Tanzania - Poverty Reduction Strategy Paper progress report and Joint Assessment : Chairman's Summing Up

REPUBLICOF TANZANIA CHAIRMAN'S SUMMING UP Poverty ReductionStrategyPaper Second Annual ProgressReport and Joint IDA-IMF StaffAssessment Meeting of Board of Executive Directorsof IDA May 29,2003 The Executive Directors met to consider the second annual Poverty Reduction Strategy Paper (PRSP) Progress Report prepared by the Government of the Republic of Tanzania, and the Joint Staff Assessment (JSA) of the PRSP-PR prepared by the staffsof the IMF and IDA. Directors commended the Government of Tanzania on its continued commitment topoverty reduction and ,on the progress that has been made in implementing the PRSP, noting in particular the impressive economic growth that hasbeen achieved since 1996, along with the maintenance of macroeconomic stability. They acknowledgedthe progress made towards achievingimproved educational outcomes, and welcomed the emphasis on rural development,the agricultural sector, infrastructure, and private sector development as a meansof reducing poverty. Directors, however, noted the less significant movement on health and nutrition indicators, and particularly stressed the importance of renewed efforts to address HIV/AIDS, and the environment. Directors welcomed the comprehensivepoverty analysis carried out by the Government;but noted with concern the finding that poverty had not declined significantly, given the strongeconomic performance. They emphasized the importance of assessing what is required to increase the poverty impact of growth in the next phase of the PRSP process. In this regard, Directors welcomed the establishment of the Poverty Monitoring System.They cautionedhowever against overloadingthe system with too manyperformance assessmentindicators. Directors welcomed the improvements that havebeenmade in public expenditure management, including the reorientation of the budget to priority sectors, as a result of which the budget has become more poverty focused. They noted the desirabilityof continuingthis process by further strengtheningthe links between the Poverty Reduction Strategy and the Public ExpenditureReview and budget processes, especially focusing on improving public financial management. Directors emphasized the needto continue to build capacity, which would improve the effectiveness, efficiency, and transparency in government expenditure, including at the local level. In this regard, Directors urged that the new CAS, and subsequent PRSC, include a comprehensive strategy on institution and capacity building at the local government level to systematically address the weaknesses in capacities of local government agencies. Directors also urged that anti-corruption actionplansand other governance measures are rolled out to their fullest extent. Directors also emphasized the need for continued attention to debt sustainabilityand aid dependencyand urged that debt managementcapacitybuildingbe pursued vigorously. Noting that Tanzania was one of the first countries to be approaching the end of the initial PRSP cycle, Directors commended the open and consultativeway in which the process had been managed, and welcomed the Government's intentions to use the next phase to revisit the PRSP's impact and strategic directions.Inthis regard consultationsshould continueto be as broad and as deep as possible. In conclusion, Directors concurred with staff that, on thebasis of this Progress Report, Tanzania's PRSP remains a sound basis for IDA concessionalassistance.