By MIKE MANDE, Special Correspondent
Posted Sunday, May 29 2011 at 11:06
Tanzania is bracing for a tough year ahead following a decision by one of its key donors, the Netherlands, to cut its funding for 2011/2012 financial budget two weeks to unveiling the national budget.
Netherlands government will reduce its budget support to Tanzania and other countries by 12 per cent despite its commitment last year that aid to Tanzania would not be reduced.
Dutch government budget cuts will be made to joint programmes with multilateral agencies and funding for civil society organisations reduced.
A letter from the Netherlands cabinet to the House of Representatives said bilateral assistance to the ex-partner countries will be phased out with due care.
Minister for European Affairs and International Cooperation, Ben Knapen, said opportunities were identified for pursuing the spearheads of policy and for this purpose a quick scan of each of the 33 current partner countries was carried out, to see where these opportunities presented themselves and where the Netherlands had something to offer.
Mr. Knapen said Netherlands examined specific problems, trends and obstacles relating to each of the spearheads and drew up an overview of the importance of local players such as the government, private sector and civil society attach to these obstacles, and examined whether co-operation with the Netherlands would bring more added value than co-operation with other donors.
The Dutch government channels approximately a third of its development aid through multilateral organisations.
Dr. Ad Koekkoek, Ambassador of the Kingdom of the Netherlands, told The EastAfrican in Dar es Salaam last week that the Dutch coalition agreement heavily emphasised budget cuts because the government budget deficit too big to be sustainable.
Dr. Koekkoek said the development cooperation budget will be reduced from 0.8 per cent to 0.7 per cent of the GDP, the UN official target.
“The Netherlands is still one of the very few countries that indeed reach this target. Development co-operation was to be streamlined; the number of partner countries to be brought down very substantially, and policy emphasis was to shift towards economic growth, trade and investment,” he said.
According to Dr. Koekkoek, Tanzania is no longer on the list of development partner countries of the Netherlands due to the consequences of reducing co-operation budget.
However that central programmes run from The Hague will remain applicable to Tanzania. “For instance, the investment promotion programmes dealing with infrastructure, like roads and airports, hospitals, generators for Tanesco; and also scholarship programmes, where Tanzania is number two for us with more than 200 fellowships, academic cooperation programmes, refugee support programmes,” said Dr. Koekkoek.
The Netherlands are the number nine import source of goods to Tanzania and the number six export destination for Tanzania.
Monique Korzelius, Political, Cultural and Press Affairs of the Embassy of the Kingdom of the Netherlands in Tanzania told The EastAfrican that during the financial year 2011 the bilateral financial aid to Tanzania will amount to $70 million.
Ms. Korzelius said that during the financial years of 2008, 2009 and 2010 the total bilaterial financial support from Dutch government to Tanzania amounted approximately $219 million.
During the financial year 2008 the Dutch government offered $97 million while in 2009 Tanzania received $52 million and in 2010 Tanzania received $66 million.
“The Dutch government presented a verbal note to the ministry of Foreign Affairs and the ministry of Finance on the 8th of March 2011 concerning the issue,” she said.
The framework for Dutch bilateral cooperation is defined by national development agendas, in particular Poverty Reduction Strategies (PRSs).
With regards to bilateral approaches and instruments, the Dutch government offers budget support to selected partner governments and was one of the first donors to support sector-wide approaches (SWAps).
Within the EU, the Netherlands has been actively involved in enhancing the coherence of European foreign and development policy and to improve the effectiveness of European aid.
In the Financial Year 2010/2011 General Budget Support to Tanzania was expected to be around $531 million to be disbursed using the GBS facility, representing 6.4 per cent of the Government’s budget in the financial year 2010/2011 but some donor countries failed to contribute the financial support in time making the government to have a deficit of $200 million.
In Tanzania, the GBS is financed by eleven bilateral development partners and three multilateral partners including African Development Bank (AfDB), Canada, Denmark and the European Commission.
Others are Finland, Germany, Ireland, Japan, Norway, the Netherlands, Sweden, Switzerland, the United Kingdom, and the World Bank.
Once a year the GBS stakeholders meet at an Annual Review where they evaluate the progress made by Government in meeting the targets set out in the MKUKUTA and MKUZA.
The review is an opportunity for development partners, government and domestic stakeholders to discuss development challenges and set out the objectives for the coming year.
Tanzania is among the top 20 recipient of development aid ranking number three with $2.811 billion received in donations.
Tanzania has been struggling to decrease its debt stock but of late the stock has risen due to the raising of prices in food stuff and heavy borrowing from the government.
The Bank of Tanzania (BoT) April statistics shows that the national debt stock rose from $ 1,599.8 million to $11,241.3 million in the year ending February 2011 out of which 80.0 percent was external debt and 20.0 percent was domestic debt.
The country external debt stock increased from $1,260.9 million to $8,996.6 million, with 81.3 percent being disbursed outstanding debt (DOD) and 19.7 percent interest arrears.
The statistics further shows that the multilateral debt stock was $4,810.9 million, up from $4,015.4 million recorded at the end of corresponding period in 2010.