AfDB Approves US$ 156 Million Budget Support for Tanzania

30/10/2008
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Tunis, 29 October 2008 - Efforts by the Government of Tanzania to enhance accountability and transparency in the allocation of its public resources received strong support on Wednesday in Tunis where the Board of Directors of the African Development Fund (ADF), the concessional window of the African Development Bank (AfDB) Group, approved a loan of 100 million Units of Account (UA*), equivalent to US$ 156 million to assist in the implementation of the country’s Poverty Reduction Strategy.

The goal of the proposed loan is to provide the Tanzanian government with direct budget support to assist in implementing its Poverty Reduction Strategy. The implementation of the strategy will also help in realizing the MDGs, and in promoting sustainable economic growth and development.

The objective of the program is to enhance accountability and transparency in the allocation and management of public financial resources. It will focus on selected policy actions and reforms that contribute towards Tanzania’s public sector management reform agenda, which include: effective Public Financial Management (PFM) reforms related to revenue mobilisation, procurement practices and audit functions; and performance of the infrastructure sector through better governance in the road sub sector.

The third Poverty Reduction Support Loan (PRSL III) from 2008 to 2010 is expected to enhance public financial management through: strengthened procurement practices, audit functions, and enhanced revenue mobilization. It is also geared to improve the performance of infrastructure sector through better governance in the road sub-sector. The program is aligned with Tanzania’s Poverty Reduction Strategy, the Bank’s Joint Assistance Strategy (JAST), and the Governance Strategic Directions 2008-2012.

The Bank’s assistance for the period 2006-2010 is focused on two of the three pillars of the country’s Poverty Reduction Strategy (MKUKUTA in Swahili): Growth and reduction of income poverty and; (ii) Improvement of the quality of life and well being. The PRSL III aims at creating synergies with the Bank’s on-going portfolio that includes support for infrastructure (roads and energy), agriculture, social sector (education and health), water, and public finance management (procurement reform). The operation is designed to leverage reforms aimed at strengthening the policy environment for the effectiveness of ongoing interventions. While the Bank-supported projects in roads, energy, and water are helping to boost the government’s infrastructure investment program, the PRSL III will complement that support by strengthening the policy, legal and regulatory environment.

The program will benefit government institutions that are directly tasked with accountability, transparency and fiduciary control in the allocation and expenditure of public resources. In particular, it will contribute to enhancing the functions of: external auditing, regulatory arrangements and public procurement and tax revenue collection. Support to the road-sub sector will strengthen the role of key implementers of road programs across the country. The people of Tanzania will benefit from better public financial management that will translate into more resources for the delivery of essential goods and services and improved quality. The processes and reforms supported will help to stimulate growth, reduce poverty and foster greater economic integration and promote gender mainstreaming activities.

Tanzania is the largest beneficiary of African Development Bank (ADF XI) resources with an allocation of UA404 million, as a result of it high performance ratings. The World Bank and 12 bilateral donors are also providing budget support to the country.

The Bank Group commenced operations in Tanzania in 1971. To date, the institution’s cumulative commitment in the country stands at US$ 1.86 billion for 106 operations.

* 1 UA = US$ 1.55722 as at 29/10/2008

CONTACTS: E-mail: b.o.toure@afdb.org