## _cr04283

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---

### Overview
- Document prepared by staffs of the IMF and IDA; approved by Anupam Basu and Michael Hadjimichael (IMF) and Callisto Madavo and Gobind Nankani (IDA).
- Date of approval: July 21, 2004.
- The Progress Report (PR) covers implementation during fiscal year 2002/03 (July-June) and updates the PRSP of October 2000 endorsed by the Boards of IDA and IMF on November 30 and December 1, 2000, respectively.
- Tanzania is preparing a second-generation PRSP covering 2004/05-2008/09; this year’s PR is a "fairly light update" pending that broader revision.
- Staff assessment highlights:
  - Despite a drought, real economic growth estimated to have been about 5 percent.
  - Sound macroeconomic management was maintained.
  - Notable progress in education and financial sector reform.
  - Emerging weaknesses in the PRS process: need to link technical reviews with policy debate on sector strategies; strengthen PRS–budget links; improve quantitative monitoring; deepen understanding of growth–poverty relationships.
- Progress since last JSA: articulation of environment and financial sector strategies, national secondary education strategy development, private sector and public service structural reforms, improved PRSP costing, updated poverty monitoring indicators.
- PRS process remains open and transparent: Poverty Policy week (October 2003) and stakeholder meeting (January, 2004); final PR posted on national website and printed for wider dissemination.

### Poverty Analysis
- Limited new survey data to track income-poverty changes over the past year; measurable changes not necessarily expected over one year.
- Drought in 2003 slowed economic growth and negatively affected food consumption in many districts; localized declines in rural welfare expected.
- Government completed a second Poverty and Human Development Report (PHDR), a Participatory Poverty Assessment (PPA), and a Policy and Services Satisfaction Survey.
- Previous findings reiterated: growth of the past decade had less impact on poverty reduction than hoped; much recent growth concentrated in Dar Es Salaam and other urban areas.
- Staff recommendations for PRSP update analytical agenda:
  - Analytical work on growth-poverty linkages.
  - Deeper analysis of geographic dispersion of poverty changes.
  - Better understanding of transmission mechanisms (including rural-urban and farm/non-farm linkages) and how sector productivity changes affect incomes, especially in agriculture.
  - Assessment of welfare impacts of liberalization and reform measures.
- Work already committed:
  - Analysis of relation between growth, poverty and inequality.
  - Preparation of a poverty map.
  - Impact of shocks on household welfare.
  - Relation between rural income growth and nutrition.

### Progress in Sectoral and Policy Reforms
- Education:
  - Continued expansion of the primary system; enrollments for 2003 again exceed PRS targets.
  - Increased emphasis on quality and completion rates; Primary Education Development Program successfully implemented.
  - Public Expenditure Tracking Study shows about 95 percent of funds allocated to schools were used for intended purposes.
  - Need to transform Ministry of Education into an agency focused on policy, technical support, and monitoring and evaluation, linked to local government delivery.
  - National secondary education strategy developed in FY2003/04 and implementation started; second-generation PRS expected to broaden priority from primary to include post-primary education and training.
- Health:
  - Improvements in indicators: increased number of outpatient visits and achievement of 90 percent DPT3 coverage.
  - New Health Sector Strategic Plan (HSSP) formulated following sector review.
  - Notable achievements in 2002/03 include:
    - Expansion of pooled financing and capture of external support in the Medium Term Expenditure Framework (MTEF).
    - Wider coverage of the national health insurance fund.
    - Community Health Financing scheme allowing local determination of fund use.
    - District planning systems for more rational resource allocation.
    - Expansion of Integrated Management of Childhood Illnesses program, more progressive malaria treatment regimes, and high TB cure rate.
  - HSSP should be a major input into the next PRSP; critical next-phase issues: address human resource crisis in health sector and improve monitoring for better empirical results.
  - HIV/AIDS strategy for 2003-06 developed and reflected in MTEF activities.
- Agriculture:
  - Government objective per Agricultural Sector Development Strategy (ASDS): create enabling environment for improving agricultural productivity, profitability and farm incomes.
  - Local government 'nuisance' taxes inhibiting agricultural trade repealed; formulation of core implementation programs initiated.
  - ASDS emphasizes greater reliance on private markets and withdrawal of government from unsustainable interventions.
  - Critique: PR focuses on reporting publicly-supplied inputs rather than effectiveness of policies in stimulating private investment and growth.
  - Recommendations for main PRSP update:
    - Focus on productivity, trade and income effects of agricultural policies.
    - Assess impact and cost-effectiveness of programs with clear delineation of public vs. private roles.
    - Determine appropriate degree and mix of government intervention across roads, land and rural finance while limiting direct government role in agricultural markets.
  - Ongoing analytic inputs: agricultural supply chains analysis, rural investment climate, review of crop boards.
- Transport and Roads:
  - Accessibility improved due to road investments, enhancing flow of people and commodities.
  - PPA highlighted urban bias concerns; road funding remains inadequate despite significant allocations in 2003/04.
  - Insufficient maintenance funding increases rehabilitation needs; improved network management requires enhanced capacity and autonomy of TANROADS and a conducive rural roads management framework.
  - Network condition: about 50 percent in poor condition, constraining development.
- Water Supply:
  - Coverage progress noted but concentrated in urban areas.
  - Policy advances: launch of National Water Policy and completion of DAWASA divestiture.
  - Constraints: need for functional user committees, coordination of donor projects, and greater local government capacity.
- Private Sector Development:
  - Government proposing ambitious steps to develop competitive investment climate; addressing labour law issues and business environment constraints.
  - Progress: privatization of National Microfinance Bank (noted as underway), reforming National Social Security Fund, and revision of land policy.
  - Immediate next steps: implement business licensing reform expeditiously; improve access to bank credit by ensuring recent amendments of the Land Act (facilitating use of land as collateral) are made fully effective.
  - Staff advice: government should play an effective facilitating role, ensure independence of regulatory agencies, and resist subsidized credit policies that proved unsustainable.
- Governance and Public Service Reform:
  - Public Service Reform Program implemented with measures to improve transparency, meritocracy, performance management, and focus on service delivery (clients’ charters and service delivery surveys).
  - Local government reform phased to allow flexible adoption based on readiness.
  - Legal Sector Reform Program initiated; quantitative indicators introduced to measure progress on National Anti-Corruption Action Plan.
  - Gender: PR outlines measures such as proposed business incubators for female entrepreneurs and a plan of action for combating violence against women; staff recommend more explicit examination of gender aspects of growth and poverty in full PRSP update.
- Environment:
  - Significant progress in institutionalizing environmental management capacity: formulation of environmental framework legislation; initiation of strategic environmental assessments; launch of an Environmental Public Expenditure Review; mainstreaming environmental indicators into poverty monitoring.
  - Staff recommended strategic focus over next four years on:
    - Strengthening capacity at district and local level, prioritizing areas of highest poverty and environmental vulnerability.
    - Greater emphasis on health–environment linkages.
    - Deeper understanding and use of economic instruments and incentives for private sector voluntary adoption of environmentally sustainable practices.
    - Strengthening information and monitoring systems to identify and manage environmental risks such as global change, droughts, flooding and fluctuations in renewable resource availability.

### Macroeconomic and Public Expenditure Developments
- Overall macroeconomic performance:
  - Tanzania maintained macroeconomic stability and furthered structural reforms.
  - Real GDP growth continued to be strong; inflation remained below 5 percent.
  - Drought in 2003 expected to have adversely affected agricultural output.
  - Staff view: reported growth rate of 5.7 percent for 2003 projected in the Progress Report appears to be optimistic.
  - Authorities contained domestic borrowing in line with agreed program target for net domestic financing under the PRGF arrangement.
  - Rising donor assistance contributed to a sizeable reserve build-up despite rising import demand.
  - Structural progress in tax reform, financial sector reform, and private sector environment; further improvement of business environment is needed.
  - Importance of harmonizing investment incentives within the East African Community (EAC) highlighted.
- Financial and trade issues:
  - Substantial progress in financial sector reform over the past year.
  - Progress Report lacks in-depth treatment of the financial sector and trade; staff recommend better integration of these issues into future PRs given their importance to growth and poverty reduction.
- Revenue mobilization:
  - Domestic revenue mobilization seen as key to containing aid dependency and enhancing growth robustness.
  - Progress Report acknowledges insufficient domestic resources to meet priority sector needs.
  - Recent tax policy and administration reforms noted positively.
  - Measures to curtail petroleum smuggling (which more than doubled recorded petroleum imports) were highly effective.
  - The new Income Tax Act (ITA) and implementation of Tanzania Revenue Authority’s corporate plan expected to further boost revenue performance.

### Macroeconomic targets and revenue
- The macroeconomic targets for 2004/05 quoted in the Progress Report are the same as the PRGF program targets.
- Projections for 2005/06 and 2006/07 for the budget framework, including revenue-to-GDP ratios, differ from those in the current PRGF.
- Recommendation: any divergences of macroeconomic targets from those included under the PRGF program should be explained in the upcoming PRSP.

### Public Expenditure Management and Allocation
- Continued increase in spending on education, roads, and agriculture in 2002/03; while overall fiscal discipline was maintained.
- The Tanzania Progress Report links the PRSP and public spending, presenting budgets and actual expenditure outcomes in each of the main sectors.
- The gap between PRSP costing presented in the PR and the projected future budget framework is less than in previous years, although there is still a disconnect.
- Needs identified:
  - Further work to harmonize PRSP program costs with realistic projections of likely resource availability.
  - Better integration of the various expenditure programming exercises in Tanzania—the annual PRSP review, Public Expenditure Review, and MTEF—so there is a single set of expenditure numbers, firmly located in the context of the annual budget process.
- Authorities’ next-cycle intention: strengthen the role of the Budget Guidelines/MTEF as a clearer statement of government’s budget strategy, linking the PRS, projected budget framework and salient aspects of proposed monitoring within a single framework.

### PRSP Process and Monitoring System
- Tanzania has developed a well-designed Poverty Monitoring System (PMS).
- Over the past year the PMS group has:
  - Updated the set of indicators for tracking PRS implementation to make them more consistent with policy targets, and to better reflect the availability of data.
  - Generated major new data from the Agricultural Census and National Population Census of 2002, to be analyzed over the coming year.
- Implementation challenges:
  - The monitoring system is not yet generating timely routine data to track changes in outcomes, nor even intermediate outputs, as evidenced by the limited reporting on outcomes in this year’s Progress Report.
  - Dissemination and use of the data generated in policy-level debate is limited.
  - Involvement of local-level institutions in the monitoring process is limited.
- Government recognizes these weaknesses.
- Recommendation: In the main PRSP update it will be critical to lay out the steps needed to strengthen the system, and commit to a program to implement them.

### Scope of the PRS and coordination of processes
- A debate is taking place within government and with the donor community on the appropriate future role of the PRS as Tanzania enters the second phase of the PRSP cycle.
- Key discussion points:
  - (i) widening the scope of the PRS, which to date has mostly focused on social sectors and agriculture, to cover the whole range of public policy;
  - (ii) expanding the role of the PRSP as an instrument for formulation of overall public policy in government, in addition to serving as a tool for external accountability;
  - (iii) the need to rationalize the multiple processes that exist in Tanzania, including the annual Public Expenditure Review, Tanzania Assistance Strategy, Budget Support Reviews, MTEF, annual preparation of an Poverty and Human Development Report, and of a PRSP Progress Report.

### Consultations and participatory processes
- This year’s Progress Report had a relatively light consultative process.
- The government has embarked on a more comprehensive and wide-ranging set of consultations with civil society across the country in the coming year for the major PRSP update.
- Consultations planned in phases:
  - Start with collection of the views of stakeholders at grassroot level during May/June 2004.
  - Followed by consultations at national level prior to finalization and approval by Cabinet, the President and National Assembly.
- Importance of integrating public consultation on a more continuous basis into on-going processes: for example on public expenditure in the budget cycle, on policy formulation, and through local government.

### Conclusion and recommended work program
- Assessment: Tanzania continues to make significant progress in the implementation of the PRSP, and the policy measures of the past year represent a credible set of reforms.
- The PRSP process now firmly forms the basis for government-donor dialogue in Tanzania.
- The expectations laid down at the time of the last JSA have largely been met in areas including private sector and financial sector policy, development of the secondary education strategy, environmental institutions, and more realistic costing of programs.
- This year’s Progress Report was intentionally limited in scope; the government focused on the forthcoming full PRS update that has already started.
- Recommendation: Authorities should use the update to frankly assess the impact of policies over the past five years or so—to critically examine what is working, what is not, and what the government would like to do differently in the next PRSP period.
- Suggested work in the coming year:
  - (i) better feeding the sound technical analysis produced by the PRS review process into formulation of policies and programs at the national strategic level;
  - (ii) strengthening the monitoring and evaluation system to better track results quantitatively;
  - (iii) a greater focus on growth, and examination of the productivity and welfare impacts of sector developments, policies, and programs, especially in agriculture;
  - (iv) aligning public interventions with the stated policy of private-sector-led growth;
  - (v) strengthening the link between the PRS and budget processes.
- Final staff view: based on this PRSP Progress Report, Tanzania’s poverty reduction strategy remains a sound basis for Bank and Fund concessional assistance.
- Recommendation: the staffs recommend that the Executive Directors of the World Bank and the IMF reach the same conclusion.

*Source: _cr04283 - Section 2*

### Section 1

### Tanzania: Joint Staff Assessment of the Poverty Reduction Strategy Paper Progress Report (Section 1)

### Overview
- Document prepared by staffs of the IMF and IDA; approved by Anupam Basu and Michael Hadjimichael (IMF) and Callisto Madavo and Gobind Nankani (IDA).
- Date of approval: July 21, 2004.
- The Progress Report (PR) covers implementation during fiscal year 2002/03 (July-June) and updates the PRSP of October 2000 endorsed by the Boards of IDA and IMF on November 30 and December 1, 2000, respectively.
- Tanzania is preparing a second-generation PRSP covering 2004/05-2008/09; this year’s PR is a "fairly light update" pending that broader revision.
- Staff assessment highlights:
  - Despite a drought, real economic growth estimated to have been about 5 percent.
  - Sound macroeconomic management was maintained.
  - Notable progress in education and financial sector reform.
  - Emerging weaknesses in the PRS process: need to link technical reviews with policy debate on sector strategies; strengthen PRS–budget links; improve quantitative monitoring; deepen understanding of growth–poverty relationships.
- Progress since last JSA: articulation of environment and financial sector strategies, national secondary education strategy development, private sector and public service structural reforms, improved PRSP costing, updated poverty monitoring indicators.
- PRS process remains open and transparent: Poverty Policy week (October 2003) and stakeholder meeting (January, 2004); final PR posted on national website and printed for wider dissemination.

### Poverty Analysis
- Limited new survey data to track income-poverty changes over the past year; measurable changes not necessarily expected over one year.
- Drought in 2003 slowed economic growth and negatively affected food consumption in many districts; localized declines in rural welfare expected.
- Government completed a second Poverty and Human Development Report (PHDR), a Participatory Poverty Assessment (PPA), and a Policy and Services Satisfaction Survey.
- Previous findings reiterated: growth of the past decade had less impact on poverty reduction than hoped; much recent growth concentrated in Dar Es Salaam and other urban areas.
- Staff recommendations for PRSP update analytical agenda:
  - Analytical work on growth-poverty linkages.
  - Deeper analysis of geographic dispersion of poverty changes.
  - Better understanding of transmission mechanisms (including rural-urban and farm/non-farm linkages) and how sector productivity changes affect incomes, especially in agriculture.
  - Assessment of welfare impacts of liberalization and reform measures.
- Work already committed:
  - Analysis of relation between growth, poverty and inequality.
  - Preparation of a poverty map.
  - Impact of shocks on household welfare.
  - Relation between rural income growth and nutrition.

### Progress in Sectoral and Policy Reforms
- Education:
  - Continued expansion of the primary system; enrollments for 2003 again exceed PRS targets.
  - Increased emphasis on quality and completion rates; Primary Education Development Program successfully implemented.
  - Public Expenditure Tracking Study shows about 95 percent of funds allocated to schools were used for intended purposes.
  - Need to transform Ministry of Education into an agency focused on policy, technical support, and monitoring and evaluation, linked to local government delivery.
  - National secondary education strategy developed in FY2003/04 and implementation started; second-generation PRS expected to broaden priority from primary to include post-primary education and training.
- Health:
  - Improvements in indicators: increased number of outpatient visits and achievement of 90 percent DPT3 coverage.
  - New Health Sector Strategic Plan (HSSP) formulated following sector review.
  - Notable achievements in 2002/03 include:
    - Expansion of pooled financing and capture of external support in the Medium Term Expenditure Framework (MTEF).
    - Wider coverage of the national health insurance fund.
    - Community Health Financing scheme allowing local determination of fund use.
    - District planning systems for more rational resource allocation.
    - Expansion of Integrated Management of Childhood Illnesses program, more progressive malaria treatment regimes, and high TB cure rate.
  - HSSP should be a major input into the next PRSP; critical next-phase issues: address human resource crisis in health sector and improve monitoring for better empirical results.
  - HIV/AIDS strategy for 2003-06 developed and reflected in MTEF activities.
- Agriculture:
  - Government objective per Agricultural Sector Development Strategy (ASDS): create enabling environment for improving agricultural productivity, profitability and farm incomes.
  - Local government 'nuisance' taxes inhibiting agricultural trade repealed; formulation of core implementation programs initiated.
  - ASDS emphasizes greater reliance on private markets and withdrawal of government from unsustainable interventions.
  - Critique: PR focuses on reporting publicly-supplied inputs rather than effectiveness of policies in stimulating private investment and growth.
  - Recommendations for main PRSP update:
    - Focus on productivity, trade and income effects of agricultural policies.
    - Assess impact and cost-effectiveness of programs with clear delineation of public vs. private roles.
    - Determine appropriate degree and mix of government intervention across roads, land and rural finance while limiting direct government role in agricultural markets.
  - Ongoing analytic inputs: agricultural supply chains analysis, rural investment climate, review of crop boards.
- Transport and Roads:
  - Accessibility improved due to road investments, enhancing flow of people and commodities.
  - PPA highlighted urban bias concerns; road funding remains inadequate despite significant allocations in 2003/04.
  - Insufficient maintenance funding increases rehabilitation needs; improved network management requires enhanced capacity and autonomy of TANROADS and a conducive rural roads management framework.
  - Network condition: about 50 percent in poor condition, constraining development.
- Water Supply:
  - Coverage progress noted but concentrated in urban areas.
  - Policy advances: launch of National Water Policy and completion of DAWASA divestiture.
  - Constraints: need for functional user committees, coordination of donor projects, and greater local government capacity.
- Private Sector Development:
  - Government proposing ambitious steps to develop competitive investment climate; addressing labour law issues and business environment constraints.
  - Progress: privatization of National Microfinance Bank (noted as underway), reforming National Social Security Fund, and revision of land policy.
  - Immediate next steps: implement business licensing reform expeditiously; improve access to bank credit by ensuring recent amendments of the Land Act (facilitating use of land as collateral) are made fully effective.
  - Staff advice: government should play an effective facilitating role, ensure independence of regulatory agencies, and resist subsidized credit policies that proved unsustainable.
- Governance and Public Service Reform:
  - Public Service Reform Program implemented with measures to improve transparency, meritocracy, performance management, and focus on service delivery (clients’ charters and service delivery surveys).
  - Local government reform phased to allow flexible adoption based on readiness.
  - Legal Sector Reform Program initiated; quantitative indicators introduced to measure progress on National Anti-Corruption Action Plan.
  - Gender: PR outlines measures such as proposed business incubators for female entrepreneurs and a plan of action for combating violence against women; staff recommend more explicit examination of gender aspects of growth and poverty in full PRSP update.
- Environment:
  - Significant progress in institutionalizing environmental management capacity: formulation of environmental framework legislation; initiation of strategic environmental assessments; launch of an Environmental Public Expenditure Review; mainstreaming environmental indicators into poverty monitoring.
  - Staff recommended strategic focus over next four years on:
    - Strengthening capacity at district and local level, prioritizing areas of highest poverty and environmental vulnerability.
    - Greater emphasis on health–environment linkages.
    - Deeper understanding and use of economic instruments and incentives for private sector voluntary adoption of environmentally sustainable practices.
    - Strengthening information and monitoring systems to identify and manage environmental risks such as global change, droughts, flooding and fluctuations in renewable resource availability.

### Macroeconomic and Public Expenditure Developments
- Overall macroeconomic performance:
  - Tanzania maintained macroeconomic stability and furthered structural reforms.
  - Real GDP growth continued to be strong; inflation remained below 5 percent.
  - Drought in 2003 expected to have adversely affected agricultural output.
  - Staff view: reported growth rate of 5.7 percent for 2003 projected in the Progress Report appears to be optimistic.
  - Authorities contained domestic borrowing in line with agreed program target for net domestic financing under the PRGF arrangement.
  - Rising donor assistance contributed to a sizeable reserve build-up despite rising import demand.
  - Structural progress in tax reform, financial sector reform, and private sector environment; further improvement of business environment is needed.
  - Importance of harmonizing investment incentives within the East African Community (EAC) highlighted.
- Financial and trade issues:
  - Substantial progress in financial sector reform over the past year.
  - Progress Report lacks in-depth treatment of the financial sector and trade; staff recommend better integration of these issues into future PRs given their importance to growth and poverty reduction.
- Revenue mobilization:
  - Domestic revenue mobilization seen as key to containing aid dependency and enhancing growth robustness.
  - Progress Report acknowledges insufficient domestic resources to meet priority sector needs.
  - Recent tax policy and administration reforms noted positively.
  - Measures to curtail petroleum smuggling (which more than doubled recorded petroleum imports) were highly effective.
  - The new Income Tax Act (ITA) and implementation of Tanzania Revenue Authority’s corporate plan expected to further boost revenue performance.

*Joint Staff Assessment prepared by the Staffs of the IMF and IDA; approved July 21, 2004.*

### Section 2

### _cr04283 - Section 2

### Macroeconomic targets and revenue
- The macroeconomic targets for 2004/05 quoted in the Progress Report are the same as the PRGF program targets.
- Projections for 2005/06 and 2006/07 for the budget framework, including revenue-to-GDP ratios, differ from those in the current PRGF.
- Recommendation: any divergences of macroeconomic targets from those included under the PRGF program should be explained in the upcoming PRSP.

### Public Expenditure Management and Allocation
- Continued increase in spending on education, roads, and agriculture in 2002/03; while overall fiscal discipline was maintained.
- The Tanzania Progress Report links the PRSP and public spending, presenting budgets and actual expenditure outcomes in each of the main sectors.
- The gap between PRSP costing presented in the PR and the projected future budget framework is less than in previous years, although there is still a disconnect.
- Needs identified:
  - Further work to harmonize PRSP program costs with realistic projections of likely resource availability.
  - Better integration of the various expenditure programming exercises in Tanzania—the annual PRSP review, Public Expenditure Review, and MTEF—so there is a single set of expenditure numbers, firmly located in the context of the annual budget process.
- Authorities’ next-cycle intention: strengthen the role of the Budget Guidelines/MTEF as a clearer statement of government’s budget strategy, linking the PRS, projected budget framework and salient aspects of proposed monitoring within a single framework.

### PRSP Process and Monitoring System
- Tanzania has developed a well-designed Poverty Monitoring System (PMS).
- Over the past year the PMS group has:
  - Updated the set of indicators for tracking PRS implementation to make them more consistent with policy targets, and to better reflect the availability of data.
  - Generated major new data from the Agricultural Census and National Population Census of 2002, to be analyzed over the coming year.
- Implementation challenges:
  - The monitoring system is not yet generating timely routine data to track changes in outcomes, nor even intermediate outputs, as evidenced by the limited reporting on outcomes in this year’s Progress Report.
  - Dissemination and use of the data generated in policy-level debate is limited.
  - Involvement of local-level institutions in the monitoring process is limited.
- Government recognizes these weaknesses.
- Recommendation: In the main PRSP update it will be critical to lay out the steps needed to strengthen the system, and commit to a program to implement them.

### Scope of the PRS and coordination of processes
- A debate is taking place within government and with the donor community on the appropriate future role of the PRS as Tanzania enters the second phase of the PRSP cycle.
- Key discussion points:
  - (i) widening the scope of the PRS, which to date has mostly focused on social sectors and agriculture, to cover the whole range of public policy;
  - (ii) expanding the role of the PRSP as an instrument for formulation of overall public policy in government, in addition to serving as a tool for external accountability;
  - (iii) the need to rationalize the multiple processes that exist in Tanzania, including the annual Public Expenditure Review, Tanzania Assistance Strategy, Budget Support Reviews, MTEF, annual preparation of an Poverty and Human Development Report, and of a PRSP Progress Report.

### Consultations and participatory processes
- This year’s Progress Report had a relatively light consultative process.
- The government has embarked on a more comprehensive and wide-ranging set of consultations with civil society across the country in the coming year for the major PRSP update.
- Consultations planned in phases:
  - Start with collection of the views of stakeholders at grassroot level during May/June 2004.
  - Followed by consultations at national level prior to finalization and approval by Cabinet, the President and National Assembly.
- Importance of integrating public consultation on a more continuous basis into on-going processes: for example on public expenditure in the budget cycle, on policy formulation, and through local government.

### Conclusion and recommended work program
- Assessment: Tanzania continues to make significant progress in the implementation of the PRSP, and the policy measures of the past year represent a credible set of reforms.
- The PRSP process now firmly forms the basis for government-donor dialogue in Tanzania.
- The expectations laid down at the time of the last JSA have largely been met in areas including private sector and financial sector policy, development of the secondary education strategy, environmental institutions, and more realistic costing of programs.
- This year’s Progress Report was intentionally limited in scope; the government focused on the forthcoming full PRS update that has already started.
- Recommendation: Authorities should use the update to frankly assess the impact of policies over the past five years or so—to critically examine what is working, what is not, and what the government would like to do differently in the next PRSP period.
- Suggested work in the coming year:
  - (i) better feeding the sound technical analysis produced by the PRS review process into formulation of policies and programs at the national strategic level;
  - (ii) strengthening the monitoring and evaluation system to better track results quantitatively;
  - (iii) a greater focus on growth, and examination of the productivity and welfare impacts of sector developments, policies, and programs, especially in agriculture;
  - (iv) aligning public interventions with the stated policy of private-sector-led growth;
  - (v) strengthening the link between the PRS and budget processes.
- Final staff view: based on this PRSP Progress Report, Tanzania’s poverty reduction strategy remains a sound basis for Bank and Fund concessional assistance.
- Recommendation: the staffs recommend that the Executive Directors of the World Bank and the IMF reach the same conclusion.

*Source: _cr04283 - Section 2*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04283.pdf_