Announcement of Tanzania to Receive United States (U.S.) One Hundred Fifty Million Dollars for Poverty Reduction Support on July 29, 2004

Tanzania to Receive US$150 million for Poverty Reduction Support Media Contact In Washington: Aby Toure (202) 473 8302 akonate@worldbank.org In Dar-es-Salaam: Rosalie Ferrao (255-22) 211 45 75 rferrao@worldbank.org Washington, July 29, 2004 – The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit* and grant of a total value of US$150 million in support of efforts by the Government of Tanzania to implement its second poverty reduction strategy in 2004. The value of the IDA credit* is US$60 million and the IDA grant value is US$90 million. The Second Poverty Reduction Support Credit (PRSC-2) will finance the implementation of the government’s comprehensive macroeconomic and social policy reforms as spelt out in Tanzania’s Poverty Reduction Strategy. It focuses on four key development areas: sustaining and accelerating growth and broadening its impact; supporting results orientation of public service delivery; enhancing public sector performance; and strengthening environmental management. The budget support provided through the credit and grant will help the government close the fiscal gap between the cost of implementing key elements of Tanzania's poverty reduction strategy and resources available from the government's own domestic revenue and other donor support. The PRSC-2 bears testimony to Tanzania’s success in donor harmonization around Government’s poverty reduction strategy. The Bank together with a group of twelve other donors provide coordinated budget support to Tanzania, using a common performance assessment framework grounded in the country’s poverty reduction strategy and a joint, semi-annual review process. The World Bank Task Team Leader for the project Robert Johann Utz acknowledged that “the targets set in Tanzania's PRSC-2 to accelerate economic growth and broaden its impact, improve public service delivery, enhance transparency and accountability of public spending, and promote environmental sustainability are key requirements if Tanzania is to achieve the Millennium Development Goals. The approval of the credit acknowledges government’s satisfactory progress in implementing the PRS and the related reform agenda.” With per capita income of about $280 per year, Tanzania's 33 million inhabitants are among the poorest in the world. The country's economy is heavily dependent on agriculture, which accounts for about 50 percent of GDP, provides 85 percent of exports, and is by far the largest employer. Although the country experienced worsening poverty in the early 1990s, the benefits of more recent growth have contributed to reverse the trend. During the past decade, food poverty has declined from 21.6 percent to 18.7 percent, while basic needs poverty has fallen to 35.7 percent from 38.6 percent a decade earlier. * The credit is on standard International Development Association (IDA) terms, with a commitment fee of 0.35 percent and a service charge of 0.75 percent. The credit’s period of maturity is 40 years, including a 10-year period of grace. For more information on the World Bank’s work in sub-Saharan Africa visit: http://www.worldbank.org/afr For more information on the World Bank’s work in Tanzania visit: www.worldbank.org/afr/tz