BUDGET SUPPORT IN TANZANIA and why government development

BUDGET SUPPORT IN TANZANIA and why government & development partners prefer it David Stanton Chair, Development Partners Group on Budget Support Head, DFID Tanzania Dar, Oct 2007

Questions What is budget support? n Why has it grown? n What can it do? What can’t it do? n How does it affect you? n 2

What is Budget Support? n Aid = budget support, programme aid, or projects n Budget support passes direct to Exchequer n Two types: direct & general budget support 3

Principles of Budget Support n To build an effective state n To create systemic change n OECD / Paris Declaration: Aid Works Best with: - ownership - alignment - harmonisation 4

What can budget support do? n Directs resources to national priorities n Stimulates a contestable budget n Makes executive accountable to legislature n Improves public financial management & public services 5

What it can’t do n Allocate money to particular programmes or activities n Attribute results to specific donors n Improve aid, without good government 6

Why has it grown in Tanzania? n Confidence n Debt relief, Mkukuta n Reforms n Reduced poverty (primary education, roads, malaria) n It reduces cost of aid 7

How big is budget support? n $670 m, or 41% of aid in 2007/08, 16% of budget n Single instrument, 14 donors: ADB, Canada, Denmark, EC, Finland, Germany, Ireland, Japan, Neths, Norway, Sweden, Switz, UK, World Bank n Tanzania is biggest recipient in Africa. Others: Uganda, Ghana, Mozambique, Ethiopia, Rwanda 8

Govt is Accountable for its budget support to…. . n The Bunge in budget debate, parliamentary committees, etc n Civil society in the public expenditure review n Development partners in the Performance Assessment Framework & Annual Review 9

How does this affect DPs? n Need for efficient budget planning, allocation & expenditure n Needs stronger, devolved local government n Needs constant persuasion of sceptical taxpayers, MPs, Ministers 10

n Thank you for your attention! n Questions? 11