Statement by Federico Ferrer at the meeting of June 15, 2000

86907 International Bank for Reconstruction and Development International Development Association International Finance Corporation Multilateral Investment Guarantee Agency FOR OFFICIAL USE ONLY CONFIDENTIAL EDS2000-177 June 14, 2000 06:28:08 PM Statement by Federico Ferrer Date of Meeting: June 15, 2000 Tanzania Country Assistance Strategy We welcome the presentation of the CAS and thank the Staff for his work in this, sometimes, candid document. Tanzania is a county that has to manage carefully its complicated situation that steams from a twofold problem: adapting its economy to a market one and reducing its chronic poverty level. Recently, the iPRSP and the completion point under HIPC initiative have been submitted to this Board evidencing that some of the major problems highlighted during these discussions remain, indeed, the same. At the macroeconomic level, We very much appreciate the positive response of the Tanzanian economy to the measures taken to curb inflation in a certainly contradictory environment. This stabilization effort has had its revenues in terms of a higher level of growth in the past four years, which, certainly, will be a base for enhancing future welfare. The performance and implementation of measures on the governance area has been rather shy which not only deprived the country from benefiting fully from the liberalization process, but rather exposed it to the worst possible scenario facing a price adjustment with no income compensation for the vast majority of population. The failure of commodity export price to increase and the current rise of import commodity prices adds, eventually, burden to the adjustment process underway. On the other hand, the stable increase in the income level of the overall economy at a rate of 4% in the past four years, as evidenced, is a very meager result to face simultaneously all social and economic challenges. We also want to show our concerns on how donor community assistance can, sometimes, interfere with a stable and unique governance framework, and encourage the Bank staff to reconvene the process under the PRSP. On the social and poverty areas, the lack of capacity in transforming the meager per capita increase in welfare in a stable poverty alleviation policy show the difficult task to carry on. It is important to note that the degree of poverty has been increasing steadily over the past four years at almost the same pace as the economic growth. The failure to meet minimum poverty alleviation shows to what extend the Government and agencies involved in the process are from using efficiently the resources put on by different donors. We hope that the implementation of the HIPC initiative will free enough resources to cope, once and for all, with this issue. Again, its worth noting the contradiction carried on the promotion of rural and agricultural sector policies designed to reduce poverty. Few countries, let alone those which have unproductive crop agriculture, as it is the case, may base its growth and, hence, its welfare strategy on those sectors. The lack of analytical data is a serious problem that needs to be addressed promptly to insure that the policies put in place, are duly implemented. A striking fact results from the total lack of information on unemployed population, which usually stands for the bulk of poverty in any nation. If confronted with data on poverty this omission is still more difficult to understand. The HIPC initiative at the decision point has been set (the completion point scenario is not well defined in this document), but still some factors need to enter the process to get it fully started. Some multilateral institutions are still pending to confirm their participation in the burden sharing of the compromises to free resources for Tanzania. The present document does not offer an explicitly clue to what extend the figures that are considered in the CAS include the totality of participants. We want to stress the importance of having all the players involved in this initiative and, again, request the Staff of the Bank to act actively in this direction. We welcome the consultation process that has taken place for the iPRSP and some institutional reforms, although we note that more coordination is needed to fully optimize the allocation of resources, specially, in the area of preventing and controlling the spread of the HIV/AIDS. The expansion of this phenomenon relates to a poor health and social framework, which permits endemic diseases to spread in the most convenient manner. The neutralization of the infectious diseases must be, therefore, addressed as a whole and not specifically. Finally, we want to express our support for the present document as a correct way to help close the gap between the current situation and the goals for fiscal year 2003.