Tanzania

World Bank Board Approves US$170 Million Supplemental Financing in Budget Support to Tanzania

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Press Release No: 2010/219/AFR

WASHINGTON, December 22, 2009 - The World Bank's Board of Executive Directors today approved a supplemental International Development Association (IDA) credit of US$170 million for the implementation of Tanzania's National Strategy for Growth and Reduction of Poverty (MKUKUTA).

The supplemental financing will support Tanzania in mitigating the impact of the international financial and economic crisis while staying the course with the objectives of the Seventh Poverty Reduction Support Credit (PRSC-7) that was approved in June. It was the fourth in a series of five annual PRSCs provided in the context of General Budget Support (GBS), objectives which focus on sustaining high and shared economic growth and expanding the effective delivery of basic public services through the government budget.

The global financial crisis has left its mark on Tanzania. Growth has declined, in particular in sectors such as textiles, tourism and cash crops that support exports and the rural population. The government has responded to the crisis by providing a moderate fiscal stimulus seeking to sustain growth by maintaining essential expenditures, increasing focus on the agricultural sector and infrastructure investments, and providing targeted relief in directly affected activities. "Overall, government's response to the international crisis appears adequate and congruent with Tanzania's current fiscal space and development strategy," said Javier Suarez, the World Bank Task Team Leader for the operation.

The supplemental financing will assist the authorities in plugging the financing gap in the FY09/10 budget, which resulted from the need to maintain expenditure levels in congruency with the government's poverty reduction objectives, unforeseen expenditures required to address the impact of the international economic slowdown, and lower than anticipated domestic revenues and foreign financing.

"The additional support provided will help the country cope with the effects of the global financial crisis," said John Murray McIntire, World Bank Country Director for Tanzania, Uganda, and Burundi. "The global crisis also brings added urgency to Tanzania's efforts to improve the business environment and strengthen governance, in particular the fight against corruption."

IDA has previously approved an Accelerated Food Security Program which will provide US$220 million to support three complementary operations. The first operation, a new emergency recovery loan for an Accelerated Food Security Project for US$160 million, seeks to contribute to higher food production and productivity in targeted areas by improving farmers' access to critical agricultural inputs.

The second operation is an additional financing credit for the Tanzania Second Social Action Fund for US$30 million that seeks to improve access of the poor and vulnerable to enhanced socioeconomic services and income-generating opportunities.

The third operation, an additional financing credit for the Agriculture Sector Development Program for US$30 million, seeks to promote sustainable agricultural productivity growth through scaling up of small-scale irrigation facilities and integrated soil management practices.

In addition, a Transport Sector Support Program of US$250 million is being considered to support the medium term infrastructure investment program.

A detailed description of the credit is contained in the Supplemental Financing Document, which is publicly available at the web link below, or by sending an email to nmarcus@worldbank.org, or by requesting a hard copy at the World Bank office in Dar es Salaam.

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:
http://www.worldbank.org/tanzania

For more information about the project visit:
http://imagebank.worldbank.org/

Contacts

In Washington:
Francois Gouahinga
(202) 473 0696
fgouahinga@worldbank.org

In Dar es Salaam:
Nicodemus Odhiambo Marcus
(255-22) 2163246
nmarcus@worldbank.org