Presentation on theme: "20 November 2009. We acknowledge the key observations as outlined in the Synoptic Note – RBA In terms of Challenges, and Good progress made in various."— Presentation transcript:
20 November 2009
We acknowledge the key observations as outlined in the Synoptic Note – RBA In terms of Challenges, and Good progress made in various areas The challenges form the stepping stone for future improvement.
1. The underperformance in domestic revenue for the first quarter of 2009/10 2. The increase in expenditure over 3 years does not reflect priority towards growth and poverty reduction objectives 3. Roads: Over commitment and inadequate funding in roads sector 4. Education: Inadequately financing of capitation grant component of the recurrent budget at primary and secondary school levels. 5. Agriculture: Increased bias towards current expenditure Vs capital spending 6. Inadequate funding of Health sector 7. D by D: Inequity in resource allocation 8. Arrears in Education and roads 9. Definition of Personal Emoluments (PE)
The underperformance in domestic revenue for the first quarter of FY2009/10 Domestic revenue collection for the first quarter of 2009/10 was TShs. 1,107.2 billion against the target of TShs. 1,231.8 billion, or 90% performance level partly attributed to: impacts of the global financial crisis If this trend continues, it will require adjustment in expenditure on goods and services, but protect MKUKUTA expenditures
The increase in Public expenditure over 3 years does not reflect priority towards growth and poverty reduction objectives. The share of MKUKUTA expenditure has increased from 65% in 2005 to 71.2% in 2009/10. This trend is encouraging and we intend to maintain it around that level at the minimum
Roads: Over commitment and inadequate funding in roads sector The government continues with its commitment to road maintenance as a key priority There is a financing gap due to the increase in allocation of fund to newly signed road construction; upgrading and rehabilitation projects in FY 2009/10. The government has taken the following measures: Stopped the signing of new contracts which do not have enough funding in the approved budget Consider reallocating funds from ongoing but underperforming road projects during the mid-year review.
Education: inadequate financing of capitation grant component of the recurrent budget at primary and secondary school levels. The government is committed to improve education delivery at all levels In 2004/05 the government introduced formula-based recurrent grants for primary education to provide funding for the effective administration and delivery of universal primary education including operation costs Allocation of block grant is 100% based on the number of school aged children in each council. Capitation grants are allocated to councils according to PEDP formula, USD10 for each enrolled student. Currently, capitation grants stands at an average of TShs 7,500/= per student. The government will consolidate these achievements and continue to improve so as to realize the desired target of USD10 per student as per PEDP capitation grant formula.
Agriculture: Increased bias towards current expenditure Vs capital spending With the current government motto “Kilimo Kwanza”, agriculture continues to be the backbone of Tanzania economy in terms of production, employment, income and foreign exchange generation. Current expenditure increased significantly compared to capital expenditure in 2009/10 mainly due to: allocation of specific fund for purchase of fertilizer, enhancing National Food Reserve and strengthening of extension services by training and recruiting of extension officers.
Inadequate funding of Health sector: The government continues to implement various interventions directed to improve health sector ◦ health infrastructure, ◦ control of endemic diseases, by providing preventive education to the communities. Implementation of Primary Health Service Development Program (MMAM) by phases and other health sectoral programmes. In the medium term the major focus will be on improving human resource capacity at all levels Other interventions include: constructing, rehabilitating and equipping health facilities with basic equipment.
D by D: Inequity in resource allocation The Government remains committed to fully implement Decentralization by Devolution. This requires that resources (financial and human) be provided to each Government level in accordance with their functions- “resources follow functions”. The formula based allocation is determined objectively and LGAs have greater stability in their budget allocations. To address the inequity in LGAs allocation, some studies are underway to review the effectiveness of formula based allocations of resources.
Arrears in Education and Roads The issue of arrears is a problem which hinders smooth implementation and execution of Government Budget. The Government has continued to strengthen public financial management by improving expenditure control and thus ensuring efficiency, transparency and accountability at all levels. Arrears consist of verified claims/certificates. The verified bills that were not paid at the end of 2008/09 were settled in the first quarter of 2009/10. The government continues to verify various claims and will subsequently pay them.
Definition of Personal Emoluments (PE) The government continues to implement the Public Service Reform Program The definition used in the classification of PE in RBA differs from the way the Government allocates resources to PE (i.e: basic salary, annual increment and promotion). According to RBA, PE includes allowances and other employee’s statutory payments which are not part of PE in government definition. Since 1996 the Government consolidated all allowances related to salary into employee basic salary.