Conformed Copy - C3300 - Public Service Reform Project - Supplemental Letter 1

Page 1 January 20, 2000 International Development Association 1818 H Street NW Washington, DC 20433 United States of America Dear Sir: Re: Credit No. 3300-TA (Public Service Reform Project) Key Performance Indicators We refer to Section III, paragraph 2 (a) of Schedule 4 to the Development Credit Agreement of even date herewith between the United Republic of Tanzania (the Borrower) and the International Development Association (the Association) for the above-referenced Credit. We wish to confirm that the key indicators agreed upon between the Borrower and the Association for the purposes of monitoring and evaluating the carrying out of the Project and the achievements of its objectives are as set forth in the attachment to this letter. Very truly yours, THE UNITED REPUBLIC OF TANZANIA By /s/ Mustafa Nyang’anyi Authorized Representative Attachment PERFORMANCE INDICATORS 1. The Performance Improvement Model successfully piloted in key social sector ministries, departments and agencies (MDAs). Success will be reflected in terms of measurable improvements in the MDAs' redefined roles, decentralization of functions and enhanced private sector participation. These will translate into improvements in the quality of services. On the basis of such outcomes, the MDAs will also receive a predictable (budget-based) flow of funds in key sectors. 2. The 'quick wins' services improvements program initiated under the past phase of the reform program will be completed. 3. Improvements in real wage levels for professional, technical and managerial staff towards levels consistent with incentives for performance and enabling the public service to hire and retain adequate numbers of staff in areas of critical skills, especially in policy and regulatory functions. 4. Demonstrated improvement towards reinstating meritocracy in the public service, i.e., appointments and promotions to the public service carried out on a transparent and competitive basis. 5. Progress in building institutions for safeguarding and sustaining meritocratic practices, as specifically reflected in a legal framework, and a new and independent Public Service Commission. 6. Progress in building sustainable capacity for both change management as well as service improvements. To this end planning and policy units in MDAs will be properly equipped and staffed with competent policy analysts and in-service training programs will be readily available to public servants. Page 2 7. sustainability of the Distance Learning Center measured by demand for and utilization of the center’s services and ability to cover operating expenses through fees. 8. Thirty-seven Executive Agencies launched by June 2004. 9. Accurate payroll and personnel data reports circulated monthly to ministries reflecting no incidence of irregular and illegitimate positions in the payroll. 10. An effective system for monitoring and evaluating the outcomes and impact of public services and to ensure that government policies are implemented and responsive to feedback from the public.