Sunday, August 17, 2008

2008/9 Tanzania national Budget On the eyes of consumers

By Bernard Kihiyo
The National budget is the most important economic policy instrument for our government; it reflects government income and expenditure based on government's social and economic policy priorities.

The national budget does translate policies, political commitments, distribution of wealth, and goals into decisions on where funds should be spent and how funds should be collected.

In this budget analysis I will try to touch on anti-poverty focus, the expenditure side and revenue side of this year budget 2008/9.

Anti-poverty focus
Government budget is directly or indirectly affects the life of all its citizens especially people with modest means are influenced the most. They tend to be affected by weak economic growth, unequal distribution or high inflation.

Even when funds have been allocated to anti-poverty programs, weak expenditure and program management — and lack of political power among the poor — can mean that the money never reaches the intended beneficiaries.

By making budget systems more transparent and participatory from grassroots level; to have a particular concern with policies affecting the marginalized poor is inevitable.

Citizen participation on budget preparation is inevitable;
TCAS have realized that citizen’s ability to advance their goals — whether these are to combat poverty or to strengthen democratic practices — will be enhanced if we develop a capacity to undertake National budget analysis from grassroots to national level to see if it is in favour of common citizens.

Expenditure focus
On expenditure side, this year national budget was built on sectoral incremental amounts using the last year budget as a baseline though altered considerably in response to changes in the economic situation or in government priorities for instance;

(In TZS)
SECTOR Budget 2007/8 Budget 2008/9 % Increment
Education 1.086 trillion 1.43 trillion 32%
infrastructure 777.2 billion 973.3 billion 25%
Health 589.9 billion 803.8 billion 36%
Agriculture 379.0 billion 460.0 billion 21%
Water 230.6 billion 309.1 billion 34%
Energy 354.0 billion 383.4 billion 8%

I do have the feeling that; the budget increment for 2008/9 is purely superficial as food and oil crisis is striking Tanzania to the roots of its economy, for instance July.2007 one litre of petrol was TZS 1200 to date July.2008 is TZS 1800 this is 67%

With the assumption that; the above situation is not controlled for the coming six months the ability of the government to spend is going to be affected tremendously by the increase on fuel price as inflationary impact on government’s marginal propensity to consumer will be high.

Even at this particular time, it appears to me there is no any budget increase on 2008/9 budget as compared to the last year budget rather there is budget decrement of more than 10% compared with the 2007/8 budget. Just give yourself a little homework on how much/many goods you can get for say TZS 1000 a year ago and what you can get today.

Based on what you got in the above homework; is the same going to affect the government spending, the government as the main spender of goods and services in the market; if commodity price are affected by the fuel prices increment and the like, definitely the government is going to get few goods and services for this year budget no matter the increment per each sector.

For instance Education (32%), Roads and infrastructure (25%) Health (36%) Agriculture (21%) Water and sewage (34%) and Electricity (8%) this is just to mention a few depending on the volume of activities in place.

Inflation should be the number one government enemy; according to BoT statistics Food inflation has reached double digits to 11% in May.2008 from 7.7% in January; it appears on the side of individual consumer, is going to be badly affected as his/her marginal propensity to consumer will be very much affected

If this situation is not careful taken care off, there will be public disorder such as increase in robberies, public and street protests, employees’ boycotts and possibly the government might call for supplementary budget anytime between this budget year.

I support the ideal of fuel bulk purchase through Tanzania Petroleum Development Corporation (TPDC) as one of the immediate solution to frequent price change and curbing of cartels in this business locally and internationally to stabilize consumer prices in the country and hence stabilize the whole economy.

Another issue I would like to discuss on expenditure side is the biggest problem with our government on ethical use of government funds in accordance with Govt procurement Act; do we have enough expatriate on this line, if not what are the plans in place to curb the problem, from LGAs, ministries, government institutions and the like.

Revenue focus
According to my observation, the budget ceiling and sources of taxes are lowly set and reliable sources for taxes are skipped for either political motivation or civil servants’ self gain reasons.

I should say there is low compliance in terms of taxes as all the taxes from tourism, mining, natural resources, industry and service sector are not very well tapped to the fullest to fund the budget gaps and it is possible for Tanzania to have budget surplus as it appeared once in 1974.

All sources where the government can get income should be taken into consideration instead of relaying on the traditional method of taxing consumer’s goods such as beers, soft drinks, cigarettes, cooking oil, gas oil and the like

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