Transcript PER Cross Sector MTEF Final

ANNUAL NATIONAL POLICY DIALOGUE
PUBLIC EXPENDITURE REVIEW
MEDIUM TERM STRATEGY
AND CROSS CLUSTER MTEF
November 20, 2009
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Outline
 Overview of PER
 Economic performance and outlook
 Public financial management
 Budget strategy and the Medium Term Expenditure
Framework
 Aid management and effectiveness
 Concluding Remark
Overview of PER

PER is a forum between Government, DPs, Private
sector, CSO, NGOs, Research institutions and
Academia to deliberate various policy intents and
progress in implementing public sector reforms

Government takes the lead in the PER process,
and implements a set of agreed indicators
Indicators are in line with overall MKUKUTA
objective of:
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


Accelerated economic growth
Improve quality of life and social well-being
Good governance and accountability
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Overview of PER Cont’d...
 PER dialogue is organised under four cluster working
groups, the first three being MKUKUTA clusters, and
fourth-the Macro and PFM Group.
 The PER Main is the umbrella working group which
overseas the four cluster working groups and is
chaired by the Deputy Permanent Secretary.
 Most of analytic work is undertaken in the Cluster
Working Groups, with guidance from the PER Main
Group
 Challenge: The PER dialogue for 2009 has been less
effective in informing budget process. Discussions are
ongoing to revive PER process.
Economic Performance and Outlook
Tanzania has continued to record robust economic
growth, averaging 7.0 percent per annum over almost a
decade.
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GDP growth for 2008 was 7.4% compared to 7.1% in 2007.
The projections have been revised downward to 5.0%
in 2009 due to the impact of global financial crisis.
The economy experienced inflationary pressures, raising
to double digit level.

The Annual Headline Inflation rate for the year ended
October 2009 was 12.7%.

Food inflation rate has increased to 18.1% in
October from 17.3% in September 2009.

Non food inflation increased to 4.4% in October
2009 from 4.0% in September 2009.
Economic Performance and Outlook Cont’d...

Over years, domestic revenue exceeded projections,
however, in 2008/09 revenue collection was 18% above
the levels in 2007/08, but 10% below the target for the
year.

This performance was primarily due to the impact of
global financial crisis resulting in slowdown in the
growth of economic activities.

Some revenue measures which did not materialise.

The Government budget has continued to benefit from
external inflows from Development partners

Expenditure for FY 2008/09 was broadly in line with
resource envelope
PUBLIC FINANCIAL MANAGEMENT
 Progress:
 CAG report - general improvement in the management
and control of public finances in MDAs
 There has been significant improvement in bank
reconciliation
 The recruitment of a new PFMRP coordination
secretariat
 Ongoing review of Public Finance Act 2001:
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provide for the establishment of the new internal audit dept.
introduction of electronic funds transfer (EFT)
taking out sections on CAG following the enactment of the
Public Audit Act in August, 2008 and
give more powers to the PMG and the ACGEN to oversee and
monitor LGA finances.
PFM progress Cont’d…
 Migration from Govt Finance Statistics (GFS) system
1986 to the GFS 2001 economic classification.
 Budget books for 2009/10 prepared in line with GFS
2001
 2010/11 budget will be prepared in accordance with
GFS 2001 functional classification.
 Connection of all sub-treasuries and RSs to the main
IFMS database in Dar es Salaam
 Facilitates better expenditure control
 Enables timely production and consolidation of
systems generated reports
PFM Cont’d…
 Challenges include:
 fully integration of the IFMS with other systems
such as the payroll system and the debt and cash
management systems;
 strengthening predictability and availability of
funds to MDAs and other spending agencies;
 further reduction in the number of bank accounts
at the commercial banks;
 ensure that EFT system is fully operational;
 streamlining fund flows and multiple reporting
systems in LGAs.
BUDGET STRATEGY AND THE MTEF
 Budget: an instrument that implements various
national policy decisions aiming at realizing Vision
2025
 Budget trend
 Government budget has grown from 22.9% of GDP in
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2007/08 to 25.3% in 2008/09 and then 30.6 % in
2009/10.
Notable increase in domestic resources mobilization
Increase in external assistance
recurrent spending increase faster than development
spending
NB: key expenditures on social service delivery are
budgeted under recurrent spending
Budget Strategy Cont’d...
 A need for balance between recurrent and
development spending
 the country aims for higher economic growth which
requires investment in physical infrastructure
 Limit the growth of recurrent expenditures
 Scale up capital investment to accelerate economic
growth in line with the Vision 2025.
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Improve supportive transport and communication
infrastructure -roads, railway, ports and telecommunication;
irrigational infrastructure; and
ensuring availability of reliable and affordable power supply
Budget Strategy Cont’d...
 Enhance resource mobilisation both, from domestic
and external sources
 Improve expenditure management to enhance
efficiency
 Promote Public Private Partnerships (PPPs in
infrastructure development to complement existing
financing arrangements
 This will reduce fiscal burden
 Empower and promote private sector led growth
Medium Term Expenditure Framework
 Domestic revenue of 16.4% of GDP percent in
2009/10 and up to 17.0% in 2011/12
 Expenditure is estimated at 30.6% in 2009/10 and
a gradual decline to 26.8% by 2011/12
 External assistance of 10.2% in 2009/10 and will
level around 7.0% in the medium term.
 Domestic borrowing of 1.6% of GDP as part of
fiscal stimulus in 2009/10 and 1.0% in the
medium term.
 MKUKUTA financing for 2009/10 accounts for 71.2%
of total budget and is expected to remain around
this level in the medium term.
Resource Allocation across MKUKUTA
Clusters
2007/08
2008/09
2009/10
% of
Mkukuta
% of
Overall
% of
Mkukuta
% of
Overall
% of
Mkukuta
% of
Overall
Cluster I
33.1%
23.4%
34.1%
24.1%
39.2%
27.9%
cluster II
45.0%
31.8%
45.5%
32.2%
42.7%
30.4%
Cluster III
16.5%
11.7%
16.0%
11.3%
15.0%
10.7%
Cross Cutting
5.4%
3.8%
4.4%
3.1%
3.1%
2.2%
100.0%
70.6%
100.0%
70.8%
100.0%
71.2%
Total MKUKUTA
Non- MKUKUTA
29.4%
29.2%
28.8%
Overall
100.0%
100.0%
100.0%
Budget Frame for 2006/07 - 2011/12
2006/07
Actual
(As a percent of GDP)
2007/08
2008/09
Actual
Actual
2009/10
Budget
2010/11
Projections
2011/12
Projections
I. TOTAL RESOURCES
Domestic revenue
LGAs Own Sources
Programme loans and grants
Project loans and grants
Basket support Loans
Basket support Grants
HIPC relief - Multilateral
MDRI (IMF)
MCA (T) USA
Non-Bank Borrowing
Bank Borrowing
Adjustment to Cash
Privatisation Funds
23.2%
14.1%
0.0%
3.8%
3.5%
0.2%
0.6%
0.0%
0.6%
0.0%
1.1%
0.1%
-0.9%
0.0%
23.1%
16.0%
0.0%
4.3%
3.7%
0.9%
0.9%
0.0%
0.5%
0.0%
-0.1%
-1.4%
-1.7%
0.0%
25.4%
15.9%
0.0%
3.5%
3.0%
0.6%
1.0%
0.0%
0.3%
0.0%
0.0%
0.8%
0.2%
0.2%
30.6%
16.4%
0.4%
3.8%
3.4%
0.9%
0.9%
0.0%
0.4%
0.7%
1.9%
1.6%
0.0%
0.0%
27.3%
16.6%
0.4%
3.8%
2.2%
0.4%
0.6%
0.0%
0.0%
0.6%
1.7%
1.0%
0.0%
0.0%
26.8%
17.0%
0.4%
3.3%
2.2%
0.4%
0.4%
0.0%
0.0%
0.6%
1.5%
1.0%
0.0%
0.0%
II. TOTAL EXPENDITURE
23.2%
23.1%
25.4%
30.6%
27.3%
26.8%
16.3%
15.2%
17.5%
21.5%
17.9%
17.4%
2.4%
1.3%
1.1%
0.2%
1.2%
2.6%
1.4%
1.2%
0.3%
1.1%
2.5%
1.0%
0.9%
0.1%
1.5%
4.9%
3.4%
1.3%
2.1%
1.5%
4.8%
3.1%
1.2%
1.9%
1.7%
4.5%
2.8%
1.1%
1.7%
1.7%
13.9%
5.0%
0.0%
0.0%
8.9%
12.6%
5.0%
0.0%
0.0%
7.6%
14.9%
6.0%
0.0%
0.0%
9.0%
16.6%
5.7%
1.1%
0.4%
9.4%
13.1%
5.7%
0.0%
0.4%
7.0%
12.9%
5.7%
0.0%
0.4%
6.8%
6.9%
2.6%
4.3%
8.0%
2.5%
5.5%
7.9%
3.4%
4.5%
9.1%
3.1%
6.0%
9.4%
5.5%
3.9%
9.5%
5.8%
3.6%
RECURRENT EXPENDITURE
CFS
Debt service
Interest
Amortisation
Others
Recurrent Exp. (excl. CFS)
o/w Salaris and wages
Designated
LGAs Own Sources
Other Charges
DEVELOPMENT EXPENDITURE
Local
Foreign
AID MANAGEMENT AND EFFECTIVENESS
 Transparency and accountability are essential elements for
development results in line with:
 Paris Declaration,
 Accra Agenda for Action
 JAST Principles
 Under JAST, the GoT and DPs agreed to become more
accountable to each other and to their citizens.
 Aid Management Platform (AMP) System has been installed in
MoFEA
 Is a web based application tool designed for better management and
coordination of external resources.
 The Technical Assistance Policy has been developed in
consultations with key stakeholders. Once approved, the Policy
will guide the selection, management, monitoring and
evaluation of TA.
GBS performance (in USD mn)
DPs’ Aid Performance
GBS Partner performance 2008/09
GBS
Partner
Timing
Predictability
Frontloading
Amount
Predictability Score
Total
2008/09
Total
2007/08
Total
2006/07
Total
2005/06
ADB
SAL II
0
0
0
4
0
5
3
CIDA
PRBS
0
0
0
9
0
8
15
Denmark
PRBS
1
1
1
3
3
4
3
EU
PRBS
1
2
2
7
5
4
4
Finland
PRBS
1
2
1
3
4
3
3
Ireland
PRBS
1
1
1
3
3
3
3
Japan
PRBS
2
3
1
8
6
3
3
KfW
PRSC
4
4
1
7
9
8
7
Netherlands
PRBS
1
1
1
3
3
4
4
Norway
PRBS
1
1
1
3
3
3
3
Sweden
PRBS
1
1
1
3
3
4
4
Switzerland
PRBS
1
1
1
5
3
3
3
UK
PRBS
1
1
1
3
3
3
4
World Bank
PRSC
1
2
1
4
4
3
6
KEY
1 - Early or same
Q as committed
1 - Q1
2- Late by 1Q
2 - Q2
3 - Late by 2Q
3- Q3
4 - Late by 3Q
4 - Q4
5 - Did not pay
5 - Not at all
1 - Same amount
or more
2 - Less than 10%
3 - More than
10% but less than
50%
4 - More than
50%
5 - No
disbursement

The amount is in own currency

If had 2 tranches, quarter with large amount was considered
Conclusion
 The budget strategy seeks to guide policy implementation
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while consolidating the achievements made in various
programmes.
The strategy needs to refocus primarily on promoting
economic growth, reduce poverty in a supportive good
governance and accountability environment
Accord high priority on infrastructure development
consistent with the declaration of Kilimo Kwanza
Addressing key challenges in public financial management
Strengthening the strategic alignment of expenditure
consistent with the growth agenda.
THANK YOU
AHSANTENI
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