- Nov 14, 2006
Fund Your Budget, Donors Tell Tanzania.
Its high time for the government to refuse foreign aid in our budget. We can't seriously depend on them to fund our budget and be free to choose what we want. Enough is enough and we should put our house in order.
8 November 2007
Posted to the web 8 November 2007
The launching of general budget support in 2001 was in retrospect a milestone in efforts by the government and other stakeholders at making donor funding to Tanzania serve the interests of the country and thus produce the desired results.
Its main positive factor was its alignment to the national budget, an aspect that was expected to reduce donor conditionality and transaction costs. The donor money would have finally been used to fund Tanzanian budget priorities.
Whether the general budget support funding mode removed harsh donor funding conditionality making the money almost unusable remained an area of concern in the media and in government circles.
This was specifically so following the remarks by the British High Commissioner Philip Parham at the debut of the GBS meeting last week that the donors had prepared and circulated to the Ministry of Finance in September a matrix of donor conditionality on budget support. He said the matrix "summarizes the conditions of each development partner for the provision of future budget support. Our decisions and actions will be with these conditions. We want to avoid surprise, and to base decisions on regular, close dialogue with the government, at both Ministerial and official levels."
He said development partners will take all these things into consideration as they decide their budget support funding commitments for 2007/08. When cornered by the media and some government technocrats, Mr Parham said the conditions were nothing new and definitely were not the harsh traditional conditionality that the GBS has tried to avoid. The conditions are just to ensure monitoring and efficient use their money, "to avoid surprises."
After all donors have a right to see their money well spent, and also not all conditions are bad conditions. But what was of much concern to donors was how the government can become self-sufficient in budget funding in the near future. It was as if donors were becoming increasingly tired of funding the government budget. "We expect the government to be able to fund its budget entirely in three years to come," said David Stanton, the head of DFID in Tanzania.
Donors were highly concerned that despite abundant natural resources that the country has, revenue collection mechanisms were very weak and as a result the government was getting peanuts, and relying instead on foreign aid for budget funding. In forestry for example, donors said, only 27 per cent of all potential revenue was being collected.
The recent 'Discussion Paper on Forestry'by the Tanzania Development Partners Group estimated that revenue from forestry alone, if the sector was adequately and sustainably exploited, would be able to fund the current budget annually. Currently the revenues from forestry account for less than one per cent of the budget funding. Mr Parham said categorically that Tanzania must be fully aware and face the main budget challenges ahead. He said the $5 billion annual budget was still very small for a country of almost 40 million people, comparing the malnutrition situation in Tanzania to be equivalent to post-conflict countries of Angola and Liberia.
He said Tanzania is now rowing in calm waters and should use this chance to ensure it benefits and become self sufficient in funding its public expenditure. "This (GBS) review comes at a time of huge opportunity for Tanzania, arising from a happy confluence of positive factors. Tanzania must grasp that opportunity by attracting the necessary aid flows and using them effectively, and by quickly improving the environment for investment," he said.
He mention the factors as a strong foundation of stability, harmony and constitutional development, good macroeconomics, increasingly vigorous democracy and accountability, enormous economic potential, particularly in agriculture, tourism and minerals, considerable international goodwill and global liquidity. It was hard to tell whether budget self-sufficiency in the near future was part of government's main concerns in the GBS review meeting. Most of government presentations dwelt in technicality of the government budgetary process.
But what was absolute clear was that there was no timetable set by the government to graduate from aid. There was scarce talk from the government of setting a timeframe for budget self-sufficiency.