Putting Aid on Budget October,2008 at Kivu Sun Serena in Gisenyi,Rwanda Presentation: Ministry of Finance and Economic Affair, Tanzania

Presentation Outline  Aid Environment in Tanzania - Framework for aid management - External resource in three modalities and their trends  Results from 2008 Paris Survey - Key issues found in Aid on National Priorities and Aid Predictability  Budget process  Challenges  Solutions

Aid Environment in Tanzania Tanzania Assistance Strategy (TAS) 2001  Framework for managing aid Joint Assistance Strategy for Tanzania (JAST) 2006  Replacing TAS  New framework for managing and guiding development cooperation

Aid Environment in Tanzania Tanzania receives External Resources in three forms: General Budget Support (35%) FY 2008/09 Baskets (19%) FY 2008/09 Direct Project (46%) FY 2008/09 14 DPs (11 bilaterals, EC, World Bank, AfDB) provide budget support under PRBS/PRSC/SAL facility and use a common Performance Assessment Framework (PAF), which allows for funding decisions to be made prior to the start of the financial year in which aid is disbursed Contribution of External Resources in National Budget for FY 2007/08 was 38% while that of FY 2008/09 is 34 %.

Aid Environment in Tanzania Percentage of Aid Flows by Different Modalities TYPE2004/052005/062006/072007/08 Budget Support30%43%51%36% Basket Funds24%22%10%18% Project Funds46%36%39%46% Source: Aid inflow database, MOFEA, URT

Aid Environment in Tanzania % of Budget Support frontloaded FY 2005/ /08 Quarter2005/06 Projected 2005/06 Actual 2006/07 Projected 2006/07 Actual 2007/08 Projected 2007/08 Actual 192%30%64.4%63%95%50% 27%67%17.3%20%5%42% 31% 18.3%2%0% 4 2%0%15%0%8% Source: Aid inflow database, MOFEA, URT

PD Survey Results 2008 two key challenges-relate to integration of ODA/Alignment  Aid on National Priorities Down from 90% (Baseline in 2005) to 84% (2008 Survey) Highlighting challenges faced in national budget process and in reflecting ODA in national budget Timely and reliable MTEF projections information crucial Communication/Information flow with MDAs needs strengthening Channeling through Exchequer Greater shift to GBS and Basket  Aid Predictability Down from 70% to 60% Considerable challenges regarding accounting disbursement Need improvements on project disbursement

Planning and budgeting cycle Quarter 1 Quarter 2Quarter 3Quarter 4 JulAugSepOctNovDecJanFebMarAprMayJun BG issued MDAs, Regions, LGAs prepare budget estimates/ MTEFs Budget and MTEF finalisation by MOF in consultation w/ MDAs, Regions, LGAs; data entry in Active Planner Budget / MTEF scrutinization by MOF Budget Books published; Parliament Budget Session Budget Guidelines (BG) Preparation DPs submit 3-year MTEF projections for all Aid modalities to MOF (EFD) MDAs& Regions Confirm DP projects & basket funds projections To MOF (EFD&BD) DPs provide Tentative GBS Commitment & projections to MOF 3 weeks after GBS Annual Review DPs confirm GBS commit. (disbursement schedule) & projections 6 weeks after GBS AR Report DPs reconfirm Basket fund Commitment & projections to MOF(EFD) MDAs& Regions Reconfirm DP Basket funds commitment & projections to MOF (EFD&BD)

Challenges in Budget Process Difficulties in obtaining complete and reliable projections from DPs in particular for the project figures of the MTEF period Funding delays and irregularities – in particular, projects (i.e. dependence of disbursements on implementation progress, various prior action, DPs procedural requirements, and in-year performance assessments) Difficulties in getting accurate confirmation of expected project funds by MDAs and Regions and integration in the latter’s MTEFs due to project planning and implementation cycles that do not follow the Government budget calendar.

Challenges in Budget Process Low levels of ownership and leadership of Government implementing agencies and the existence of parallel systems of resource delivery and project management DPs’ financial years, which are not in line with the Tanzania Budget Cycle constraints provision of ODA commitments by DPs and their subsequent inclusion in the national budget (e.g. funding approval is finalized after the preparation of the Government budget) Political uncertainties (e.g. government changes after election) in DPs’ home countries negatively affect aid predictability Inadequate use of Government systems (i.e. Exchequer System) relates to issue of accountability

Possible Solutions in Budget Process:  DPs to provide timely projections and commitment to MoF through MTEF projection process  DPs and MDAs engage in dialogue to discuss and agree together projected external resources to sector/thematic areas. Sector Dialogue (i.e. Sector WG defined by Dialogue Structure) can take on board discussion on resources  Where SWAp is in place, this can be facilitated through the framework to include not only Basket funds but also direct project scheduled disbursement  Disbursement through Exchequer System – reflecting scheduled disbursement in national budget is the first step to disburse through Exchequer  GoT is organizing a technical training on the Budget process and the use of Exchequer to DPs to upraise them on modalities.  GOT established a web-based tool for capturing external resources  Streamlined of Dialogue structure into single process

Thanks For your attention