Tanzania and the World Bank (WB) yesterday signed an International Development Association (IDA) credit facility worth USD100m, which is equivalent to 159bn/-, for the ninth Poverty Reduction Credit (PRSC-9).
WB country director for Tanzania, Uganda and Burundi, Africa region Philippe Dongier said at the signing ceremony held in Dar es Salaam that the funds would be direct budget support to improve Tanzania’s investment climate and promote shared growth through sound public finance management.
Dongier stressed, “PRSC-9 is the first in a series of three annual operations (PRSCC-9/11) supporting the implementation of Tanzania’s second national strategy for growth and reduction of poverty known as MKUKUTA II, complemented by the first five year development plan”.
He noted that the credit would provide a new platform for policy dialogue and support to critical reforms for private development.
By focusing on the new creation of a regional transit hub, the programme aims at creating synergies between Tanzania and its neighboring countries, while its focus on domestic revenue mobilisation will contribute to improve management delivery of social services.
The new PRSC series is aligned with the harmonised framework for the General Budget Support (GBS), which the World Bank supports with 11 other development partners.
The GBS accounted for 9 per cent of the government budget and 35 per cent of the total foreign aid in the financial year 2010/11.
Speaking at the function, Finance Minister Mustafa Mkulo said that, the private sector should act as a stimulus for the development of the economy to generate more job opportunities, which will eventually strengthen the economy through taxes.
He said as part of strategies to improve the economy the government would improve infrastructure such as roads, electricity and water supply.
According to him, the funds will be spent on surveying and distributing plots. Moreover, he said, the money will be invested in improving the efficiency of the harbour since there are eight land locked countries using it.
“The ninth poverty reduction support credit is expected to contribute to poverty reduction and improved social conditions in Tanzania, which focus on two main areas namely, promotion of private sector growth and development and improvement of fiscal policy and management,” he said, adding:
“Efforts in the first focal area will support improvements in the general investment climate, accompanied by specific reforms in land access, special economic zones and facilitation of a regional transit hub, while reforms in the second focal area will stress on the need to consolidate the current efforts for improving public financial management and budget transparency”.