Tanzania - Poverty reduction strategy paper and assessment

21329 INTERNATIONAL MONETARY FUND AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TANZANIA Poverty Reduction Strategy Paper Joint Staff Assessment Prepared by the Staffs of the IMF and IDA Approved by G. E. Gondwe and Anthony Boote (IMF) and Callisto E. Madavo and Kemal Dervis (IDA) November 2, 2000 1. INTRODUCTION 1. The government of Tanzania has placed increasing emphasis on addressing poverty and enhancing human development in recent years. The 1997 National Poverty Eradication Strategy (NPES), which set out long-term poverty reduction goals consistent with the international development goals, has been followed by the medium-term expenditure framework (NMEF), focusing on priority sector areas and the preparation of poverty indicators. These initiatives have involved a broad process of consultation, including civil society and the donor community. The Poverty Reduction Strategy Paper (PRSP) builds on these efforts. 2. The preparation of the poverty reduction strategy (PRS) has been characterized by strong country ownership and the broad-based participation of civil society. It provides solid foundations for attacking poverty and represents a major advance from previous poverty alleviation efforts. However, the staffs note that some elements of the PRSP are still being developed, and the PRSP remains a work in progress. The Government has indicated that the first annual PRSP progress report will reflect further work on data collection, poverty diagnostics, sectoral strategies, monitoring systems, and costing exercises. 3. The authorities' ability to produce a PRSP in half a year reflects the wide experience in participatory processes, as well as the fact that many elements of the strategy were already well developed. One result was that some issues were not addressed as fully as would have been desirable. One factor behind the speed with which the paper was prepared was the authorities' wish to move as quickly as possible to the HlPC completion point. Despite the brevity of the process, however, the PRSP has already resulted in a number of shifts in policies, such as the plan to remove primary education fees; moreover, plans for reforms in areas such as governance are being reviewed as a result of the emphasis in the public debate. 4. The Joint Staff Assessment summarizes the views of the staffs of the IMP and the IDA on the content and process of the PRSP. Section II of this assessment outlines Tanzania's PRSP process, while Section III highlights the main features of the PRSP. Section IV contains the staffs' conclusions.  2. THE PRSP PROCESS 5. The process of preparing the PRSP, summarized in the main text of that document and described in detail in its Annex I, has followed closely the plans described in the Interim PRSP (I-PRSP). The staffs note that the consultations, guided by a cabinet-level Ministerial Committee, built on the participatory processes developed in the context of the NPES, the Public Expenditure Review (PER), and the Tanzania Assistance Strategy (TAS). The government organized workshops in seven zones in the country in May 2000 to solicit the views of villagers, village and district authorities, and nongovernmental organizations (NGOs) on the causes of poverty and on policy priorities. The discussions indicated a broad consensus on the priority of accelerating economic growth, as the main tool for poverty reduction, and on the ongoing agenda of structural reforms. Further discussions were held with multilateral and bilateral donors (which also provided technical assistance) and a separate workshop was held with parliamentarians. The findings of these consultations were included in both the diagnostic chapter of the PRSP and in the strategy. 6. The targets, priorities, and actions outlined in the draft PRSP were again discussed in a national workshop in August 2000, which included high-level central and regional authorities, private sector organizations, the donor community, and the media. Following a further review by regional authorities, the PRSP was approved by cabinet on August 31, 2000, subject to some editorial redrafting. The PRSP was submitted to the IDA and the IMF on October 11. The government intends to deepen the participatory process during the implementation of the PRS. The NGOs are also coordinating their interventions to increase their effectiveness and to enhance their participation in the monitoring and evaluation of the PRS. 3. MAIN FEATURES OF THE PRSP Summary 7. Poverty reduction has been a policy objective in Tanzania for four decades, but the policies were insufficiently growth oriented and expenditure programs were typically under funded and poorly prioritized. However, in the past few years, the PRS has been radically transformed: * Policies for sustained economic growth are now assigned high priority and the importance of maintaining macroeconomic stability is fully acknowledged. Moreover, the PRSP lays out the remaining long-term structural challenges and discusses measures and expenditure programs to address them in the framework of a prioritized medium-term action plan. * The strategy has evolved through a broad-based participation process. Listening to the poor, to civil society, NGOs, and various other stakeholders has allowed the government to recognize and address the multidimensional aspects of poverty. * Given the fragmentary statistical data on poverty, the need for further work on reform strategies in some key areas and the uncertainty about future financing resources, the 2  PRSP recognizes that the current PRS is a work in progress that will be refined as new information becomes available. * Finally, the PRSP correctly recognizes that the struggle against poverty will require better donor coordination, improved integration of external assistance into the budget, and simplification of aid disbursement procedures. 8. In line with indications provided in the I-PRSP (paragraph 6(a)), the PRSP includes: a national poverty line;' medium-term poverty reduction targets, including monitorable indicators covering income poverty and priority sectors such as primary education, primary health care, rural roads, water supply, the judiciary, and HIV/AIDS; there has also been a shift in budgetary resources toward these priority sectors. Moreover, the Tanzanian Authorities have taken a number of specific actions, as reported in Box 1. Box 1. Measures Implemented Since I-PRSP Poverty Data and Strategy . Review of the Poverty Reduction Strategy in the Consultative Group Meeting (May 2000) . Launch of Households Budget Survey (visited 6000 households) * Launch of Pilot Labor Survey . Launch of school mapping in 50 local authorities . Completion of the Tanzania Assistance Strategy Revenue system . Streamlining of taxes on petroleum products and elimination of VAT exemption . Streamlining of excise system, with remaining excises on petroleum products, beer, cigarettes, beer, wine, and soft drinks . Elimination of exemption on govenmuent purchases of petroleum products Priority spending, budgeting, and expenditure controls . Increase of 70 percent and 34 percent in nominal spending on core priority goods and services and wages, respectively, in budget for FY 2000/01 * Update of Medium Term Expenditure Framework incorporating poverty priorities . Introduction of Government Finance Statistics - based classification on central government level . Introduction of Integrated Financial Management System at central government level * Presentation of Public Finance Management Legislation to parliament. During 2000, the National Bureau of Statistics, with assistance from donors, has put together a database on poverty using the 1991/92 Household Budget Survey and the 1993 Human Resources Development Survey. A poverty baseline was established (using the 1991/92 survey) for Tanzania for the early 1990s. The baseline will represent the starting point against which progress will be measured next year using data from the 2000/01 Household Budget Survey. See "National Bureau of Statistics and Oxford Policy Management Ltd., 'Developing a Poverty Baseline,' May 2000." 3  Poverty diagnosis 9. Tanzania is one of the poorest countries in the world. Information on poverty incidence and on the characteristics of the poor is available, but it has become outdated, making it difficult to assess precisely poverty and inequality changes over time. Efforts were made during the preparation of the PRSP to update the 1991/92 poverty estimates, but these were only partially satisfactory. Thus, the PRSP adopts the 1991/92 estimates of poverty incidence (which are based on a sound household budget survey (HBS)) as the 2000 poverty baseline.2 Under the circumstances, this appears to be acceptable. Partial information, as well as findings from the consultations with civil society, indicates that poverty has stagnated, and that some social indicators have worsened, but that the main characteristics of the poor have remained unchanged. 10. The absence of recent data means that the PRSP contains little information on the impact of recent economic policies, but the staffs share the general view expressed in the PRSP that the lack of progress in poverty reduction can largely be attributed to low economic growth and poorly targeted (un-programmed) cuts in public spending following the fiscal deterioration during 1993-95. The staffs agree that, as described in the PRSP, the poor performance of agriculture has been particularly important for the deterioration of living standards in rural areas. Reasons for poor agriculture performance include adverse climatic conditions (during 1995-98), weaknesses in the management of the reform process, and partial implementation of many market liberalization measures, all of which have limited the benefits of the reforms. 11. The government is aware of the importance of robust information for poverty analysis and monitoring and is undertaking, with donor support, a comprehensive initiative to upgrade its databases and statistical capacity. A new HBS is currently under way, and is scheduled to be completed by mid-2001 . The survey is the largest ever undertaken in Tanzania. Results covering about 6,000 households will be available in early 2001, allowing a preliminary analysis of more recent poverty incidence and trends to be included in the first annual PRSP progress report. In a situation where poverty is so pervasive, and overwhelmingly rural, the staffs agree with the authorities that efforts should focus, as outlined in the PRSP, on enhancing growth, particularly in the rural areas, and expanding access to basic social services. In light of cross-country experience,4 the income-poverty reduction targets appear 2 Poverty incidence, using the Basic Needs Poverty line, is 48 percent at the national level, 57 percent in rural areas, and 36 percent in urban areas; using the Food Poverty line, extreme poverty falls on 27 percent of the population. The Food Poverty line represents 36 percent of mean expenditure and the Basic Needs Poverty line 53 percent. Comparable international experience suggests that these poverty lines are defined at an appropriate level of mean expenditure. 3 Other initiatives (a pilot labor force survey, a social accounting matrix, a demographic health survey, and a population census), to be implemented during 2001-02, will significantly strengthen the information base of the country. 4 See M. Ravallion (2000), "Growth, Inequality and Poverty: Looking Beyond Averages;" D. Dollar and A. Kraay (2000), "Growth is Good for the Poor," World Bank Working Papers; and Datt, Gaurav and Martin Ravallion (1992), "Growth and Redistribution Components of Changes in Poverty" Journal of Development Economics, 38:275-295. 4  to be consistent with the envisaged changes in the policy framework and in the growth projections. Nonetheless, more up-to-date information should be reflected in the first annual PRSP progress report to allow more careful analysis of the causes of poverty and to sharpen the focus of the strategy. 12. Poverty in Tanzania has been amplified by rapid population growth, which has led to high dependency ratios, pressures on natural resources, and strains on the education and health systems. The PRSP recognizes the link between poverty and population dynamics, as well as the dependence of the poor on the environment, particularly in rural areas, and actions to contain population growth and measures to promote the sustainable management of natural resources will need to be incorporated as the PRS is developed further. Equally, the PRSP could have included both a stronger analysis and policy actions on gender issues (for which much experience already exists in the country) and on the impact of AIDS. The staffs advise the government to address these issues in the first annual PRSP progress report. 13. The PRSP analysis shows that social indicators are extremely uneven across regions. For example, infant mortality and under-five mortality rates are three times as high in the most deprived regions as in the least deprived. This may call for a regionally differentiated strategy, which would be facilitated by the new HBS data, an issue that should be addressed in the first annual PRSP progress report. Poverty monitoring and evaluation 14. The PRSP defines medium-term (three years) and long-term (ten years) targets for monitoring income poverty and human development (see PRSP, pp 19-21). The staffs agree that at this stage annual indicators - apart from input indicators - such as government expenditure, are not feasible. The indicators chosen were drawn from a wider list of poverty and welfare indicators resulting from a consultative process during the last two years. The baseline for many of these indicators will be updated as information from HBS and other sources becomes available. The three-year targets for improving human development indicators are broadly in line with the country's policy priorities, implementation capacity and expectations of increases in incomes and in public expenditure. 15. There are, however, several weaknesses in the poverty monitoring and impact evaluation system proposed in the PRSP. First, the institutional framework and responsibilities for collecting, using, and disseminating data appear to be at the design stage. Second, the authorities will need to develop some annual indicators to monitor progress toward the medium- and long-term targets. Third, while the government wishes to involve stakeholders and civil society in the implementation of the PRSP, the arrangements for participatory poverty monitoring remain unclear. The challenge for both government and civil society in Tanzania is how to transform the consultative exercises undertaken during the formulation of the PRSP into a fally institutionalized and sustainable process of public accountability. Fourth, government funding for the monitoring system will only be provided in next year's budget; however, many donors have already promised their financial support. 5  Macroeconomic framework 16. Tanzania has embarked on a three-year macroeconomic program (2000-02) focused on policy reforms aimed at maintaining macroeconomic stability, increasing growth, improving market efficiency and reducing poverty. The program is supported by an arrangement under the Poverty Reduction and Growth Facility (PRGF) of the IMF, the Programmatic and Structural Adjustment Loan (PSAC I) and the Public Sector Reform Program loan (PSRP) of the IDA, and other lending and grant support by international donors. Tanzania reached the decision point under the enhanced HIPC Initiative in April 2000. 17. The macroeconomic framework presented in the PRSP is unchanged from that of the PRGF arrangement5 and of the Country Assistance Strategy, endorsed by the IDA Board in June 2000.6 Annual GDP growth is projected to increase to 6 percent (about 3 percent in real terms per capita) by 2002 and the inflation rate to decline to about 4 percent, a rate comparable to that of Tanzania's main trading partners. The higher growth is expected to result from the improvements in efficiency in the economy and in the investment climate as a result of the past and ongoing sound macroeconomic policies and structural reforms, links which should be examined in more detail in the first annual PRSP progress report. Structural and sectoral policies 18. The PRSP has reconfirmed that the ongoing macroeconomic and structural reforms, which are supported by international donors, are at the core of the PRS. The staffs believe that significant progress has already been made in these areas, and that the current program is strong. The planned reforms address key policy incentives and institutional constraints to private sector development and growth. They include, inter alia, strengthening of tax administration and expenditure control mechanisms, further restructuring of the financial system, the implementation of performance budgeting, the privatization of the remaining public enterprises, the strengthening of the regulatory framework for the main utilities, and the improvement of the business environment. As previous staff documents have noted, in the view of the staffs, Tanzania would also benefit from a more accelerated program of tariff reduction, consistent with regional trade arrangements. In the social sectors, the government will pursue the development of sector-wide strategies closely tied to the medium-term objectives of the poverty reduction strategy. This will require better coordination of donor support programs and close alignment with the PRSP. The details of the structural reforms and social sector strategies have been discussed in the documents underlying the PRGF arrangement and the PSAC I; however, the comprehensiveness of the PRSP would have benefited from more details of the planned structural reforms through inclusion of an update of the policy framework attached to the I-PRSP. 5 EBS/00/147 (7/18/2000) provided documentation for the first review of the arrangement. 6 World Bank Group, Country Assistance Strategy for the United Republic of Tanzania, Report No. 20426, May 22, 2000. 6  Governance 19. An important feature of the PRSP is the focus on governance. Participatory assessments show that poor people stress the importance of improving governance to help reduce their vulnerability and insecurity. In recent years, the government has introduced a program of institutional reforms and specific measures to improve govemance and transparency that have not been reflected fully in the PRSP. In 1999, the government developed a National Anti-Corruption Strategy and Action Plan, and sectoral plans are now being prepared. The staffs note that diagnostic surveys in a number of ministries and agencies will be undertaken to monitor the implementation of the plan. In addition, the government will review the procurement law and regulations, and strengthen financial accountability. Given the stress on govemance as a poverty issue in the PRSP consultations, the government has decided to increase its efforts to strengthen the judicial system and governance. While the judicial system is one of the priority sectors that will receive increased budgetary allocations in the MTEF, detailed action plans have not been costed. Specific public actions proposed in PRSP 20. The macroeconomic and structural program is geared toward reaching higher growth and poverty reduction, and certain elements are being accelerated in the context of the PRS. These include measures in agriculture, which is the source of livelihood for most of the poor; measures to improve the business environment; reduction in the excessive cost of utilities to industry; and the rapid adoption of key reforms in the National Anti-Corruption Strategy. In addition, the government has already announced a number of new measures to address the main concerns that came from the consultative process; the abolition of primary school fees, the promotion of community-driven development and the creation of employment schemes for the poor. These actions are appropriate, but the institutional details and the costing still need to be elaborated. 21. With respect to public expenditure, the government has focused its poverty interventions on sectors-primary education, primary health care, agriculture research and extension, rural roads, water, the judiciary, and HIV/AIDS-which are in line with the priorities that emerged in the poverty diagnosis and in the consultative process (see below). In their first annual PRSP progress report, the authorities should provide more concrete detail and prioritization of these initiatives. Financing and budgeting of the poverty reduction program 22. The government budget will play the pivotal role in expenditure allocation toward poverty reduction. The staffs share the view expressed in the PRSP that the medium-term financing framework for the budget and the poverty reduction strategy must continue to be subject to the over-riding goal of maintaining macroeconomic stability. The MTEF has been based on a conservative projection of government revenue, restrained net use of domestic financing, and external budget financing in line with current high level of commitments and trends, including (interim) debt relief under the enhanced HIPC Initiative. The revenue projections will be reviewed in line with developments-e.g., to account for increases in tax 7  collection resulting from the ongoing improvements in tax administration. The target for domestic financing of the budget will be managed flexibly in line with the targets for inflation and international reserves, to provide a degree of adjustment for fluctuations in external financing. 23. Within the financing constraints, the expenditure targets contained in the PRSP are consistent with the MTEF (including the budget for the current fiscal year). These targets respond to the results of the broad-based participatory process of the recent PER. Although the PRSP was approved in August, the expenditure allocation for poverty reduction programs, as proposed in the MTEF, had already been included in the 2000/01 budget and the government had significantly increased allocations for personnel and other charges in order to improve delivery of social services. Expenditure allocations to the priority sectors will be further increased in the future. In total, allocations to these sectors are projected to increase from 24.8 percent to 40.3 percent of total recurrent discretionary expenditure during the period 1999/2000-2002/03. 24. The costs of reaching the proposed targets in the health, education, and roads sectors of the strategy were derived from studies prepared in the context of the MTEF. From these studies, for example, it is clear that the financing of acceptable levels of health care for the entire population would require a doubling of present health sector expenditure. Thus, given available resources, the delivery of health services to the whole population will fall short of the minimum needs. Similar conclusions are reached in the case of education. The staffs note that the links between budget inputs, outputs, and final outcomes need to be further investigated, to ensure that public spending is efficiently directed to achieve the poverty reduction and human development targets, and that additional priority spending that would be financed by additional aid flows or revenues need to be identified. Further advances in the costing of achieving the proposed targets in the PRSP will require the finalization of sectoral strategies as well as new information. Thus, staffs expect that costing will be continuously refined in successive updates of the strategy. 25. The staffs share the government's expectation that the international donor community will continue to provide external assistance to Tanzania at its current level, or higher. And they welcome the fact that many bilateral donors are beginning to realign their support in line with the objectives and programs of the PRSP. However, they recognize that, over time, sustained poverty reduction will depend critically on the success of current efforts to strengthen revenues. Public expenditure tracking and audits 26. As in the past three years, participatory PERs will be the main annual instrument for designing and monitoring the allocation and composition of public expenditure. Quarterly review meetings conducted with various stakeholders will continue to be the instrument for monitoring the implementation of the budget. Furthermore, the government has been working on enhancing public expenditure management and control capacities and the PRSP could have usefully discussed these efforts. Specifically, tracking expenditures should now be made easier by the introduction of a new accounting system, the Integrated Financial 8  Management System (IFMS). However, some compliance issues still need to be addressed, inter alia, by strict enforcement of new public finance legislation, to be approved by Parliament in early 2001. 27. The PRSP recognizes that the delegation of a significant amount of poverty reduction spending to local governments will require appropriate monitoring and accountability mechanisms to ensure the proper and effective use of resources. These mechanisms need to be further developed as the devolution process continues. Under the Local Government Reform Program, which started in 1999 and will be completed by 2003, local governments are responsible for service delivery in education, health, water, roads, agriculture, and social development. They are financed by block grants from the central government budget, based on the costs of delivering minimum standards of services. The government is extending the IFMS to 28 local authorities and a rollout to another 22 local authorities is planned. However, further work remains to be undertaken to examine the financial relations and control mechanisms between the different government levels. In particular, a system for reporting back to the central government regular and detailed information on actual priority spending from the districts needs to be introduced.7 28. The government has recognized the importance of strengthening the auditing function at all levels of government. The PRSP could have discussed achievements so far, remaining shortcomings in both internal and external audits, and the institutional development strategy, especially in the context of the new public finance legislation. Work in progress 29. There are four major areas of the poverty reduction strategy that are being completed. In each of them, preliminary strategies exist and substantial analytical work has been undertaken. First, there is the national strategy for primary school education, together with detailed district plans for the 50 districts that are covered by the ongoing school mapping exercise. Finalization of the strategy, which builds on the 1997 Basic Education Master Plan, is expected by July 2001. The costing of detailed measures, including the removal of primary school fees, will be included in the 2001/02 budget. Second, a national agricultural strategy will be developed, based on sector work carried out in 1999/2000. A first draft has already been discussed with stakeholders. The strategy, expected by June 2001, will include actions to rationalize taxation and remove local impediments to efficient marketing. Financing of poverty-focused interventions will be included in next year's budget. Third, a rural development strategy will be prepared after a broad-based consultative and participatory process by December 2001. Fourth, the finalization of the Local Government Reform and development of district-specific poverty reduction plans is expected by the end of the 2002/03 fiscal year. The staffs believe that, in each of these areas, there has already been significant progress in refocusing actions and public spending toward poverty reducing objectives. 7 An IMF public expenditure management review mission that visited Tanzania in October 2000 made some recommendations on how to carry forward the required work. 9  30. The government has communicated to staffs that it intends to prepare a first annual report on the implementation of the PRS. It will include: a new poverty profile, as well as any revisions to the baselines, targets and indicators that result from the HBS, the pilot labor survey, and relevant sector information; details of the education and agricultural policies, a progress report on the rural development strategy and on the local govemment reform; updating of costing exercises in priority sectors to reflect both resource requirements and the priorities to be adopted in a constrained resource situation; a review of the institutional framework for poverty monitoring and evaluation; and a progress report on achievements under the poverty reduction strategy, including the core reforms set out in Appendix I of the I-PRSP. The 2001/02 budget would include the costing of poverty interventions identified in the education and agricultural strategies, as well as the core financing of the monitoring system. Risks 31. The PRSP, which embraces the program of structural reforms supported by the PRGF, the PSAC-I, the PSRP, and other instruments, represents a substantial agenda for the next three years. While the past record attests to the government's commitment to reaching its policy objectives, the staffs are aware of risks. First, commitment to implementing the PRSP remains largely untested at the local level. Second, institutional weaknesses and lack of capacity may delay the development of the remaining elements of the poverty reduction program, or its implementation. Finally, the staffs note that, although the medium-term targets of the PRSP are feasible, this assessment is based on the assumption that current high levels of external financing are maintained, in addition to the debt relief under the enhanced HIPC Initiative. 32. Although more detailed analysis is required, the PRSP recognizes the vulnerability of Tanzania to exogenous shocks and suggests that the country's ability to respond to these shocks has increased. For example, the sources of foreign exchange earnings have become more diversified, and the current and projected levels of international reserves offer sufficient cushion against external shocks. Agricultural output is becoming more diversified, though food insecurity continues to be a problem in certain areas. However, the low level of revenue makes key programs vulnerable to cuts necessitated by other unexpected expenditure requirements or a slow down in economic activity. 4. CONCLUSIONS 33. In the view of the staffs, the strategy set out in the PRSP provides a credible basis for sustainable improvements in the lives of the poor, although important elements need to be developed over the coming years. It is based on strong country ownership of the program and on an assessment of poverty that is built on a solid consultative process with civil society and other development partners. Within the context of sound macroeconomic policies, the PRSP aims at addressing those areas that have been indicated as the main causes of poverty, including low growth, lack of access to social services and infrastructure, and the sense of vulnerability and insecurity caused by weak governance. It contains appropriate and realistic 10  medium- and long-term targets and indicators of poverty reduction and human development, and describes the participatory process in which it was prepared. 34. The paper candidly admits that the available data do not provide a basis for a precise analysis of poverty incidence and trends in Tanzania, but at the same time points out that available statistical information, together with inputs from the consultative process of the PRSP itself, does provide an adequate basis for designing a poverty reduction strategy. The availability of new data in the next 1-2 years should help to refine the strategy. The improvement in the statistical base will need to be accompanied by better arrangements for monitoring progress. 35. The staffs believe that the PRSP could have been improved by a broader perspective on poverty alleviation issues. The paper pays relatively little attention to the rapid progress Tanzania is making in creating an environment favorable to sustained growth, the prime prerequisite for poverty reduction, including the further reforms that are currently under way. It also says little about the extent to which the PER and MTEF processes have contributed (in consultative fashion) to the prioritization and costing of fiscal expenditures, nor about the reforms in the monitoring, control, and auditing of government expenditures. Instead, the document has focused on poverty-specific reforms. This reflects the fact that Tanzania has further to go in some of these areas, as well as the fact that the consultative process focused chiefly on them; the desirability of macroeconomic stability and sustained growth through structural reforms has already been broadly embraced by Tanzanian society. Moreover, the latter aspects have been well described in other public documents. Nonetheless, the staffs would urge the authorities, as they prepare the first annual report on the implementation of the PRS, to emphasize the broader macroeconomic and structural reform context. 36. The PRSP is candid in noting that in some areas, such as education, agriculture, and rural development, the development and costing of the specific strategies requires further work to bring them to the level already achieved, for example, in the health sector. The production of the document has itself advanced the progress in these areas by bringing the issues to the fore, and by developing timetables for future progress. It is crucial that these sectoral strategies be fleshed out in the near future. 37. The PRSP sets out an ambitious schedule of activities for the remainder of the current fiscal year, as summarized in paragraphs 29 and 30 above. This will provide a basis for a first annual PRSP progress report that will correct some of the existing weaknesses in the PRSP. The authorities have indicated their intention to finalize the agriculture and primary education strategies by June and July 2001, respectively, and the rural sector strategy by December 2001; and to develop a sound monitoring and evaluation system in the course of the current fiscal year. The staffs endorse the authorities' view that these areas are critical to the success of the PRS, and urge them to continue to make substantial progress in their poverty strategy to ensure that the first annual PRSP progress report describes the outcome of their efforts. The report should also pay adequate attention to the role of growth-oriented structural reforms in reducing poverty, and to Tanzania's pace-setting progress in the PER and MTEF exercises, as well as in expenditure monitoring and control. 11  38. In light of the government's commitment to implement a comprehensive set of pro- poor policies, and to further developing the PRS in the first annual progress report, the staffs of the IDA and the Fund consider that this PRSP provides a sound basis for IDA and Fund concessional assistance. The staffs recommend the concurrence of the respective Executive Directors of the Boards of the IDA and the Fund with this assessment. Box 2. Tantania: Tentative Schedule of Key BankFnd EEv ents'Related to the PRSP in 2001 t;lInsititutionj;fX |; 00 |tt 0 4 Event Expected-Date 1MF Review of PRGF arrangement February World Bank Primary Education Adjustable Project Loan June World Bank Public Expenditure Review April World Bank/Stakeholders Consultative Group Meeting May IMF Review of the PRGF July IMF/WB JSA of the first annual PRSP progress report ... 12  THE UNITED REPUBLIC OF TANZANIA POVERTY REDUCTION STRATEGY PAPER (PRSP) DAR ES SALAAM OCTOBER, 2000   Table of Contents Page I. BACKGROUND ..................................................................3 A. The Policy Planning Process .................................................................3 B. Consultative Process for the PRSP ..................................................................4 II. THE STATUS OF POVERTY IN TANZANIA ..................................................................5 A. Income Poverty: Current Status and Recent Trends .................................................................. 5 B. Non-Income Poverty ..................................................................7 C. Regional Poverty and Welfare Ranking ................................................................. 10 D. Poverty as Assessed by the Poor Themselves ................................................................. 11 Ill. POVERTY REDUCTION: PERSPECTIVES OF VARIOUS STAKEHOLDERS ......................... 11 A. "Grassroots" views as expressed at the Zonal Workshops ............................................................. 11 B. View of Parliamentarians ................................................................. 13 C. Views of Various Stakeholders at the National Workshop ............................................................. 13 IV. THE STRATEGY FOR POVERTY REDUCTION ................................................................. 13 A. Income Poverty ................................................................. 14 B. Human Capabilities, Survival and Well-being ................................................................. 18 V. FINANCING OF THE POVERTY REDUCTION PROGRAMME .................................................. 22 A. Basic Considerations ................................................................. 22 B. Overall Financing Envelope ................................................................. 22 C. Composition of Public Expenditure ................................................................. 23 D. Specific Poverty Reduction Interventions ................................................................. 26 VI. MONITORING AND EVALUATION OF THE POVERTY REDUCTION STRATEGY ............ 29 A. Current and Proposed Indicators ....................... 29 B. Indicators of Income Poverty ....................... 30 C. Indicators of Quality of Life and Social Well-Being ..................................... 30 D. Water and sanitation ..................................... 30 E. Macroeconomic Stability ..................................... 30 F. Social Safety Nets .............. 31 G. Governance .......................... . ..... 31 H. Resource Allocation ......................... 31 I. Indicators of participatory process ......................... 31 Box 1 Tanzania: The Policy Planning Process. 3 2 Tanzania: Consultative Steps in Preparing the PRSP. 5 3 Tanzania: Regional Variation in Poverty, 1999 .10 Chart 1: Share of OC for the Priority Areas in Total Discretionary Recurrent Expenditures ................27 Text Tables 1 Tanzania: Selected Economic and Financial Indicators, 1998-2002 ..................................... 16 2 Breakddown of Expenditure Priority Items: FY 1999/2000 - 2002-2003 ................................ 25 3 Proposed Budgetary Allocation for Priority Sectors, FY 1999/2000-2002/2003 .......................28 Appendix Tables 1 Regional Welfare Ranking ............................................................... 32 2 Tanzania: Central Government Operations, 1996/1997-2002/2003 .......................................... 33 2 Tanzania: Central Government Operations, 1996/1997-2002/2003 .......................................... 34 3 Disaggregation of Priority Sectors: FY2000-2003 .............................................................. 35 3 Disaggregation of Priority Sectors: FY2000-2003 ............................................................. 36 Map Tanzania: Regional Variation in Poverty ............................................................... 37 1  Annex I : The Participatory Process of the PRSP .......................................................... 38 Annex II : Logical Frame for the Tanzania PRSP . ......................................................... 41 Annex III: Monitoring and Evaluations System for the Poverty Reduction Strategy ..................... 48 2  L BACKGROUND Since independence in 1961, the Government of Tanzania has been preoccupied with three development problems: ignorance, disease and poverty. National efforts to tackle these problems were initially channeled through centrally directed, medium-term and long-term development plans, and resulted in a significant improvement in per capita income and access to education, health and other social services until the 1970s. Thereafter, these gains could not be sustained because of various domestic and external shocks, and policy weaknesses. Indeed, despite sustained efforts since the mid-1980s, to address the country's economic and social problems, one half of all Tanzanians today are considered to be basically poor, and approximately one-third live in abject poverty. A. The Policy Planning Process More recent efforts to tackle poverty and the other development problems have been pursued under relatively decentralized, but largely complementary policy initiatives (Box 1). Box 1 Tanzania: The Policy Planning Process Policy Planning Initiative Objective * Vision 2025 National vision of economic and social objectives to be attained by the year 2025 * National Poverty Eradication Strategy National Strategy and objectives for poverty (NPES) eradication efforts through 2010 * Tanzania Assistance Strategy (TAS) Medium-term national strategy of economic and social development, encompassing joint efforts of Government and the international community * Poverty Reduction Strategy Paper (PRSP) Medium-term strategy of poverty reduction, developed through broad consultation with national and international stakeholders, in the context of the enhanced Highly Indebted Poor Countries (HIPC) Initiative Building Blocks 1. Policy reforms aimed at ensuring macroeconomic stability and market efficiency being supported partly by the by the International Monetary Fund and the World Bank under the Poverty Reduction and Growth Facility (PRGF) and the Programmatic StructuralAdjustment Credit (PSAC-I), respectively. 2. Reform of the public sector (including central and local Government), being supported under PRGF, PSA C-l, Public Service Reform Programme (PSRC) and by other initiatives supported by international partners 3. Development of sector-specific strategies, being supported by many international partners.. Vision 2025 lays out the long-term developmental goals and perspectives, against which the strategy for poverty alleviation (NPES) was formulated. The TAS is the result of a mutually felt need by the Government of Tanzania and its international partners for a comprehensive development agenda, around which issues pertaining to ongoing activities can be regularly discussed and assessed. As such, the TAS covers all the development areas that have characteristically been supported by the international partners, both within and outside the framework of the central Government budget. It is hoped that the TAS will provide a useful framework for organizing periodic consultations and dialogue among all development partners. The PRSP is an integral part of the HIPC process, focusing mainly on poverty 3  alleviation, subject to a relatively hard (central Government) budget constraint, starting in FY 2000/2001. Nevertheless, the PRSP encompasses poverty-oriented extra-budgetary activities, and various non-financial considerations that have an important bearing on poverty reduction. The elaboration of the PRSP has entailed broad consultation among the stakeholders-a factor that has contributed to underlying consistency in the country's development policy objectives, including the strategy for poverty alleviation. This notwithstanding, the national policy planning process has features that call for continuous review and reassessment. First, substantial efforts toward poverty reduction by international partners are still being implemented outside the framework of the central Government budget. To ensure maximum progress toward poverty reduction and improved predictability of budgets, these efforts would need to be rationalized and realigned progressively, to reflect the PRSP priorities. Second, a large amount of international resources is being channeled through specific donor- driven projects, sometimes entailing duplication. An effective struggle against poverty will require continued efforts to channel these resources in the context of sector-wide development strategies. Third, a key step in the area of public sector reform, notably the Medium-Term Expenditure Framework (MTEF) exercise for FY 2000/2001 (July-June), preceded the formulation of the PRSP. The priority objectives of the latter will, therefore, need to be reflected more fully in the MTEF for 2001/2002 and the subsequent years. Finally, major reforms in key areas, especially local Government, education, and agriculture, are still being formulated, and their implication for poverty reduction and resource requirement cannot be assessed accurately now. The Government will, therefore, continue to review and adjust the poverty reduction strategy, in order to reflect the ramification of these reforms. B. Consultative Process for the PRSP As noted above, the PRSP has been prepared through a process of consultation, detailed in Annex I and summarized in Box 2. The Zonal Workshops, which included a large number of representatives for the poor at the village level, were key in this process, and yielded results paralleling those of earlier participatory poverty assessments (PPA) by the World Bank ("Voices of the Poor" in the 1995 report) and the UNDP in Shinyanga (1997).' In retrospect, the coverage of the poor could have been broadened even further, to include unemployed and under-employed youths, and the informal sectors. It is also possible that with a different sampling of the poor, the emphasis placed on certain views and concerns could have been somewhat different. The Government intends to continue to seek fuller representation of the poor and other stakeholders in the implementation, monitoring, and evaluation of the poverty strategy, and in subsequent revisions of the PRSP. ' Among the findings of the World Bank study ("Voices of the poor") is the importance which the poor attach to secure land tenure; availability of inputs, credit and suitable technology; access to markets and health services; ability to save; and social capital (such as trust, unity, and participatory involvement). 4  Box 2 Tanzania: Consultative Steps in Preparing the PRSP Consultative Steps Objective of Consultation Outcome (date) L. Donestic Stakeholders * Committee of ministers Steer preparation of PRSP Final PRSP and central bank Governor * Inter-niinisterial Technical preparation of the Final PRSP draft technical committee, PRSP researchers, editors * Zonal Workshops (May Ascertain views of "grassroots" Identified priority concerns and 2000) stakeholders requirements for poverty reduction * Members of Parliainent Establish reactions to the findings Concurred with the findings of (July 2000) of the zonal workshops, and the zonal workshops; underscored solicit their views regional differences in the incidence of poverty * Regional admninistrative Discussion of the final PRSP secretaries (August draft 2000) * Cabinet (September Review and discussion of the Reviewed and approved final 2000) final PRSP draft PRSP II. Joint consultation with international partners * Consultative meeting Review, and exchange views on with donors (May and the preparation of the PRSP June 2000) * National workshop Review draft PRSP Concurred with the orientation of (August 2000) the draft and also noted specific concerns, such as unemployment, child labor and enviromnent II. THE STATUS OF POVERTY IN TANZANIA For purposes of the PRSP, poverty is defined to include "income" and "non-income" human development attributes. A. Income Poverty: Current Status and Recent Trends The assessment of poverty levels and trends is complicated by the lack of consistent information and absence of officially recognized poverty lines. Since the early 1980s, a number of households surveys using different definitions, samples, and methods have been conducted: + The 1983 Human Resources Survey (HRS); covered 498 rural households in four regions in Mainland Tanzania; * The 1991/92 Household Budget Survey; covered 5,328 households countrywide; * The 1991/92 Cornell/ERB survey; covered 1,046 households in Mainland Tanzania; + The 1993 Human Resource Development Survey (HRDS); covered 5,184 households countrywide; * The 1995 Participatory Poverty Assessment (PPA); covered 768 households in rural Mainland Tanzania; and 5  * The 1998 REPOA survey; covered 649 rural households in three regions in Mainland Tanzania, and 148 peri-urban households in Dar es Salaam. Partly due to the absence of official poverty lines, some studies have used their own lines. Thus, "lower lines" denote basic food needs, based on specific assumptions about eating habits, nutritional requirements, and cost; and "upper lines" cover, in addition to such food requirements, other essential needs, such as clothing, housing, water, and health. Moreover, a poverty line of one US dollar per day in real terms (using purchasing power parity exchange rate) has been used to facilitate comparison with other countries. Notwithstanding the data problems, poverty is, no doubt, pervasive and deep. Based on the 1991/1992 HBS, around 27 percent of the people were in households with total expenditure that was insufficient to obtain enough food to meet nutritional requirements, and about 48 percent of the households were unable to meet their food and non-food basic requirements. The results of various updated estimates for year 2000 suggest that poverty levels may have increased, to well over 50 percent for Mainland Tanzania. For the purpose of this PRSP, and given the inconclusiveness of the updated results, the 1991/1992 poverty baselines are used extensively in the discussion below, and references to other sources are made where appropriate. These baselines will be updated, based on the preliminary results of the ongoing HBS, which will be available in early 2001. (a) Characteristics of Income Poverty (i) Poverty is largely a rural phenomenon In the rural areas, incomes are lower and poverty is more widespread and deeper, than in the urban centres. According to the 1991/92 HBS, basic needs rural poverty incidence is estimated at 57 percent, and the food poverty incidence is about 32 percent. Tentative estimates for year 2000 suggest that the incidence of poverty in the rural areas may have increased. (ii) The poor are concentrated in subsistence agriculture The 1993/1994 HRDS indicates that within the rural areas farmers are poorer than non-farmers. According to the 1991/1992 HBS, the poverty incidence for households whose heads work in own farms is 57 percent. These results are also supported by the 1998 REPOA rural survey. In addition, farmers that grow cash crops have higher incomes than those who do not, holding farm size, education, and other factors constant. (iii) Urban poverty is also widespread and increasing Although poverty is less acute in the urban, area, it is still a serious problem, especially in urban areas other than Dar es Salaam. According to the 1991/1992 HBS, the basic needs poverty incidence for Dar es Salaam was 5.6 percent, and for the other urban areas, 41 percent. These results are supported by the 1993/1994 HIRDS, with corresponding figures of 4.2 percent and 30.8 percent, respectively. Results from updated estimates for year 2000 suggest 6  that the incidence of poverty may have increased further. The urban poor are concentrated in the informal sector. (iv) The youth, the old, and large households are more likely to be poor According to the 1991/1992 FBS, 44 percent of the population is below the age of 15, and 4 percent is aged 60 or over, implying a dependency ratio of over 0.9. Other surveys show higher dependency ratios. The REPOA (1998) rural survey data yields an overall dependency ratio of 1.1. Moreover, the 1991/1992 HBS indicates that the proportion of the poor increases as the level of dependency rises. Households with a dependency ratio of 0 - 0.25 showed a basic needs poverty incidence of 32.1 percent, while those with a ratio of 0.75 - 1.0 showed a poverty level of 55.8 percent. Other surveys also confirm the relationship between household size and poverty. According to the 1991/1992 HBS, people living in households of seven or more are two thirds more likely to be poor than those living in households of six or less. The 1993 HRDS data indicates that households of 6-10 people are nearly twice as likely to be poor than households of 1-5 people. (v) Althoughfemale-headed households are not necessarily poorer than male- headed households, women are generally perceived to be poorer than men Women represent 51 percent of the population and head 14 percent of the households. Results from household surveys show that women-headed households are not necessarily poorer than male-headed households. For example, the 1991/1992 FBS shows a poverty incidence level of 45 percent for female-headed households, and 49 percent for male-headed households. A recent case study established that male-headed household (without wives) are likely to be as poor as female-headed households (without husbands). This notwithstanding, a good number of studies suggest that women are in fact poorer than men. In particular, according to the results of the PPA (1995) survey, women perceive themselves to be poorer than men owing to their vulnerability, the lack of asset ownership (including land and livestock) and limited schooling. (b) Changes in the Incidence of Poverty The incidence of poverty appears to have declined during 1983-1991 and 1991-1993, and risen during 1993-1998. The more recent deterioration in the poverty situation is probably attributable to worsening income inequality, and relatively low rate of economic growth, particularly in the rural areas. B. Non-Income Poverty (a) Education Broadly based primary school education plays a major role in strengthening human capabilities and reducing poverty. Tanzania's literacy rate was estimated at 84 percent in 1997, with the rate for women being somewhat lower than that for men. Primary school gross enrolment rate is currently estimated at 78 percent, reflecting 7  approximately equal rates for boys and girls (79 percent and 77 percent, respectively). The overall net enrolment rate is, however, much lower (57 percent). The available data suggests that the poor are more likely to be less educated. In 1991, 54.3 percent of the rural poor were literate, compared to 61 percent for the rural population as a whole. Between 1983 and 1991, illiteracy among the poor increased, while the proportion of illiterate women remained more or less the same, but still higher than any other socio-economic group. In addition, data from the HRDS (1993/1994) suggest that gross enrolment rates among poor children aged 7-9 decreased from 82 percent in 1983 to 80 percent in 1993. (b) Survival High mortality rates (especially among infants and under-five children) and corresponding low life expectancy are an important dimension of poverty. In 1999, infant mortality was estimated at 99 per 1,000 live births, and under-five mortality was 158 per 1,000 live births. Although these rates represent a major improvement over the 1970 rates, recent evidence suggests that infant and the under-five mortality rates have begun to level off, and some areas may even be witnessing a slight increase at present. The leading killer diseases for infants and under-five children are malaria, anemia and pneumonia. In addition, maternal mortality is still high, currently estimated at 529 per 100,000 live births. Recent estimates put the average life expectancy at birth at 48 years of age, compared to 52 years in 1990 and 45.3 years in 1970. The more recent decline in life expectancy is largely attributable to the impact of HIV/AIDS and other communicable diseases. At present, AIDS is the leading killer disease in the age group 15-59 years in sampled districts of Dar es Salaam, Hai and Morogoro rural. For example, AIDS accounts for as high as 35.5 percent and 44.5 percent of male and female deaths in that age group in Dar es Salaam; AIDs is followed closely by malaria and tuberculosis. Infant mortality rates appear to be much higher for the poor, especially in the rural areas, than for the general population. The Demographic and Health Survey data shows a high rate (per 1,000 live births) of 113.7 for the first asset quintile, compared to 87.7 for the fourth asset quintile in 1991. The corresponding rates for 1996 were 116.2 and 99.9. (c) Nutrition Malnutrition among children is a good indicator of poverty levels or social well- being. Available statistics reveal that there is a considerable degree of chronic malnutrition in Tanzania. In 1996, 43 percent of the children under five were found to be stunted (low height for age) and 18 percent were severely stunted. Acute malnutrition is measured in terms of weight for height, (that is "wasting"). In 1996, 7 percent of the children under five were classified as wasted, and 1 percent were severely wasted. A combined measure of chronic and acute malnutrition is weight for age. More than 30 percent of the children under five are under weight for their age. Comparisons with earlier data on children's nutrition status show that there has hardly been any improvement over the past decade. 8  According to the HRDS data, malnutrition increases with poverty. In 1991, about 43 percent of the stunted children came from families in the first asset quintile, and 26 percent came from families in the fifth asset quintile. The corresponding percentages for 1996 are 46 percent and about 8 percent. The majority of the poor in the rural areas, who produce their own food for consumption, are more likely to be malnourished. Localised food insecurity and famine are common, and compounded by inadequate resource endowments at the household level. (d) Clean and safe drinking water About 68 percent of the urban population have some kind of access to piped water, and less than half of them obtain 24-hour service. In the rural areas, about 45 percent of the population have access to a safe water source, and about 30 percent of the facilities are not functioning properly. According to the 1991/92 HBS, about 53 percent of the population use unprotected water sources. These people are more likely to be poorer (with poverty incidence of 52.5 percent) than those who use pipe water in their homes (17.5 percent), and those who use private pipes located outside their houses (24.8 percent). In addition, only a limited number of the existing waste waters treatment facilities work. Outbreaks of cholera and waterborne diseases affect mostly low-income neighbourhoods, with households that have no access to piped water. Moreover, many poor families rely on water vendors who charge rather heavily for their service, or spend a substantial amount of their time fetching water. (e) Social well-being Tanzania has a long history of participatory planning and implementation of public programmes. However, institutional disruptions that took place in the late 1960s and early 1970s fostered centralized Government control at the expense of participatory involvement of the poor and grassroots organizations. Ongoing political and administrative reforms are aimed at reversing this trend. The right to security, justice, peaceful life, and freedom are important aspects of survival. In general, Tanzania has enjoyed peace, stability and unity since independence. Recently, the effectiveness of the instruments of law and order, and the judiciary appears to have eroded. For example, the proportion of filed cases that are decided on a timely basis is only 63 percent, and the High Court of Appeal holds only 50 percent of its planned sessions. Moreover, the Warioba report cites the police and judiciary as highly corrupt institutions.2 (f) Vulnerability A major concern of the poor is their vulnerability to unpredictable events. In Tanzania, famine often results from either floods or drought. Since the mid-1990s, Tanzania has in fact experienced a series of adverse weather conditions, which undermined food security. Another threat is the increasing impact of HIV/AIDS on the number of orphans, currently estimated at 680,000. Many communities have to deal with growing numbers of AIDS victims and orphans, the handicapped, the very old, and refugees. There is, therefore, a growing need for safety-nets. This point was 2 The report contains the findings of a presidential commission on corruption, established in 1995 and headed by Justice Joseph Warioba (former Prime Minister). 9  noted in the recent Zonal Workshops. The apparent breakdown of traditional systems that used to take care of vulnerable groups and the escalating number of dependent persons have increased the need for safety-net programmes. Several initiatives to update the database for poverty analysis are being implemented, namely: a new Household Budget Survey covering 15,000 households (being carried out over the period April 2000-April 2001) to enable an update of the poverty status; a pilot labour survey to establish the baseline data for the labour market; a Demographic and Health Survey in 2001; an updated Social Accounting Matrix to allow impact assessment of income and policy interventions on poverty; and Population and Housing Census in 2002 (see Annex II for further details). C. Regional Poverty and Welfare Ranking An attempt was made in 1999 to calculate a composite deprivation index for regions in Tanzania, taking into account among other things, food security, income and production, education, and health and nutrition services. The results suggest that Dodoma, Kagera, Lindi, Kigoma and Coast are the most deprived regions. The least deprived regions are Dar es Salaam, Ruvuma, Kilimanjaro, Singida and Tabora. (Box 3, Appendix Table 1, and Map). Box 3. Tanzania: Regional Variation in Poverty, 1999 Indicator Least deprived Most deprived region Most deprived regions region Per capita GDP in 1997 371,811 95,623 Kilimanjaro, Dodoma, Kigoma, (Tanzanian shillings) (US$608) (US$156) Kagera. Literacy rate (per cent) 1/ 96.4 68.1 Shinyanga, Arusha, Singida, Kigoma. Gross primary school 100 63.0 Kagera, Kigoma, Rukwa, Tabora, enrollment rate (per cent) Dodoma Boys 99 65.0 Tabora, Dodoma, Kagera, Kigoma, Rukwa Girls 100 60.0 Tabora, Dodoma, Kagera, Kigoma, Rukwa Life expectancy (years) 59 45 Dodoma, Morogoro, Mtwara, Kagera, Rukwa, Iringa. Men 57 44 Dodoma, Morogoro, Mtwara, Kagera, Rukwa, Iringa Women 62 45 Dodoma, Morogoro, Mtwara, Kagera, Rukwa, Iringa Infant Mortality 52 130 Dodoma, Lindi, Kagera. Mtwara (per 1000) Under-five mortality 78 220 Dodoma, Lindi, Kagera, Mtwara (per 1000) Low birth weight (per cent) 4.7 15.6 Mara, Ruvuma, Mwanza, Morogoro. Severe malnutrition (per cent) 2.7 14.7 Iringa, Lindi, Kagera, Singida Food security (cereal 590 177 Coast, Dodoma, Morogoro, Tanga equivalent) 2/ 1/ For women the most deprived regions were Shinyanga, Tabora, Coast and Kigoma 2/ Availability of cereal equivalent levels (in kilograms) during 1992-96 10  D. Poverty as Assessed by the Poor Themselves Two major participatory poverty assessments have been carried out in Tanzania; one by the World Bank ('Voices of the Poor', in 1995) and the other by the UNDP (in Shinyanga, 1997). Both assessments provide useful additional information on poverty in the country. The 'Voices of the Poor' study, which covered more than 6,000 people in 87 villages, revealed differences between men and women in the perception of poverty. According to the study, the poor attached importance to secure land tenure, availability of agricultural inputs, credit and suitable technology; good transport; access to markets; and the potential to save. Limited access to quality health services was also identified as a cause of poverty. Perhaps the most striking finding of the World Bank study, was the important role that "social capital" (trust, unity and spirit of participation) and plans at the village level in fostering development. A UNDP study was carried out in 8 localities in Shinyanga Region during 1997. This study highlighted livelihood insecurity, poor social service provision, and gender inequality as factors that contribute significantly to poverty. Cultural constraints, weak governance, scarcity of funding, and poor infrastructure were also identified as development obstacles. Gender bias in the control of household resources, was of particular concern to women. These factors were reiterated in the zonal workshops organised in the course of the PRSP process. M. POVERTY REDUCTION: PERSPECTWES OF VARIOUS STAKEHOLDERS A. "Grassroots" views as expressed at the Zonal Workshops At the Zonal Workshops, six problem areas, largely conforming to the broad concept of poverty discussed above, were identified; participants also proposed various ways of dealing with the respective problems. The consultation with other stakeholders reconfirmed the findings from the Zonal Workshops and provided complementary insights that have been taken into account in formulating the PRSP. (a) Income poverty Various causes of income poverty, especially in the agricultural sector, were identified, namely: * Poor working tools and technology (highlighted by over one-third of the groups involved in the workshops); * Non-availability of farm inputs (approximately one third); * Poor roads (nearly one third); * Limited access to markets (one third); * Non-availability of credits (almost one third); * Collapse of cooperatives (one sixth); + Adverse climatic conditions (one-sixth); and * Absence of safety-nets to cope with (weather-related) short-term fluctuations in income * (one-sixth). 11  In order to cope with these problems, the participants at these workshops underscored the need for (i) new and strengthened rural credit mechanisms; (ii) improved research and extension services, possibly including one extension agent per village; (iii) enhanced ability, especially at the community level, to repair and maintain rural roads; (iv) the revival of agricultural cooperatives; (v) improvement and expansion of irrigated farming; and (vi) effective safety-nets, to assist vulnerable groups. (b) Education Over one half of the groups participating in the Zonal Workshops cited education as a major concern, and specifically noted the following problems: * Limited access to primary school education; * Poor quality; * Inhibiting role, especially in regard to access, of the cost-sharing mechanisms, including the misuse, and lack of transparency in the deployment of funds contributed by parents; * High dropout rates; and * High rate of illiteracy. Virtually all groups participating in the Zonal Workshops were of the view that under the PRSP, the Government should give overriding attention to these problems. More specifically, the participants called for interventions to bolster primary school enrollment and retention rates; raise the quality and relevance of education; and facilitate access to primary school education, including a review of the cost-sharing arrangements. (c) Health Health was ranked third, next to education and agriculture, among the areas deserving priority attention under the PRSP. Specific concerns of the participants included the poor level of health education; weak service provision, especially in the rural areas; and the limited involvement of the poor in the design of health plans and programs. Underlying these concerns was a sense of alarm (shared by groups from all the regions) in regard to the HIV/AIDS epidemic, and high rates of morbidity and mortality. (d) Governance Over one-half of the groups in the Zonal Workshops noted that poor governance was an area of concern. In this connection, the groups underscored the lack of transparency and accountability, notably at lower levels of Government administration; and the inadequate financial support being provided for sectors that are deemed key in poverty reduction. (e) Gender, social, and cultural issues Slightly over one-half of groups at the workshops mentioned that cultural customs and traditions were an obstacle to poverty reduction. A related issue that was cited by about one- sixth of the groups was gender discrimination, especially in regard to customary ownership of property; participation in wage employments; and decision making at the national and household level. A breakdown, by gender, of the concerns of the workshop participants revealed that (i) rural women were proportionately more concerned about the role of cultural customs and traditions than rural men; (ii) women raised the issue of gender discrimination 12  more frequently than men; and (iii) about one quarter of the women expressed concern about laziness and drunkenness among men. (f) Other areas of concern Other areas that were emphasized by the participants in the 62 groups formed at the Zonal Workshops included the development of the economic infrastructure, notably all-weather roads and building local capacity for road repair and maintenance (mentioned by 44 groups); the development of water resources (22), telecommunications (15), and financial markets (12); and the promotion of environmentally sensitive exploitation of land (4) and other natural resources. B. View of Parliamentarians Parliamentarians reviewed and concurred with reported findings of the Zonal Workshops. However, they emphasized one point that was not a focus of zonal discussion-they stressed that the poverty reduction strategy would need to take into account regional differences in regard to the status of the poor. C. Views of Various Stakeholders at the National Workshop During the national workshop that was held to review the draft of the PRSP, participants (including international partners) concurred that the outlined strategy to reduce poverty in Tanzania constituted an appropriate response to the concems and views of the poor, as evinced at the Zonal Workshops. The participants at this workshop also made complementary observations concerning the need to (i) address the problem of unemployment among youths and in the urban areas; (ii) arrest environmental degradation; (iii) stop the use of child labour; (iv) increase financial support (including through extra debt cancellation and other forms of intemational support) for programs aimed at reducing poverty; (iv) develop rural financial mechanism that meet the needs of the "small" farmer; (v) develop "micro", small and medium enterprises; (vi) inculcate a sense of self-reliance; (vii) intensify efforts aimed at developing an enabling environment for the private sector; and (viii) facilitate the use of relevant research findings. IV. THE STRATEGY FOR POVERTY REDUCTION3 The poverty reduction strategy is based on three considerations. First, the strategy is viewed as an instrument for channeling national efforts toward broadly agreed objectives and specific inputs and outputs. The elaboration and implementation of the strategy are fundamentally ongoing processes. While a wide variety of key interventions has already been launched, the preparation of strategies for certain sectors, such as agriculture and education, are still underway. Moreover, the implementation of reforms aimed at shifting the responsibility for formulating, implementing, and monitoring poverty reduction intervention by the districts, municipalities, and communities at the grassroots, has started, but it will take some time to complete. The overall strategy of poverty reduction will, therefore, need to be managed 3 A more detailed outline of impact, outcome, and intermediate indicators and requisite actions is contained in Annex II 13  flexibly, to accommodate additional action plans and activities emanating from the ongoing work. Second, the poverty reduction strategy is to a large extent, an integral part of ongoing macroeconomic and structural reforms that are being supported by Tanzania's multilateral and bilateral partners. Some of these reforms, including those being supported under the PRGF and the PSAC- 1, are expected to have a significant impact on the welfare of the poor.4 Accordingly, the Government has chosen, as detailed below, to accelerate selected reforms that are likely to have a major impact on poverty reduction. Finally, in keeping with the concerns of the stakeholders, and guided by the overarching orientation of Vision 2025 and the NPES, the focus of the poverty reduction strategy concentrates on efforts aimed at (i) reducing income poverty; (ii) improving human capabilities, survival and social well-being; and (iii) containing extreme vulnerability among the poor. A. Income Poverty Available quantitative analysis, from within and outside the country, provides strong evidence that economic growth is a powerful means of reducing income poverty. Because of this, a key objective of the poverty reduction strategy will be to promote accelerated and equitable growth. Specifically, over the three-year period, 2000/2001-2002/2003 (July-June), annual GDP growth is targeted to accelerate from about 5.2 per cent to 6 per cent. Moreover, under the three-year period, real value-added of agriculture, which provides a livelihood for the majority of the poor, is expected to increase at an average annual rate of about 5 per cent, compared to 3.6 per cent during 1990-1998. In keeping with past trends, the growth of the industrial and service sectors is anticipated to be higher than that of agriculture. The Government believes that these rather ambitious targets are achievable, in view of the potential beneficial effect of a stable macroeconomic environment and the efficiency- promoting structural reforms, some of which will be front-loaded. Moreover, provided the envisaged growth in agriculture and the rest of the economy is distribution-neutral, the available simulations indicate the targeted pattern of sectoral growth is consistent with: + Reducing the proportion of the population below the basic poverty line from 48 percent in 2000 to 42 per cent in 2003 (compared to a longer-term target under the NPES of 24 percent by 2010); + Reducing the proportion of the rural population below the basic poverty from 57 per cent to 49.5 per cent (29 percent in 2010); and * Reducing the proportion of the food poor from 27 per cent to 23.5 per cent (14 per cent in 2010). In pursuit of the above poverty reduction objectives, supporting measures will be needed in four strategic areas. First, the Government will continue to maintain sound macroeconmic policies and intensify the implementation of reforms aimed at bolstering market efficiency, notably in agriculture, and raising factor productivity. Second, while the budgetary expenditure will continue to be restrained because of macroeconomic considerations, special efforts will be made to channel the limited Government resources toward the support of key programs and social services under the poverty reduction strategy (discussed in Section V). Third, the Government will put increased emphasis on reforms aimed at promoting export- 4The policy matrix in the Interim PRSP also outlined details of the reform measures being implemented. 14  oriented expansion and diversification of the "pro-poor" sectors, with a view to enabling the poor to share increasingly in the benefits of globalization. Fourth, efforts will be made to raise steadily investment as a percent of GDP from 15 per cent to approximately 17 per cent, including through initiatives focusing on bolstering private investment in the cultivation of traditional and new crops, small and medium size enterprises, and informal sector activities. (a) Sustaining Macroeconomic Stability Since the mid-1990s, significant progress has been made toward restoring macroeconomic stability. In particular, inflation has been reduced to a single digit level, and fiscal imbalances are now in a prudent range. As part of the poverty reduction strategy, the Government will continue to consolidate the substantial progress that has been achieved in the macroeconomic area. In addition to the above-noted objective of accelerating GDP growth to 6 percent, other macroeconomic objectives include (i) sustained efforts to maintain domestic inflation at approximately 4 per cent annually (broadly in line with anticipated inflation in Tanzania's main trading partners, Table 1); (ii) ensuring that the exchange rate for the Tanzanian shilling will continue to be market-determined; and (iii) maintaining gross official international reserves at the equivalent of approximately 4 months of imports of goods and non-factor services. 15  Table 1. Tanzania: Selected Economic and Financial Indicators, 1998-2002 1998 1999 2000 2001 2002 Prov. Proj. Proj Proj. (Change in percent, unless otherwise indicated) GDP and prnces Real GDP 4.0 4.7 5.2 5.6 6.0 Real GDP per capita 1.2 1.9 2.3 2.7 3.1 Consumer price index annual average 12.8 79 56 4.5 4.0 (In percent of GDP, unless otherwise indicated) Public finance 1/ Domestic revenue (excluding grants) 11.3 11.2 11 3 11.8 12.0 Expenditure 14.7 16.9 16.5 17 3 16.8 Overall balance (including grants; checks cleared) 2/ 0.3 -1.7 -0 4 -10 -0 4 Savings and investment Gross domestic savings 6.4 6.2 6.3 6.5 6.6 Government 0,9 0.9 0.9 0.9 0 9 Nongovernment 5.6 5.4 5.5 5.6 5.8 Investment 15.6 15.2 16.0 16.5 170 Government 3.3 31 4.5 4.4 4.4 Nongovemment 12.4 12.1 11.5 12.1 126 Resource balance -9.2 -8.9 -9.7 -10.0 -10 4 Gross official reserves in months of imports ofgoods 3.4 4.1 4.2 4.2 4.3 and nonfactor services 1I Fiscal years (July-June), beginning in the year indicated in the column header. 2/ Excluding the cost of bank recapitalization In support of these objectives, budgetary performance will be strengthened, with the overall fiscal deficit (including grants, on a cheques cashed basis) being maintained at a modest level. To this end, the tax effort will be intensified through measures to broaden the tax base (including through the control of tax evasion) and tax administration will be improved (reform of customs administration and instroduction of Tax-payer Identification Number). The allocation of budgetary expenditure will continue to reflect the MTEF and PER guidelines and also take into account the objectives of poverty reduction. Moreover, fiscal accountability will be fostered through expanded use of the Integrated Financial Management System and ongoing efforts to strengthen financial management capacity at the local Government level. These, and other measures aimed at promoting macroeconomic stability and accelerating growth, are contained in a comprehensive program that is being supported under the PRGF and PSAC-I. (b) Rural Sector Development and Export Growth Prior to the mid-i980s, attempts at agricultural transformation encountered problems of design and implementation. State involvement substituted for grassroots initiatives, and agriculture was heavily taxed. More recently, there has been a significant shift away from these policies, to market-oriented approaches. Notwithstanding the generally positive impact of these reforms, notably on output and average productivity, there has been wide- spread dissatisfaction, evident from the findings of the Zonal Workshops, concerning the limited availability of, and access to, credit agricultural inputs and extension services, and the low level of technology. 16  In response to these concerns, the Government will endeavor to ensure that the poor and the private sector in general, take the lead in developing durable mechanisms and schemes that are effective and, as far as possible, market-oriented. In particular it is expected that: * Credit will be provided by crop buyers, banks, and cooperatives rather than the Govemnment; * Farmers will be encouraged to organize themselves in groups or 6ooperatives, with a view to improving their prospects for obtaining credit from financial institutions, as well as carrying out crop-specific research and other initiatives, to bolster output and raise the quality of their products; * Private crop buyers or traders will be encouraged to continue to experiment with voucher schemes and other mechanisms to facilitate the purchase of fertilizers and insecticides; * Local communities will play a more active role in rehabilitating and maintaining rural roads; * Communities will also be encouraged (as far as possible with the support of the Government) to develop irrigated farming. For its part, the Government will confine its own interventions mainly to the elaboration of sound policies, and also support the rural sector through: * Training primary societies or cooperatives on organizational and financial management aspects; * Providing demand-driven research, and crop extension services; * Working with intemnational partners in providing training and other forms of support to local communities in the repair and maintenance of rural roads; * Supporting labour-intensive, agro-processing (notably of cashewnuts, cotton, coffee and other crops); * Putting into effect the new Land Act and ensuring that related regulations facilitate the use of land as collateral for purposes of commercial transactions; * Rationalizing physical controls that constrain crop movements within the country and across intemnational borders; * Particular attention to the most deprived regions, including through priority allocation of budgetary resources; and * Encouraging the on-going efforts by NGOs and local banks to provide credit, training, and other forms of support to the informal sector, as well as small-and medium-scale enterprises. A forward-looking dimension of the poverty reduction strategy will include concerted efforts to increase traditional and new export products and, to the extent possible, non-agricultural products of small- and medium-scale enterprise. The above-noted efforts to raise the quantity and quality of marketed agricultural products will be key. Additionally, the Government will, where appropriate, provide extension, training, "best practices" workshops, and other forms of support to entrepreneurs seeking to produce or export new products. Most of the above-listed interventions are already in the process of implementation. The Government will continue to review their effectiveness, and examine other ways of strengthening its intervention in support of the development of the rural sector. The outcome of these efforts will be incorporated in an agriculture sector strategy that is under preparation, as well as in a broadened strategy for the development of the rural sector. 17  (c) Private Sector Development Since 1993, the Government has been taking a variety of measures to spur private investment. These measures include adoption of the Tanzania Investment Act, the privatization of public enterprises, and the establishment of the Tanzania Investment Centre (TIC). Despite these and other measures which have been taken, the response of private investors has fallen below expectation (except in the mining and tourism sectors). Accordingly, the Government has resolved, on its own, to bring forward a number of important reforms that had been programmed under PSAC-I. Among the reforms that will now be implemented before mid- 2001 are: + Restructuring and restaffing of the TIC, to serve as an investment-promotion agency in keeping with its newly developed corporate strategy; * Preparing the Commercial Court project plan, and establishing an automatic filing and registry system through computerization; + Submitting the new companies legislation to Parliament for approval; and * Approving a proposal to relax restrictions on foreign portfolio investment in equities with appropriate safeguards. In addition, the Government has decided to: * implement forcefully reforms that will help reduce the excessive cost of utilities (including electricity) to industry; and * accelerate adoption of key reforms in the National Anti-Corruption Strategy. B. Human Capabilities, Survival and Well-being While the picture in regard to the overall strategy and objectives for improving human capabilities, survival, and well-being is fairly clear, an assessment of required inputs and their costing is still continuing. The Government is determined to have this outstanding work completed quickly. In this regard, the following tasks will be carried out or launched in the course of FY 2000/2001: + A national strategy for primary school education by July 2001, together with detailed district plans (including costing of needed inputs) for 50 districts that will be covered under the ongoing school mapping exercise. Guidelines for preparing these district plans will be issued shortly by the Ministry of Education; * A national agricultural strategy (including costing of key interventions) will be finalized and approved by June 2001, building on a draft strategy that is currently being reviewed; * Based on the above noted-strategy, the Government will elaborate a broader development strategy for the rural sector, covering all dimensions of poverty reduction and seek to have it completed by December 2001; and + The Govemment intends to bring all districts under the Local Government Reform Programme (LGRP), and will develop district-specific poverty reduction plans by the end of FY 2002/2003. Subject to these caveats, the strategy on the non-income side of the poverty reduction strategy will reflect a number of important considerations. First, the Government is aware that a large proportion of existing service delivery facilities are in poor condition and that the services 18  being provided are of poor quality. Primary emphasis will, therefore, be placed on rehabilitating existing structures and raising the quality of the services being offered. Decisions to construct new facilities will, however, be left mainly to local authorities. Second, although the Government will be seeking to bring externally funded operations within the purview of the budget, a large volume of activities will probably continue to be donor driven and remain outside the budget. Because of this, the Government will involve its development partners in reviewing the sectoral strategies under preparation and the key aspects of the LGRP, with a view to enlisting strong and coherent support for the poverty reduction strategy, thereby ensuring greater consistency of donor programs with government priorities. Third, while the Government, guided by the 2000/01 MTEF and PER exercises, is resolved to bolster budgetary support for key social services, it is almost certain that an effective programme of poverty reduction will, as discussed below, call for "additionality" of resources. The Government is planning to provide a more detailed assessment of financial requirements for the poverty reduction programme in the context of the budget for FY 2001/2002. (a) Education The Government intends to achieve the following specific objectives in the area of education during the three-year period ending 2003: * Raise gross primary school enrolment to 85 percent; * Increase the transition rate from primary to secondary school from 15 percent to 21 percent, and reduce the drop-out rate in primary school from 6.6 percent to 3 percent; * Raise net primary school enrolment from 57 percent to 70 percent, * Increase the number of students passing Standard VII examination at a reasonably high standard (to be specified) from 20 percent to 50 percent; and * Expand adult education programmes. In pursuit of these objectives, special efforts (including teacher upgrading and reallocation, strengthening of inspectorate services, improvement in availability of textbooks, rehabilitation of classrooms, and appropriate modification in the pupil-teacher ratios) will be made to raise educational attainment. The Government will continue to support basic costs in primary education, especially salaries of teachers. Moreover, in a reversal of past policies, it is intended to abolish primary school fees, starting in FY 2001/2002. (b) Health In order to raise the productive life of Tanzanians, the Government will place special emphasis on reducing morbidity, improving nutrition, and strengthening access to health services and safe water. The national goal in this regard will be to arrest the decline in life expectancy (owing to the impact of HIV/AIDS), and then raise it to 52 years by the year 2010. In line with this overarching goal, the Government intends to pursue policies and programs, which will: i Lower infant mortality rate from 99 per 1000 to 85 per 1000 by 2003; * Reduce under-five mortality from 158 to 127 per 1000 by 2003; *+ Lower maternal mortality from 529 per 100,000 to 450 per 100,000 by 2003; * Reduce malaria-related fatality for under-five children from 12.8 percent to 10 percent by 2003; and 19  * Raise the proportion of the rural population that has access to safe and clean water from 48.5 percent in 2000 to 55 percent in 2003. In pursuit of these objectives, the Government is making substantial progress toward the immunization of children under 2 years against measles and DPT. The national objective of raising the percentage of immunized children under 2 years, from 71 percent in 2000 to 85 percent in 2003, should be attained. The Government is also determined to improve the availability of drugs and medical supplies. To this end, revolving funds have now been established in virtually all hospitals in the country. Moreover, special efforts will be made to raise the share of districts with active HIV/AIDS awareness campaigns to 75 percent by 2003, and increase, over the same period, the coverage of births by trained personnel from 50 percent to 80 percent. A number of initiatives that will be developed and costed over the coming months: + Provision of quality health service, through essential health package delivery; * Strengthening and reorienting the delivery of secondary and tertiary health services, to ensure more effective support of primary health care; * Personnel training; * Promotion and coordination of private sector and civil society activities in the health sector; + Rehabilitation of malfunctioning water supply schemes, protection of water sources, and some expansion of new schemes (to be determined by local communities); * Promotion of nutrition education, especially to mothers, and reinforcement of reproductive health and family planning; + Raising the proportion of the rural population that has access to safe and clean water; * Promoting HIV/AIDS and public health awareness, including through peer education in schools; and * Strengthening the program of Integrated Management of Childhood Illness. (c) Social Well-being In the past three years, the Government has promoted participatory approaches to the determination of development programs and has opened up the public expenditure review process to the public. Simultaneously, the Government has adopted a program of devolving responsibilities for key services to the local authorities. Given the progress in political liberalization, the fast growing role of the public media, and the increasing dynamism of civil society, the poor are participating more effectively in shaping development policies. The ongoing Local Government reforms should lend momentum to this encouraging development. The well-being of the poor is also dependent on personal security afforded by the state. In this regard, the most important factors are personal safety, access to justice, and overall efficiency, fairness, and transparency of the administrative system. Accordingly, the Government intends to take the following steps: * Speed up settlement of cases in the primary courts by, among other things, reducing the estimated shortage of magistrates (approximately 700) by one half, * Promote community-based security arrangements; and + Rehabilitate building and other facilities of the primary courts. 20  These initiatives, which are expected to be elaborated and costed more carefully over the coming months by the local authorities, will be paralleled by decisive efforts at higher level of Government to strengthen the justice system and governance. Such efforts, the detailed action plans of which are under preparation, will include: * Speeding up court decisions and raising of the ratio of decided to filed cases from 63 percent to 80 percent by end-2003; * Reducing the average time taken to settle commercial disputes to 18 months by the end of 2003; + Raising the ratio of actual Court of Appeal sessions to planned sessions from the current 50 percent to 100 percent by end-2003; and * Carrying out diagnostic surveys of corruption in the Judiciary; in the Ministries of Works, Education, Health and Home Affairs; in the Attorney General's Office; and in the Tanzania Revenue Authority. (d) Vulnerability The Government will give specific attention to vulnerable groups through its own programmes and by enlisting the involvement of its development partners. Local Communities will be expected to play a major role in identifying the needs of vulnerable groups. Specific interventions in this area will include food-for-work programmes and other initiatives that are implemented under the World Bank supported Tanzania Social Action Fund (TASAF). The Government will also examine other interventions that would be targeted at the most vulnerable groups (orphans and handicapped). The Government already has in place an early warning system to predict weather-related variations in crop yields. However, in order to increase food security, the Government will seek to reduce dependence on rain-fed agriculture by supporting irrigation schemes in the arid areas, and improving access to food supplies in surplus regions. Related initiatives will also include the development of drought resistant crops and sustained efforts in re- afforestation. (e) Environment The poor in Tanzania are heavily dependent on the environment. Specifically, households in Tanzania are heavily dependent on environmental resources for income generation. For example, as much as 50 percent of their cash incomes in some areas derive from the sale of forest products such as charcoal, honey, wild fruits and firewood. There is evidence as well, that the poorest households are the most dependent on woodland resources. Other studies show very high levels of dependency on environmental resources for consumption. The Government intends to find ways of incorporating environmental quality indicators into its poverty monitoring system in a way, which captures these levels of dependency. Future iterations of the PRSP and the MTEF will capture more fully these linkages and help define a more consistent framework for managing activities aimed at protecting the environment. 21  V. FINANCING OF THE POVERTY REDUCTION PROGRAMME A. Basic Considerations In assessing the financial resources that will be required for the poverty reduction program, the government had to take into account seven basic considerations. First, pending the completion of the above-noted key tasks (notably in the ministries of Agriculture and Education, and in regard to the LGRP) the estimated financing for the poverty reduction programme will be kept under review and updated to reflect the impact of more thoroughly costed interventions. Second, while it is certain that the financing of the poverty reduction programme will derive principally from domestic sources, notably the central government budget, an assessment of the revenue impact of ongoing improvement in tax enforcement and administration is fraught with uncertainty. Accordingly, the government has chosen to proceed on the basis of conservative estimate of central government budgetary revenue over the medium term. This underscores the importance, once again, of continuing to review the financing requirements. Third, the financing of the poverty alleviation efforts will, as in the past, depend substantially on external funding, the availability of which could differ from the projected path. Because of this, the govemment's monetary programme, including government recourse to bank credit, will be managed flexibly, to allow for some compensation in unforeseen shortfall of projected external financing. Fourth, on the basis of insights from the MTEF and PER exercises, it is evident that the poverty reduction programme will be constrained severely by available resources. Because of this, the government has opted for a slight deterioration in the fiscal balance, and will also place special emphasis on the cost-effectiveness of intended poverty reduction initiatives. Fifth, the government will strategically support cost-sharing, co-financing, and other initiatives aimed at catalyzing deeper involvement by communities and other shareholders in well-conceived poverty reduction programmes. Sixth, the government is envisaging that there will be significant changes in the financing modalities for the poverty reduction programme, following the planned devolution of responsibilities to the local government authorities, and the attendant decentralization of public finances. The financial consequences of these prospective institutional changes will be kept under review, and incorporated more explicitly in the budget for FY 2001/2002. Finally, the government, guided by the findings from the stakeholders' workshops, will confine its financial interventions mostly to (i) education (notably at primary school level); (ii) health (primary health care); (iii) agriculture (research and extension); (iv) roads (in the rural areas); (v) water; (vi) judiciary; and (vii) HIVIAIDS. The deterioration of some key indicators of social well-being between 1989 and 1996 paralleled the decline in budgetary resources allocated to social sectors, particularly those for financing maintenance and operating expenses. Therefore, it is expected that a boost in budgetary support for these sectors along with improved efficiency in the delivery of public services will enhance access to better quality services for the poor. B. Overall Financing Envelope In line with the macroeconomic framework outlined above, and assuming that the average level of international support (grants and concessional loans) will be maintained at a slightly higher level than that of the preceding years, total budgetary expenditure during FY 22  2000/2001 - 2002/2003 is expected to increase slightly to about 17 - 18 percent of GDP, compared to 15.5 percent during the preceding four-year period (Appendix Table 2). Domestic revenue will cover nearly 70 percent of the envisaged total expenditure, and external support, including savings from the HIPC debt relief, will finance 30 percent. In this connection, the government is determined to redouble its reform efforts, with a view to meeting all the conditions for the HIPC completion point by mid-2001. The exact level of budgetary expenditure, including the impact of poverty reduction programmes, will reflect, as explained above, a more detailed costing of interventions in key sectors, especially at the local government level. Depending upon the outcome of this exercise, the government may have to modify its monetary program, including planned government recourse to bank credit, subject to the overriding goal of maintaining macroeconomic stability. C. Composition of Public Expenditure The costing of priority interventions has been based partly on the analysis of recurrent cost implications of sector investment programmes, and also reflects inputs from PER and MTEF exercises of previous years, as well as from sector-specific studies carried out in Health, Education, Water and Transportation. More specifically, these technical studies defined "basic units of service" and their estimated costs. Following these technical guidelines, financing requirements were derived for the medium term, subject to the resource envelope. For example, in the case of health, the technical studies indicated that the financing of acceptable levels of health care in Tanzania would cost about US$9 per head. Of the US$9, about 67 percent would cover recurrent expenditures, including salaries (36 percent), drugs and supplies (19 percent) and other charges (11 percent). The remainder, 33 percent, would cater for development expenditure. However, observance of a per capita expenditure of US$9 would entail a doubling of the present budget allocation for the health sector. Budgetary provision for the sector had, therefore, to be constrained to available resources, implying that the delivery of health services under the present circumstances would fall below acceptable levels in the short term. Likewise, in the case of education, the PER and MTEF studies developed a basic unit of service, which for primary education comprises salary and non-salary items (textbooks, exercise note books, rulers, pens, schoolbags and school supplies). The unit was costed and provided, as in the case of health, as a guideline for estimating required expenditure. In pursuit of the poverty reduction objectives, similar cost assessments will also be attempted for key interventions in other areas. For water anti- corruption and HIV/AIDS, specific actions were identified and costed. Pending the completion of this detailed work, the government has made a deliberate decision starting in FY 2000/2001, to increase allocations for personnel and other charges, in order to improve key social services for poverty reduction (Table 2 and Chart 1). This decision contrasts sharply with past experience when, following the introduction of the cash budget system, expenditures on "other charges" served as a residual item, to cushion shocks to revenue or statutory payments. Moreover, expenditure allocations for the "core" sectors are expected to increase significantly when compared to allocations for other sectors (Text Table 3). In particular, total allocation for "other charges" for all priority sectors is projected to increase (as a proportion of discretionary expenditure) over the medium term from about 21 percent in FY 2000/2001 to over 22 percent and nearly 26 percent in FY 2001/2002 and FY 2002/2003, respectively. Simultaneously, the allocation for "other charges" for the "core" areas is projected to increase, respectively, from 11.3 percent to 13.4 percent and 16 percent. 23  A more disaggregated picture of budgetary allocations for priority activities is provided in Appendix Table 3. 24  Text Table 2: Breadkdown of Expenditue Priority Items: FY 1999t00 - 2002-03 (PE=Personal Emoluments; OC=Other Charges) 1999/2000 | 2000/01 Budget I 2001t/02 Proj. I 2002O3 Proj. P E OC TOTAL PE OC TOTAL PE OC TOTAL PE OC TOTAL In Million of Taniina shillings Education 121704 37213 158917 127789 54272 182061 205402 67040 275515 265870 91584 357454 Basic Education 02898 13421 96319 120316 20974 142424 139909 27935 167844 181096 36097 217193 Health 1/ 32020 21850 53870 33621 32685 65970 39096 40856 87970 50605 55156 105761 Primary Health 15013 13768 28781 21510 20804 42314 25013 27708 52721 32376 35804 60180 Water 3229 2123 5352 2111 4862 5064 2455 6070 6388 3177 8205 11382 Roads 4325 37887 42212 4541 55106 50147 5279 57861 52868 6835 60754 67589 RunrlRoads 1237 14357 15593 1851 26998 28849 2152 35959 38111 2706 46465 49251 Judiciary 4035 3913 7947 3955 5700 7055 4599 7125 9793 5953 9619 15572 Agriculture 8210 5475 13605 3067 6331 8213 4529 8164 10351 5863 11022 16885 Agr. Res. and Ext, 6913 4753 11666 2298 4595 6893 2672 6121 8793 3459 7909 11368 HIV/AIDS 2t 0 0 0 0 4800 4000 0 6393 6393 0 0261 8261 TotalPrlariltSwtors 3/ 173523 108461 281984 175884 163756 339640 261360 194317 455677 338303 244600 582903 TotalPriortlyItasx 3/ 113324 52335 165659 152041 88734 240775 176800 117318 294118 228047 152360 381207 Dilcroaetwy recurrmnt EXp. 4/ 668464 7809 7830f9 945872 As a percent of discretionary Recurent Expenditwe 4/ Education 18.2 5.6 23.8 16.3 6.9 23.2 23.5 7.8 31.5 28.1 9.7 37.8 Basic Education 12.4 2.0 14.4 15.4 2.7 18.2 16 3.2 19.2 19.1 3.8 23 Health / 4.8 3.3 8.1 4.3 4.2 8.4 4.5 4.7 10.1 5.4 5.8 11.2 Primary Health 2 2 2.1 4.3 2.7 2.7 5.4 2.9 3.2 6 3.4 3.8 7.2 TotelWater 0.5 0.3 0.0 0.3 0.6 0.6 0.3 0.7 0.7 0.3 0.9 1.2 Roads 0.6 5.7 6.3 0.6 7 6.4 0.6 6.6 6 0.7 6.4 7.1 Rual Roads 0.2 2.1 2.3 0.2 3.4 3.7 0.2 4.1 4.4 0.3 4.9 5.2 Judiciary 0.6 0.6 1.2 0.5 0.7 1 0.5 0.8 1.1 0.6 1 1.6 Agniculture 1.2 0.8 2 0.5 0.8 1 0.5 0.9 1.2 0.6 1.2 1.8 Agr. Res. and Ext. 1.0 0.7 1.7 0.3 0.6 0.9 0.3 0.7 1 0.4 0.8 1.2 HIV/AIDS 2/ 0.0 0.0 0 0 0.6 0.6 0 0.7 0.7 0 0.9 0.9 TotaIPriritySectors 3/ 26.0 16.2 42.2 22.5 20.9 43.4 29.9 22.2 52.1 35.8 25.9 61.6 TortalPriortyltema, 3/ 17.0 7.3 24.8 19.4 11.3 30.7 20.2 13.4 33.6 24.2 16.1 40.3 Dlaisronlary Rwe. EFp.4// 100.0 100.0 100.0 10.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Minislry of Finance 1/ lnhides HIV/AIDS 2/ Expenditure on HIV/AIDS will basically fiud avareness campaigns, development of sttegic plans for combating HIV/AIDS, preventive measures such as the provision of condoms, and carryg out studies and monitoringsurveillance of the incidence and impact of the pandemic, as well as actions taken to fight it. 3/ That is, basic eduatLon, primary healthk rural roads, judiciary, agricultural research and extension, and HIV/AIDS. 4t Discretionary recurrent expenditure is defined as total recusrent expeditue less I contactuall obligations (such as debt service and pensions ctrinutions). 25  D. Specific Poverty Reduction Interventions (a) Abolition ofprimary schoolfees: The government will, as noted above, abolish primary school fees in order to ensure that children, especially from poor families, will have access to primary school education. This measure will be introduced in the context of the FY 2001/2002 budget at an estimated cost of TshlO - 12 billion, or one percent of recurrent expenditure. (b) Catalyzing communities and other stakeholders: Local communities at the village, ward, and district levels will continue to play a major role in poverty reduction through self- help schemes to construct classrooms, teachers' houses, health centers, dispensaries, water facilities, and rural roads. Moreover, extra-budgetary interventions by international and other development partners will continue to provide substantial complementary support for poverty reduction. The government intends to provide some financial resources, starting in FY 2001/2002, in order to catalyze "pro-poor" interventions by other stakeholders. (c) Employment creation: The government intends to spend about Tsh. 100 million annually, to support demand-driven skill development over the medium term. This effort will also be directed at assisting vulnerable persons. 26  Chart 1: Share of OC for the Priority Areas in Total Discretionary Recuffent l:xpenditures 2.0%-~ ~ ~ ~ ~ ~ ~ 2  Text Table 3: Proposed Budgetary Allocation for Priority Sectors, FY 1999/2000-2002/2003 (In millions of Tanzania shillings; OC=other charges) 1999/2000 2000/2001 2001/2002 2002/2003 Preliminary Budget Projection Projection Education 40,447.17 87,808.70 103,053.54 128,558.21 Recurrent (OC) 54,272.00 67,840.00 91,584.00 Development 33,536.70 35,213.54 36,974.21 Health 24,724.70 75,566.20 85,881.51 102,432.46 Recurrent (OC) 32,685.00 40,856.25 55,155.94 Development 42,881.20 45,025.26 47,276.52 Water 4,813.78 37,606.00 40,458.70 44,304.89 Recurrent (OC) 4,862.00 6,077.50 8,204.63 Development 32,744.00 34,381.20 36,100.26 Judiciary 3,412.65 6,100.00 7,545.00 10,059.75 Recurrent (OC) 5,700.00 7,125.00 9,618.75 Development 400.00 420.00 441.00 Agriculture 6,059.87 33,475.80 36,455.87 40,727.94 Recurrent (OC) 6,531.40 8,164.25 11,021.74 Development 26,944.40 28,291.62 29,706.20 Roads 46,955.61 86,838.00 92,036.66 76,816.79 Recurrent (OC) 55,106.00 57,861.30 60,754.37 Development 31,732.00 34,175.36 16,062.42 TOTAL (OC+Developments) 126,413.78 327,394.70 365,431.28 402,900.03 Source: Ministry of Finance 28  VI. MONITORING AND EVALUATION OF THE POVERTY REDUCTION STRATEGY5 A. Current and Proposed Indicators The Vice-President's Office (VPO) will have the overall responsibility for monitoring the implementation and impact of the poverty reduction strategy. The specific institutional mandates in the gathering and analysis of relevant data are identified in Annex III. To these ends, the government will develop plans, to be included in the MTEF for FY2001/2002, to strengthen capacity in the VPO and other concerned institutions. Monitoring and evaluation (M&E) of the poverty reduction strategy will require indicators or qualitative assessments pitched at different levels. First, M&E will require impact and outcome indicators. Impact indicators will describe progress towards overall poverty eradication objectives, while outcome indicators will refer to results of interventions (inputs) directed at poverty reduction. The government has already coordinated a consultative process to draw up a list of poverty and welfare monitoring indicators (PMI), which contains many of the required impact and outcome indicators. These indicators have been incorporated into the Tanzania Socio-Economic Database (TSED), which contains a wider set of indicators. The impact and outcome indicators identified below therefore draw largely on the PMI and TSED. Second, proxy indicators will be developed to substitute for impact and outcome indicators that are more difficult to measure, or are available only at infrequent intervals. Third, intermediate indicators will be used to provide supplementary information for assessment of progress under the poverty reduction strategy. Fourth, resource allocation for, and expenditure on, priority poverty reduction initiatives will be monitored under the PER and MTEF framework. Fifth, M&E will also seek to assess the extent of participatory involvement by the poor, as well as other shareholders, in subsequent revisions of the PRSP and in the implementation, monitoring and evaluation of related programmes and projects. Sixth, M&E, supported by well-targeted research, will assess the impact on the poor of policies that transcend the immediate agenda of the poverty reduction strategy. Seventh, A set of gender-oriented indicators, will be developed as an integral part of the M&E. Finally, given financial and technical constraints, the M&E system will be limited to C"core" strategic indicators that can be used readily by policy makers and other stakeholders. Moreover, a special effort will be made to include indicators with at least two observations during the three-year horizon of the poverty reduction strategy. 5 Additional detailed information on data sources for the monitoring indicators, institutional arrangements, and financial issues is contained in Annex III 29  B. Indicators of Income Poverty (a) Impact and outcome indicators: * Food poverty line (for urban and rural areas); + Basic needs poverty line (for urban and rural areas); (b) Proxy indicators * Ownership of "standard" consumer assets (could include items in the HBS, preferably those which are owned by most households); * Use of modern building materials in the construction of dwelling units (in particular, for floors, walls, and roofing). (c) Intermediate indicators (available annually or at shorter intervals) * Overall real GDP growth; * Growth in value-added of agriculture; + Seasonal production of key food and cash crops; and i Kilometers of rehabilitated rural roads. C. Indicators of Quality of Life and Social Well-Being (a) Survival * Infant and under-five mortality rates (by sex and for rural and urban areas); * Percentage of children fully immunized by their first birthday (by sex and for rural and urban areas); and * Proportion of districts with active HIV/AIDS awareness campaigns (as intermediate indicator). (b) Human capabilities (by sex andfor rural and urban regions) * Net enrolment rate for primary education; * Net primary school intake rate; + The enrolment rate in grade seven; and + Passing rate in grade seven. D. Water and Sanitation * Proportion of households with access to safe drinking water (in rural and urban areas). E. Macroeconomic Stability * Rate of inflation; * Gross official international reserves; + Movement in the exchange rate; and * Fiscal balance; 30  F. Social Safety Nets * It is intended to establish databases on vulnerable groups at local and central levels of government administration. G. Governance * Quarterly data on, or assessment of, progress toward achievement of the objectives listed above for the judiciary. H. Resource Allocation * Actual, budgetary allocation for basic education, primary health care, water and sanitation, rural roads, agriculture extension and HIV/AIDS (to be monitored semi- annually). L. Indicators of participatory monitoring * Dissemination of implementation reports * Consultative workshops; * Attendance at workshops; and * Inputs received from civil society. 31  Table 1: Regional and Welfare Ranking Regional 6/ Food Security Unemployment GDP per capita Female iliterate Gross Enrollment Health Status'/ Health services'/ Nutrition level' Rate (prim. School) 1. Dodoma 3 18 3 7 6 2 11 10 2. Kagera 10 15 1 11 4 1 5 3 3. Lindi 5 6 10 8 2 4 18 6 4. Kigoma 6 4 2 4 4 10 9 15 5. Coast 4 5 7 3 9 9 13 11 6. Morogoro 2 8 8 14 14 7 13 7 7. Mara 7 9 6 15 18 3 7 2 8. Tanga 1 3 5 16 12 13 13 17 9. Mtwara 9 11 9 S 13 8 12 9 10. Rukwa 18 14 19 5 3 5 2 5 11. Arusha 8 7 18 11 7 17 2 14 12. Mwanza 14 18 14 6 10 10 9 8 13. Iringa 11 20 17 17 17 5 13 1 14. Mbeya 15 12 11 13 15 10 7 12 15. Shinyanga 16 13 15 1 7 16 1 18 16. Tabora 17 17 12 2 1 18 4 19 17. Singida 12 19 13 10 10 19 5 12 18. Kilimanjaro 13 2 4 20 20 20 20 16 19. Ruvuma 19 10 16 18 15 15 19 3 20. DSM 20 1 20 19 19 13 13 20 Source: Poverty and Welfare Monitoring Indicators, Vice President's Office, Dar es Salam - November, 1999 6, Rank"l" Implies most deprived region and "20" least deprived region. / Weighted average ranking for infant mortality rate, life expectancy and erude death rate sJ Average weight and ranking for population per health facility and population per hospital bed / Average weighted rate for population per health facility and population per hospital bed 32  Appendix Table 2. Tanzania: Central Government Operations, 1996/97-2002/03 1/ 1996/97 1997/98 1998/99 1999/2000 2000/01 2001/02 2002/03 Pro- 2 Rev. Prog. Prog. 2/ Rev Prog. Proj. Proj. Total revenue 572.1 619.1 689.5 777.6 768.7 869.2 861.4 982.8 1108.1 Taxrevenue 514.6 566.1 616.5 711.3 6876 795.6 7726 884.1 999.5 Taxesonimports 174.2 180.7 218.9 233.8 216.8 253.3 325.0 374.0 415.4 Sales and excise taxes on local goods 141.7 140,5 161.3 179.9 1801 199.2 194.6 224.1 260.4 Incometaxes 134.2 149.8 162.9 212.6 201.3 252.7 167.9 194.1 224.3 Othertaxes 64.5 90.4 73.4 85.0 89.4 90.4 85.1 91.8 99.4 Nontax revenue 575 530 73.0 66.3 81.1 73.6 88.8 98.7 108.6 Totalexpenditureandnetlending 638.4 765.1 898.8 1078.1 1,161.8 1,207.7 1,256.1 1,443.0 1,542.2 Recutrentexpenditure 528.1 567.7 657.3 811.4 830.4 911.8 9426 1,053.2 1,129.6 Wages andsalaries 199.2 218.8 220.5 287.3 287.3 315.0 315.9 356.8 396.5 Interestpayrnents 110.8 115.9 959 106.4 109.9 106.9 111.3 110.6 111.2 Donestic 73,5 50.6 38.2 70.0 73.7 57.0 75.0 72.8 70.6 Foreign 37.3 65.3 57.7 36.4 36.2 49.9 36.3 37.8 40.6 Othergoods andservices andtransfers 218.1 233.0 340.9 417.7 433.2 489.9 515.4 585.8 621.9 Ofwhich: priority sector spendmg n/a 64.9 96.2 100.2 99.0 132.8 142.3 172.8 219.3 Net lending ... ... -6.4 .. ... ... ... ... ... Developmnentexpenditure3/ 110.3 197.4 2479 266.7 331.5 295.9 313.5 389.8 412.6 Ofwhich: expenditure financed domestically ... ... 18.8 23.4 23.4 40.6 380 93.1 100.2 Overall balance before grants (checks issued) -66.4 -146.0 -209.3 -300.5 -393.1 -338.5 -394.7 -460.3 -434 1 Grants 152.4 156.4 240.4 269.1 278.0 292.1 366.6 379.3 394.9 Program 75.0 38.3 74.6 118.7 116.4 136.1 124.3 113 9 116.1 Project 774 118.1 165.8 150.4 1504 155.7 195.9 212.2 221.1 HFPC Initiative interim relief (MF and World Bank) ... .. 11 2 ... 46.1 53.2 57.7 Overall balance af er grants (cheeks issued) 86.0 10.4 31.1 -31.4 -115.1 -46 4 -28.4 -81.0 -39 2 Adjustment to cash and other items (net) 4/ -7.1 -1.3 -13.1 ... .. ... Overall balance (checks cleared) 78.9 9.1 18.0 -31.4 -1151 -46.4 -28.4 -81.0 -39.2 Cost of bank recapitalization 5/ .. ... 69.8 60.3 100.8 ... Augsnentedoverallbalance(checkscleared) 78.9 9.1 -51.8 -91.7 -215.9 -46.4 28.4 -81.0 -39.2 Financing -78.9 -9.1 51.8 91.7 215.9 46.4 28.4 81.0 39.2 Foreign (net) -20.2 50.0 27.0 557 121.0 66.4 277 1066 83.1 Foreignloans 34.0 106.1 98.3 147.1 211.9 174.1 152.0 200.7 166.9 Progran loans 21.4 65.8 350 54.3 543 74.4 72.4 116.1 75.5 Development project loans 12.6 40.3 63.3 92.8 157 6 99.7 79.6 84.6 91.4 Amortization -54.2 -56.1 -71.3 -91 4 -90 9 -107.7 -124.3 -94.1 -83.8 Domestic (net) -31.5 -22.1 -10.0 -8.0 ... ... Bank -18.4 -47.9 -1.9 -9.4 -1.4 ... Nonbank -13.1 25.8 -8.1 1.4 1.4 .. Bankrecapitalization5/ ... ... 69.8 60.3 88.8 ... Privatization 12.7 6.5 11.5 ... 12.0 ... 15.0 Changeinarrears6/ -39.9 -43.5 -46.5 -16.4 -5.9 ... -14.3 Planning reserve 7/ . ... ... ... . -20.2 0.0 -25.6 -43.8 Memorandum items: Primary balance (after grants; checks issued) 44.4 -30.1 127.0 75.0 -5.2 606 82.9 29.6 71.9 Overall balance before grants, excluding Foreign-financed development expendituTe 19.8 -57.2 -85.1 -83.1 -119.2 -163.5 -121.7 Overall balance after grants and grantelement 110.3 86.2 101.4 73.8 36.4 388 80.3 62.5 80.1 0.0 27.3 15 8 -87.9 -87.9 -86 9 -85.9 1/ Fiscal years run from July to June. Pending the completion of thorough estimates, the figures do not include the impact of abolishing prinmary school fees And certain special initiative for employment creation and catalyzation of extra-budgetary support for the poverty reduction programmes. 3/ Includes fees, charges, and operating margins collected by the Tanzania Revenue Authority and disbursed to Tanzanian-Italian Petroleum Refinery (TIPER) to Cover operating costs. In 1998/99, the subsidy to TIPER includes T Sh 5 billion as a special subsidy. In 1999/2000, all subsidies to the petroleum sector Are included. 4/ Includes contingency as net expenditures. 5/ Development expenditure is on a checks-issued basis. Beginning in 1997/98, a broader coverage of in-kind project expenditures financed by Extemal grants and loans is included; the increased coverage represents a break in the series of a magnitude of about 1 percent of GDP. 6/ Difference between the overall deficit on a checks-issued basis and the total financing, which reflects expenditure based on checks cleared by the Bank of Tanzania (BoT). This difference is due to the change in the check float at the end of the fiscal year and unriecorded revenue or expenditure. 7/ Consisting of bonds issued to the National Microfinance Bank and the conversion into bonds of interest arrears owed to the BoT. For program-momutoring Purposes, such bonds are excluded from domestic financing. 8/ Clearance of arrears on utility and suppliers' credit 33  Table 2. Tanzaniia; Central Government Operations, 1996/97-2002/03 1/ (concluded) 1996/97 1997/98 1998/99 199912000 2000/01 2001/02 2002/03 Prog. 2/ Rev. Prog. Prog. 2/ Rev Prog. Prrj. Proj (In percent of GDP) Total revenue 13.5 12.2 11.3 11.5 11.2 11.6 11.3 11.8 12.0 Taxrevenue 12.1 11.1 10.1 10.5 10.0 10.6 10.2 10.6 10.9 Nontaxrevenue 1.4 1.0 1.2 1.0 1.0 10 1.2 1.2 1 2 Total Expenditure 15.1 151 14.7 3/ 15.9 16.9 16.1 16.5 17.3 16.7 Recurrent expenditure 12.5 11.2 10.8 12.0 12.1 121 12.4 12.6 123 Deveopnientexpenditure 2.6 3.9 4.1 3.9 4.8 3.9 4.1 4.6 4.5 Overall balance (checks cleared), including 1.9 0.2 -0.8 -1.4 -3.1 -3.1 -0.4 -1.0 -0.4 cost of bank recapitahzation 4/ Sources Tanzanian authorities; and Fund staff estimates and projections. 1/Fiscal years run from July to June. Pending the completion of thorough estimates, the figures do not include the impact of abolishing primary school fees and certain special initiative for esployment creation and catalyzation of extra-budgetary support for the poverty reduction programmes. 2/ Revised during mid-term review missionr 3/ Including net lending amounting to Tsh6.4 billion, or -0.1 percent of GDP. 4/ Develppoment expenditure is on a checks-issued basis. Beginning in 1997/98, a broader coverage of in-kind project expenditures fnanced by external grants and loans is included; the increased coverage represents a break in the serie of a magnitude of about I percent of GDP. 34  Table 3: DISAGGREGATION OF PRIORITY ITEMS WITHIN PRIORITY SECTORS: FY00- FY03 (in millions Tsbs.) VOTE SUBVOTE FTEM DESCRIPTION FY00 Prel. Actual FY01 Budget est. FY02 Pr__. FY03 Pro' l ~~~~~~~~~~~~~~~~~~~P.E. O.C. ITO TAL P. E. O.C. TOTAL P. E. O.C TO TAL P. E. O.. TO TAL 1. BASIC EDUCATION: 70-89 101' all O.C.Subventiont Local Athrities 79607 11107 90714 114865 17429 132294 133570 23214 156784 172891 29996 202887 70-89 204 2012 Exarnuation exp s min the RAS budget 92 556 648 _ 0 670 670 0 892 892 0 1153 1153 46 301 all MoEC - Basic Educ.Subvote O.C. 58 10 68 79 23 102 92 31 123 119 40 159 46 501 all MoEC-TeacherEduc.Subvote O.C. 1891 861 2752 2595 995 3590 3018 1325 4343 3906 1712 5618 46 202 all MOEC - 75% oflnspectorate Subvote O.C 542 241 783 821 516 1337 954 688 1642 1235 888 2123 46 201 30630 Subvention to I stute of AdiltEducation 41o 3 417 634 31 665 737 41 778 954 7 53 1007 46 ~~~~101 30625 SbeiotatEaratncouncil 242 529. 771 581 707 1288 676 941, 1617 875 1216 2091 67 all all 75%ofTSCO.C. 52 114 166 742 603 1345 863 804 1667 1116 1038 2154 Sub-Total Basic Educati on2898 13421 96319 120316 20974 141290 139909 27935 167844 181096 36097 2171 2. PRIMARY HEALTE: 70-89 101- all O.C.SubvntiontoLocalAuthonres 14504 2628 17132 21153 7959 29112 24598 10600 35198 31839 13698 45537 52 201 1709 Local Authorities drugs allocation (Its) 0 0 0 0 0 0. 0 0 0 0 0 Budgeted under MoH 0 6600 6600 _ 0 7357 7357 0 9798 9798 0 12661 12661 52 301 all MoHPrevontvcSubvoteO.C 312 3637 3949 216 5388 5604 251 7176 7427 325 9273 9598 70-89 302 all Rcgions Prevntive Subvote O C. 198 903 1101 140 100 240 163 133 296 211 172 383 Sub-Total PrimaryH..lth 15013 1376l 28781 21510 20804 42314 2501 27708 52721 32376 35804 68180 3. WATER _____________ 70-89 101", all O.C Subvntion to Loc. Authonti.s 1408 1065 2473 1669 3374 5043 1941 4218 6159 2513 5693 8206 49 401 all MoWaterO.C. 1802 1002 2804 442 875 1317 514 1093 1607 665 1476 2141 70-89 204 1803/1818 Regions O.C. items 18 57 75 _ 0 614 614 0 767 767 0 1035 1035 Total Water 3229 2123 5352 2111 4862 6973 2455 6078 8533 3177 8205 11382 4. RURAL ROADS ________ 70-89 101", all .C.SubventiontoLocalAuthores 880 361 1241 1406 1177 2583 1636 1568 3204 2117 2026 4143 56 202 2301 Road Fund budgeted for Dratricts 0 13989 13989 0 15252 15252 0 2031 20314 0 26249 26249 47 701 all MoW -Rural Roads Subvote O.C 356 7 363 444 10570 11014 517 14077 14594 669 18191 18860 Total Rural Roads 1237 14357 15594 1851 26998 28849 2152 35959 38111 2786 46465 49251 S. JUDICIARY___._ 40all_ _ all All O.C. under Judidiary Departnsent 4035 3913 7948 3955 5700 9655 4599 712' 11724 5953 9619 15572 6. AGRICtlLTURE RESEARCH N XESO 70-89 101" all O.CSubventiontoLocalAuthorties 0 0 0 977 977 0 1302 1302 0 1682 1682 43 301 all MoA - Research Devlopment Subvote O C 654 775 1429 637 388 1025 740 516 1256 958 667 1625 43 201 all MoA - Crops Dvelopment Subvote O C 3351 1962 5313 985 833 1818 1146 1110 2256 1483 1434 2917 43 401 all MoA-Cooperatvc Development Subvte O.C 402 1330 1T732 108 2060 2168 126 2744 2870 1 63 3545 3708 43 601 | __ MoAa-lLivtO.C 2504 687 3193 568 337 905 660 449 1109 855 580 1435 Total Agriculture Research and Esteasion 6913 4753 11666 2298 4595 6893 2672 6121 8793 3459 7909 11368 7. EHV/AIDS_ 0 0 0 0 4800 4800 0 6393 6393 0 8261 8261 Tot.l Priority Sectors _ 113324 52335 165659 152041 88734 240773 176800 117318 294118 228847 152360 381207 % Shar, of Total Recurrent Budget (excl. CFS) 17 0%o 7 8% 24 8% 19.4% 113% 30.5% 20.2% 13.4% 332% 242% 16.1% 4030/ * Expenditure on HIV/AIDS will basically fund awareness campaigns, development of strategic plans for combating HIV/AIDS, preventive measures such as the provision of condoms, and carrying out studies and monitoring/surveillance of the incidence and impact of the pandemic as well as actions taken to fight it. 35  Source: Ministry of Finarice Table 3: DISAGGREGATION OF PRIORITY ITEMS WITHIN PRIORITY SECTORS: FY00 - FY03 (in percentage) VOTE SUB VOTE ITEM DESCRIPTION FY00 Prel. Actual FY01 Budget est. FY02 Proj. ____ FY03 Proi. ___ F~~~~~~~~~~~~~~~~~~~PE. oC..I TOTAL P.E. O.C. TOTAL P.R. IO.C. TOTAL P.E. O.C. TOTAL 1. BASIC EDUCATION:___ 70-89 101** all O. C. Subvention to Local Authorities 96,0% 82.8% 94.2% 95.5% 83.1% 93.6% 95.5% 83.1% 93.4% "I+.,% 83.1% 93.4%/ 70-89 204 2012 Examinat~~~~~ionexcpensesintheRAS budget 0.1% 4.1% 0.7% 0.0% 3. 2% 0.5% 0.0% 3.2 % 0.5% 0.0% 3.2% 0.5% 46 301 all MoEC -BasicEduc.Subvote D.C. 0.1% 0,I/.1 ~0.1 i 0.1I% 0.1% 0.1 0.1% O 0.1 ~01% 0.1% 0.1% 0.1% I 46 501 all MoEC - Teacher Educ.Subvote O.C. 2.3% 6.4% 2.9% 2.2% 4.7% 2.5% 2.2% 4.7% 2.6% 2.2% 4.7% 2.6% 46 22 all MoEC - 75% of Inspectorate Suhvote O0C. 0.7%/ 1.8% 0.8%1 0.7% 2.5% 0.9% 0.7% 2.5% 1.0% 0.7% 2.5% 1.0%. 46 201 30630 Subvention tolInstitute ofAdult Education 0.5% 0.0% 0.4% 0.5% 0.1%, 0.5% 0.5% 0.1% 0.5% 0.5% 0.1% 0.5% 46 101 30625 SubventiontoaNat. Examination Council 0.3% 3.9% 0.8% 0.5% 3.4% 0.9% 0.5% 3.4% 1.0% 0.5% 3.4% 1.0% 67 all al 75 %o fT SCO.5C. 0.1% 0.8% 0.2% 0.6% 2.9% 10 t6% 291.% 0.6% 2.9% 1.0% Sub-Total Basic Education _____ __ _______________ 100.0% 100.0% 100.0% I100. 0%/ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 2. PRIMARY HEALTH ____ 70-89 ___ 1010* all O.C.Subvention toL1oca-lAuthorities ___ 96.6% -19.1% 95% 98.3% 38.3% 68.8% 98.3% 3-8.3% 66.8% 398.3 ~3 8.3%- 66.8% 52 201 1709 Local Authorities druga allocatio (kits) 0.0%. 0.0% 0.0% 0.0%~ 0.0% -0.0% 0.0% -0.0% 0.% 0.0% 0.0% 0.0%/- Budgeted under MoH 0.0% 47.9% 22.90/a _0.0%1 3-5.4% 17.4% 0.0% 35.4% 18.6% 0.0% 35A4% 18.6% 52 30-1 al oPeetve, Subvote O.C. 2.1% 26.4% 13.7% 1.0% 25.9% 13.2%. 1.0% 25.9%/ 14.1% 1.0% 25.9% 14.1% 70-89 __302 al einLrvnieSbvote O.C. 1.3% 6.6% 3.8% 0.7% 0.5% 0.6%1 0.7% 0.5% 0.6% 0.7% 0.T% 0.6% Sub-Total Primary Health _________________100.0% 100.0% 100.0% 100.0% 100.0% 100. 0% -1-0 0-.0%/- I1 000% 1-I 00-0.0%.F 10-0.0% 100.0% 100.0% 70-89 1010* - all O.C.Subvention to Local Authorities 43.6% 50.2% 46.2% 79.1% 69.4% 72.3% 79.1% 69.4%/ 72.2% 79.1% 69.4% 72.1% 49 401 all MoWater O.C. 55.8% 47.2%. 52.4% 20.9% 18.0% 18.9% 20.9% 18.0% 18.8% 20.9% 18.0% 18.8% 70-89 204 1803/1818 Rgns0.tes0.6% 2.7% 1.4% 0.0% 12.6% 8.8%~. - 0.0%. 1-2.66% -9.0%- 0.0% ~ 12.6% 9.1% Total Water ~~~~~~~~~~~~~~~~100.0% 100.0% 100.0% 100.0% 100.0% 100.% 100.0% -100.% 00% - % 100.0%o- 100.0% 100.0% 70-89 101*0 all 0. C. Subvention to Local Authorities 71.1% 2.5% 8.0% 76.0% 4.4% -9.0% 76.0% 4.4% 8.4% 76.0% 4.4% 8.4%/ 56 202--_ 2301 Road Fund budg_eted for Districts 0.0% 97.4%/- 89.7% 0.0% 56.5% 52.9% __0.0% 5 6.5%-/ 53.3% 0.0% 56.5% 53.3% 47 701 all MOW -Rural Roads Subvote O.C. 281.8 0.0% 2.3% 24.0% 39.2% 38.2% 24.0% 39.1% 38.3% 24.0% 39.1% 38.3% Total -Rural Roads ___ __ _________________ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 1 00.0%. 1- 00.0%. 100 0~O% 100 100.0% 100.00/6 40 ______ all - all ~~~AII O.C. under Judiciarv Departmsent 1O- 00.0% o 1000 10.0 10.100 I00% 10.%.0% 0% 100.0% 100.0% 100.0% 100.0% 100.0% 6. AGRICULTUTRE RESEARCH AND EXTENSION 70-89 lo1000* all O.C.SubventiontoLocalAuthoritics 0.0% 0.0% 0.0% 0.0% 21.3% 14.2% 0.0% 21.3% 14.8% 0.0% 21.3% 14.8% 43 301 L all MoA - Research Developmeat Subvote O.C. 9.5% 16.3% 12.2% 27.7% 8.4% 14.9% 27.7%/ 8.4% 14.3% 2 7.7% 8.4% 1-4.3% 43 1 ~~~~201 [ all MoA -Crop aDevelopment SubvoteO. C. 48.5% 41.3% 4S.5% 42.9% 18.1% 26.4%/ 42.9% 18.1% 25.7% 42.9% 18% 257 43 ] 401 [ all MoA - Coo rative Developmeat Subvote 0.C. 5.8%6 2-8.0% 14.8-% - 4.7% 44.8% 31.5% 4.7% 44.8% 32.6% 4.7% 44.8% 32.6% 43 601 L all MoA-LivcstockDevelopmentSubvote0.C. ~~~ ~~36.3 4.% 27.4% 2.% 7.3% 13.1% 24.7%, 7.3%. 12.6% 24.7%/ 7.3% 12.6% .Total neriulture Research and Extension 100.00/a- 100.0% 100.0% 100.0% 100 0% 100 %j 100.0%1 10-0-0%- I 100.0% 100.0% 100,0% I100.0% 7. HIV/A.iS 0.0% 0.0%1 0,0% 0.0% 00/ 00 0,0% 100.0%] 100.0% 0.0% 100.0% 10'00J 0 Expenditure on HIlV/AlDS will basically fund awareness campaigns, development of strategic plans for combating HI V/AIDS, preventive measures such as the provision of condoms, and carrying out studies and monitoring/surveillance of the incidence and impact of the pandemic as well as actions taken to fight it. Source: Ministry of Finance 36  Tanzania: Regional Variation in Poverty Shiyanga >. Sranjaro ins aro 7Dr E la Rukwa Morogoro .Mbeya nrlga | l 1 to 5 (Most deprived) (5) 0l 6 to 10 (5) Ruvuma