The government will continue borrowing abroad for productive investment, senior central bank official said.
Bank of Tanzania Director of Research and Policy, Dr Joseph Masawe, said talks were currently going on with banks on a syndicated loan of between $500 million and $800 million, with proceeds earmarked to finance development projects.
“The government is in talks with various institutions, but that is being done very cautiously,” he said.
He said the country’s total debt now stood at the equivalent of about 39 percent of gross domestic product (GDP), a
figure that takes into account the maturity profile of the debt.
Based on those debt levels, he said, there was still “a lot of headroom” for borrowing for productive investment.
He also said that Tanzania still intended to issue its first Eurobond but that it would not do so “at any cost”, noting that the cost of such borrowing had climbed.
Several African nations have sold debut Eurobonds in the past the two years or so, including neighbouring Kenya and Rwanda, but turmoil on global markets has driven up yields on such issues, discouraging some other new
Tanzania had in the past said it would seek to issue the Eurobond in financial year 2015/16, which started on July 1.
Dr Masawe said that the government was now in discussion with banks to raise $500 million to $800 million
via a syndicated loan for this financial year.
“All these resources will be for investment in development projects, including infrastructure,” he said.
“We intend also to go for a Eurobond. Definitely we will look at price, because it is not money at any cost,” added Dr Masawe. “Tanzania intends to issue a Eurobond when the prices are favorable.”
He said Tanzania’s likely cost of borrowing in the Eurobond market had risen in recent months from 6-7 percent
to 9 percent.
Dr Masawe said it would take about 12 months before Tanzania had secured a credit rating, so the east African
country could be ready to issue a Eurobond by late 2016, assuming the pricing was right then.