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World Bank approves $200 million credit
2006-05-11 09:50:16
By Anaclet Rwegayura, PST, Addis Ababa
The World Bank on Tuesday approved a $200 million credit to Tanzania to support the government’s strategy for economic growth and poverty reduction.
The credit will provide financing for Tanzania’s 2006-2007 budget and incentives to implement key economic and social reforms, the World Bank said in a statement.
This is the fourth World Bank credit extended to Tanzania to help keep its reform program on track.
’’With particular focus on growth and jobs, this complements earlier efforts to ensure improved access to basic services by all Tanzanians,’’ said Judy O’Connor, World Bank Country Director for Tanzania and Uganda.
The bank’s Board of Executive Directors approved the Fourth Poverty Reduction Support Credit (PRSC-4) to help the Tanzanian Government pursue its policy objectives laid out in the MKUKUTA by providing financing for the 2006/2007 budget, she said.
According to the World Bank, the credit would provide some incentives to implement key economic, social and institutional reforms to strengthen the overall performance of the economy and contribute to poverty alleviation.
The government reform programme is supported by a series of PRSCs as well as harmonized budget support from 13 other donors and runs from 2006 to 2010, said O’Connor.
The reform programme aims at sustaining high rates of economic growth in the range of 6 to 8 per cent annually, which are projected to translate into a significant reduction of poverty incidence in the country, she said.
Tanzania is also expected to make progress towards the realization of the Millennium Development Goals (MDGs) by increasing school enrolment and literacy rates, reducing child and maternal mortality, increasing access to safe water, and strengthening the sustainability of development efforts, she said.
’’PRSC-4 continues IDA’s financial support for achieving the Government’s MDGs and MKUKUTA goals, and is a further step in the steady progress towards the goal of achieving middle income status,’’ O’Connor said.
’’With particular focus on growth and jobs, this complements earlier efforts to ensure improved access to basic services by all Tanzanians,’’ said O’Connor.
The proposed credit would focus on private sector and infrastructure development in support of Government’s objective to making the private sector the engine of growth, she explained.
It would also help sustain rural development to improve the livelihood of the poor and enhance access to quality and essential public services and improve social indicators.
The PRSC-4 is expected to increase the effectiveness of public service delivery and improve governance through public service reform and institutional capacity building.
’’The government of Tanzania has undertaken economic reforms during the past decade that have provided strong basis for continued economic growth and there is a strong commitment by the fourth phase government to sustain macro-economic stability,’’ said Robert Johann Utz, the World Bank Task Team Leader for the project.
The PRSC-4, according to World Bank officials, would help ensure better coherence with national policy and draw on government’s own processes to guarantee transparency and accountability to domestic stakeholders.
It will increase government ownership, by avoiding the use of conditionality as policy leverage and instead focus on due process and have a common approach for all budget support development partners.
The credit has been provided in the context of a common framework and joint review process supported by a group of 14 donors, providing for consistency of policy dialogue and reduction of transaction costs.
General budget support has played an important role in supporting Tanzania’s efforts to maintain macro-economic stability while increasing public expenditure to enhance access to social services and to invest in public infrastructure.
Efforts by all development partners to enhance the predictability of budget support and to minimize year to year fluctuations have also contributed to macro-economic stability in Tanzania, said O’ Connor.
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