, out of which, 99bn/- were Treasury Bills while 9.5bn/- were Treasury Bonds.

Other investors outlined in the bank report are the pension funds with 18.3 per cent, insurance (5.4 per cent), non-bank financial institutions (2.2), BoT Special Funds (1.0), official entities (0.5) and private sector (0.4). According the bank report, the external debt accounts for 80.2 per cent while domestic debt stands at 9.8 per cent. The external debt stock decreased by 6.3 million US dollars (about 10.08bn/-) to 9,725.4 million dollars (about 15.56bn/-) with 81.6 per cent being disbursed outstanding debt (DOD) and 18.4 per cent interest arrears. However, the total debt stock ballooned to 12,131.8 million US dollars (about 19.41tr/-) at the end of August 2011 from 12,112.8 million dollars (about 19.38tr/-) in the preceding month, stated the report. The increase is mainly explained by conversion of Treasury bills held by the central bank for liquidity management strategy into financing and issuance of Treasury bonds to meet the growing government funding needs.

In the month under review, the disbursements amounting to 6.7 million US dollars (about 10.72bn/-) were recorded. External debt service was 4.7 million US dollars (about 7.52bn/-) of which 3.9 million US dollars (about 6.24bn/-) was principal and 0.8 million dollars (about 1.24bn/-) interest payments. Likewise, the government domestic debt increased by 124.6bn/- to 3,862.1bn/-, from the level recorded at the end of July this year. The increase was mainly on account of increasing financing needs that resulted into conversion of liquidity papers worth 107.5bn/-, in face value. The government bonds accounted for the largest share of domestic debt followed by Treasury bills. A total of 112.9bn/- was due for payment, in which 21.6bn/- was paid out of government resources as interest, while principal amount of 91.3bn/- was rolled over.

Sebastian Mrindoko

Tanzania Daily News/07/11/2011