The Effects of COVID-19 Pandemic on the Government Revenue in the Extractive Industry in Tanzania

Abstract

Tanzania has not been unique amid the COVID-19 pandemic in terms of economic impact. Since the first case was announced in March 2020, several thousand cases have been confirmed with several hundred deaths (real-time data). There were a number of transmitting factors and effects that exposed Tanzanian national revenue systems to great economic risk if COVID-19 was not well managed. The paper assesses the level of risks on the total government revenue resource systems, government revenue collections from the extractive industries and national expenditure budget performances. This descriptive paper uses results from the HakiRasilimali field research survey, 2020. The paper found high and increasing levels of negative and perceived risks on the government revenue mobilization, collection and utilization due to the existence of the COVID-19 pandemic. The majority perceived that the COVID-19 pandemic has high levels of risks and negative effects on the national budget expenditure frameworks in medium- and long-term periods. In the short run it is not easy to cut down and stop major recurrent government expenditures in developing economies. The public expenditure resources allocated to the Ministry of Minerals have been increasing during the COVID-19 pandemic to support the on-going mining reforms in Tanzania. Also, the government was compelled to allocate more financial resources to the health sector in order to fight against the COVID-19 pandemic and the aftermath, as well as support other most affected sectors. The paper recommends that the best way of preventing and combating the COVID-19 risks and related public health threats or possibilities is to protect and give capacity to socio-economic entities, sectors and actors’ abilities in achieving their desired short-, medium- and long-term objectives. To support a robust health and economic policy response, Tanzania has in its potential fiscal space relative to other East African countries, stable political environment, high international reserves, larger domestic market and favorable mineral commodity price movements. Tanzania has enhanced political preparedness and containment capacity through measures to strengthen detection, surveillance and combating the current COVID-19 pandemic.