Conformed Copy - C3300 - Public Service Reform Project - Supplemental Letter 2

Page 1 January 20, 2000 Minister of Finance Ministry of Finance P. O. Box 9111 Dar es Salaam, Tanzania Dear Sir: Re: Credit No. 3300-TA (Public Service Reform Project) Triggers for Moving to Second Phase We refer to the Development Credit Agreement for the above mentioned Project and to the Borrower’s request that the Association support its Program, through a series of Credits. This is to record our understanding that, in order for the Association to approve the subsequent Credit in support of the Program, the Borrower would be required to have achieved the indicators attached to this letter. Sincerely, INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Oey Meesook Authorized Representative CONFIRMED: UNITED REPUBLIC OF TANZANIA By /s/ Mustafa Nyang’anyi Authorized Representative Attachment Triggers End of Phase 1: Transition to Phase 2 Seventy-five percent of MDAs will have developed a strategic plan and fifty percent will show results in line with the agreed performance targets. Results will be linked to improved service delivery and will be known by the population and proper mechanisms will be in place to deal with the population’s feedback on the services. In the ten ministries initially targeted for strategic planning and performance budgeting, PSs will have been working for the last two years in keeping with performance agreements linked to results to be achieved. All MDAs will have in place a quick win that will demonstrate improvement in service delivery with the same or fewer budgetary inputs. Page 2 The real wages of professional and technical staff, adjusted for variations in the expected GDP growth and revenue collection, will show significant increase as per the Medium Term Pay Policy targets. All the last year’s new appointments will have been made by the Public Service Commission consistent with the new legislation establishing its independence.