Washington, DC, September 8: The World Banks Board of Executive Directors Thursday approved a 150 million US dollar (900 mio. DKR) credit to support the implementation of Tanzanias National Strategy for Growth and Poverty Reduction (MKUKUTA).
Tanzanias third Poverty Reduction Support Credit (PRSC-III) provides financial support to close the gap between the cost of implementing key elements of MKUKUTA and the resources available from the governments own domestic revenue and other donor support.
PRSC-III will help implement the comprehensive structural reforms on which Tanzania has embarked to improve economic governance, enhance public service delivery, and create an enabling environment for private sector activities.
It will finance efforts to accelerate, sustain and broaden the impact of economic growth, enhance public sector performance, foster a results culture in public service delivery, and strengthen environmental management.
Private sector and rural development are the two areas where reforms financed by PRSC-III are expected to have the biggest impact on reducing income poverty in Tanzania.
The core reforms are expected in agricultural and rural development focusing on raising agricultural productivity and enhancing the incomes rural dwellers, where poverty is most widespread and most deeply entrenched.
The measures in rural development will include improving the profitability of agriculture and export products through reduced marketing cost; improved access to markets and to financing; the removal of institutional constraints remaining on rural activities; and correcting the incentives provided by the overall tax regime.
With respect to private sector development, the focus will be on improving the business environment, in particular for Small and Medium Enterprises, and putting in place legal and administrative reforms to enhance the functioning of land, credit, and labor markets.
The credit will fund measures to build capacity within the public sector to implement poverty reduction programs in the priority sectors and generate additional funds for poverty reduction by reducing leakages and improving operational efficiency of public expenditures.
It will help to strengthen the national audit office, implement a payroll reform, implement anticorruption strategies, enhance efficiency in the use of development assistance and ensure improved performance in public sector procurement.
The credit will ensure improved basic service delivery in the priority sectors identified in MKUKUTA: primary education, basic health, rural roads, agricultural research and extension, the judiciary, HIV/AIDS, rural water supply and waste disposal, among others.
Reforms in the area of public financial management include the implementation of an integrated financial management system, the adoption of an inclusive Public Expenditure Review/Medium Term Expenditure Framework process, and the revision of the public finance management and the public procurement acts.
Although Tanzania experienced economic difficulties and worsening poverty in the early 1990s the benefits of the more recent growth have reversed the trend. During the past decade, food poverty has declined from 21,6 percent to 18,7 percent while basic needs poverty is down from 38,6 percent to 35,7 percent.
The credit is on standard International Development Association (IDA) terms, with a commitment fee of 0,35 percent and a service charge of 0,75 percent. The credits period of maturity is 40 years, including a 10-year period of grace (afdragsfri periode).
For more information on the World Banks work in Africa visit:
www.worldbank.org/afr/
Kilde: www.worldbank.org
