THE UNITED REPUBLIC OF TANZANIA MINISTRY OF FINANCE
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1 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF FINANCE Telegrams: TREASURY, DAR ES SALAAM Tel: , Fax: , Telex: (All official communications should be addressed to the Permanent Secretary to the Treasury and T to individuals). P.O. Box 9111 DAR ES SALAAM In reply please quote: Ref. No: C/AE191/298/01 24 th February, 2006 PRBS Secretariat, Norwegian Embassy Mirambo Street, DAR ES SALAAM Resident Representative The World Bank DAR ES SALAAM RE: REVISED PAF MATRIX As you will recall, agreement on the design of a new Performance Assessment Framework (PAF) for the General Budget Support (GBS) instrument was reached during the Annual Review in October/November It was also agreed that the resultant PAF Matrix be annexed to the new Partnership Framework Memorandum between the Government and GBS Development Partners. I now forward the matrix to you for use in future dialogue and s. Yours truly, Joyce Mapunjo for: PERMANENT SECRETARY - TREASURY
2 Appendix II General Budget Support UNITED REPUBLIC OF TANZANIA General Budget Support Performance Assessment Framework (PAF) ES TEMPORARY ACTIONS 1 implementati on: Cluster 1 - Growth and reduction of income poverty Is broad based economic growth being effectively promoted? Are policy debates/deci sions transparent? Development of and dialogue on implementation of a growth strategy. To be developed Infrastructure Review, encompassing Roads, Energy, Communication, and Transport sector in 2005/06. (iii) Agricultural Sector Review in 2005/06. (iv) BEST Programme Review (v) Second Generation Financial Sector Reforms Programme Review In Place (vi) Per Macro Group Put in place the agreed sector processes, ensuring alignment of the next PRBS annual in October 2006 Government amendments to the Civil Procedure Code (CPC) by October, (iii) Private sector views considered prior to second reading of the Business Activities Registration (BAR) Bill and the Regulatory Licensing Regime reformed (iv) Draft Roads Act to be submitted to the Parliament by October (v) Draft Electricity Act to Parliament by October 2006 (vi) EWURA (Energy, Water, and utility Regulatory Authority) and SUMATRA (Surface & Marine Increase in credit extended to private sector as % of GDP Enabling environment for private sector lead growth improved (iii) Reduction of Income Poverty in Rural Population (measured by Annual Agriculture. GDP growth). (iv) Improve rural market access. Volume of credit to the private sector to increase by 1% of the GDP per annum. Tanzania steadily moves up the World Bank Doing Business ranking. : 5.4% 10.0% Rehabilitate 15,000 km of rural roads by 2010 from 7.9% of the GDP in 2004 Tanzania ranked 140 in % (iv) 8,500 kms of rural roads rehabilitated in 2004
3 ES (vii) Privatization Review TEMPORARY ACTIONS Transport Regulatory Authority) fully operational and staffed 4,500 km in [1] (viii) Tax Modernisation Programme (TMP) Review (to be replaced by a comprehensive Cluster Review when developed. (vii) Amendment of Legislation for at least two crops Boards by November (viii) Survey of individual farms 11,693 and issue of CCROs (v) Increase capacity of LGAs to support agricultural development (ix) Production and distribution of the Strategic Plan for the Implementation of Land Laws (SPILLs) (x) Special studies on SGR, Input Trust Fund and Input subsidies conducted with Government position on their recommendations 2 implementati on: Cluster 2 - Improvement s of quality of Life and Social well being Is there improved quality of life? Is service delivery improving? A comprehensive Cluster Review when developed 1[1] Before the Annual Review 2006, a Joint Task Force will identify a better indicator to capture market access, encompassing the Government s entire efforts in improving such access.
4 ES TEMPORARY ACTIONS Implementation of the National Environment Management Act, 2004 Publication of the first State of the Environment Report. To be identified from the State of the Environment Report. Action Plan for developing a National Social Protection Strategy adopted. To be identified from the Action Plan. Health Sector Review Proportion of children that receive three doses of vaccine against diphtheria, pertussis (whopping cough), tetanus, and Hepatitis B under two (2) years. : 71% 90% 71% NMSF Bi-Annual Review National HIV prevalence2[2] in the years age group. : 7.5% 6.0% 7.5% Education Sector Review Net primary school enrolment Transition rate from standard VII to Form I NER Primary Average 94.8% Boys 95.6% Girls 93.9% Target 99% Transition Rates: Average 36.1% Boys 36.6% Girls 35.6% Target 50% 94.8% 36.1% GER Tertiary 2[2] Target to be ed to take into account the effect of ARVs.
5 ES TEMPORARY ACTIONS (iii) Gross Tertiary Education enrollment Education: :0.5% 10% GER Higher Education : 0.27% 6% 0.5% 0.27% Water Sector Review Satisfactory joint water sector held in first quarter FY 2006/07 Revised Water Sector Legislations presented to the parliament by April 2006 Percentage of the population that has access to clean and safe water from a piped or protected source. : Rural 53.5% Urban 73.0% Targets 2010: Rural 65% Urban 90% Rural 53.5% Urban 73.0% (iii) The National Water Sector Development Strategy presented to the Cabinet by end of February implementati on Cluster 3 - Governance and accountabilit y Is good governance and the rule of law ensured? Is government accountable to the people? GoT - DPs and other stakeholders consultations on governance. NACSAP (II) (iii) PSRP Review (iv) LSRP Revised anti Corruption Legislation presented to Parliament by November 2006 Develop mechanism for NACSAP (II) Quarterly NACSAP Implementation Report published and discussed. Current pay as a proportion of government s pay target (PSRP). : 4 reports 4 reports : 86% 100% 4 Reports 86% (v) LGRP (iii) Percentage of Court cases outstanding for 2 years or more. : 70% 70%
6 ES TEMPORARY ACTIONS 40% (iv) Number of strategic plans of central and sector ministries containing a strategic objective to implement decentralization by devolution. 2005: One (PO- RALG) Target 2010: All 4 Resource allocation and budget consistency Does the budget reflect national policy? Does spending reflect the budget? Are budgetary decisions questioned for consistency with policy and VFM? PER MACRO Poverty Monitoring System (vi) Budget Guidelines. (vii) Fiscal reports (BER, QDR) (viii) PEFAR (ix) Annual MKUKUTA Progress Report Approved budget broadly in line with policy objectives (, sector policies); Expenditure outturn consistent with approved budget. Recurrent budget deviation reduced: : 18% 10% 18% 5 Public Financial Management Are there systems in place within GoT to assess the regularity of expenditures? Is the procurement system open and transparent and provide value for Single PFM instrument PEFAR which will need to look at annual procurement audit PFMRP JSC consultations Audit Reform priorities to be reflected fully in PFMRP - see attached table. PWC contracted to establish system for monitoring and checking compliance, start November, will end around March 2006 NAO Audit Report is of international standard by 2010 and released within 9 months as required by the Public Finance Act : NAO starting to introduce INTOSAI and ISA international standards regarding formats, procedures and reports. 2010: NAO fully compliant with
7 money? Are these enforced? ES TEMPORARY ACTIONS international standards. 10% Number of procuring entities complying with the Public Procurement Act 2004 : 10% 80% 6 Macroecono mic stability. Is the broad macroecono mic environment conducive for budget support? PER MACRO (x) Budget Guidelines. (xi) Fiscal reports (BER, QDR) (xii) PRGF (xiii) PEFAR Fiscal and monetary stability, reflected by: Fiscal Deficit (after grants) as % of GDP consistent with PRGF targets. Inflation rate consistent with PRGF targets. : 6% per PRGF : 4.5% 6% 4.5% per PRGF
8 1.0 BACKGROUND TANZANIA PERFORMANCE ASSESSMENT FRAMEWORK (PAF) MATRIX FOR THE GENERAL BUDGET SUPPORT COVER TE 1.1 In the 2004 annual of the PRBS/PRSC it was decided to start work on a new Performance Assessment Framework (PAF) and a redesign of the PRBS. The following objectives of a new framework were agreed: (iii) (iv) (v) (vi) (vii) (viii) To ensure better coherence with national policy as described in the To reduce transaction costs for GoT and Development Partners To draw on GoT s own processes to ensure transparency and accountability to domestic stakeholders To increase GoT ownership, by avoiding the use of conditionality as policy leverage and instead focus on due process (budget formulation, execution and reporting and auditing) To have a common approach for all budget support Development Partners including the PAF, times, shared analysis and assessment, shared commitment to provide foreign assistance commitments prior to the start of the fiscal year and to frontload the support To establish a PAF with simpler and fewer actions that are outcome oriented To establish a structure of tranches that is responsive to overall performance rather than focusing on conditionality and specific actions To facilitate a transfer from sector financing to GBS by drawing in sector dialogue into the general GBS dialogue but with caution not to delve into sector detail due to high associated transaction costs. 1.2 A Task Force with representatives from the Government (GoT) and Development Partners (DPs) and headed by the Commissioner for Policy and Analysis in the Ministry of Finance (MoF) met regularly since December 2004 to produce a draft PAF based on agreed principles and regular feedback from GoT and DPs and agreed guidelines. A final draft was presented prior to the Annual Review
9 2005 (AR05). One of the tasks for each Thematic Group during AR05 was to facilitate sector/cluster discussion and refinement of the outcome indicators. 2.0 OVERALL PURPOSE OF THE PAF MATRIX The PAF is a framework for annual dialogue on Government of Tanzania (GoT) and Development Partners (DP) performance in achieving the targets set out in the MKUKUTA, and for DPs to ensure that the GBS funds are spent in a responsible manner The overall purpose of the outcome indicators is to serve as a basis for an overall assessment of performance on macroeconomic stability, poverty reduction, public expenditure, and financial management. 3.2 The PAF indicators will be a subset of the MKUKUTA indicators. Since the MKUKUTA indicators are only expected by the end of November 2005, the PAF indicators will be adjusted in line with related MKUKUTA indicators once they are finalized in order to avoid deviating benchmarks and/or duplicating processes. 3.3 The following criteria have been suggested for outcome indicators: Outcome indicators should meet the following criteria: In agreement with the MKUKUTA policy matrix Reflect a MKUKUTA outcome or goal (iii) Be of a quantitative nature (iv) Have baseline information available
10 (v) Be measured on an annual basis (vi) Have annual targets (vii) Are Specific, Measurable, Attributable, Realistic and Targeted (SMART); (viii) Draw upon good quality data, that is precise, reliable, timely, integer and valid. (ix) Give a good indication of overall progress in the cluster (x) Consistent with cluster plans 4.0 ES 4.1 The purpose of the underlying processes is to provide background for Government s performance in the sectors covered by PAF/MKUKUTA, using existing national processes. The underlying processes are therefore complementary to the outcome indicators. 4.2 For the MKUKUTA Clusters (Section 1, 2 and 3 in the PAF), the main underlying process will be the MKUKUTA. Until this process is in place, sector s will be the main source of information on GoT s performance in the clusters. The following definition of a satisfactory sector s has been agreed between DPs and GoT: Reviews are conducted regularly as input to the budget preparation process and in line with the MKUKUTA Monitoring Plan; Review processes involve a wide range of stakeholders under the leadership of the Government; (iii) The main purpose of s is to establish relevant developments, and assess performance against agreed results and targets;
11 (iv) Information and analysis for the Annual Review will be drawn primarily from the MKUKUTA monitoring system in particular the MKUKUTA Annual Implementation Report and other s process outlined in the PAF.; and (v) The shows good progress against agreed targets and results. 4.3 The PRBS assessment will deal in priority with those sectors which have put in place the necessary conditions for s to take place, and be based on an agreed timetable as to which sector s will be identified for PRBS assessment in the coming period. Interim measures/indicators will be needed for sectors not currently covered by adequate processes, with the intention that such s should be developed as soon as possible. 4.4 Each AR should agree on which sector s need to be undertaken before next AR. A time schedule for each sector /studies should be defined during the in order to have timely inputs for next annual. TGs should be prime source of information for decision. 4.5 During the annual 2005 there was agreement so far on the need for s in Water, Health, Infrastructure, Education and Agriculture. 5.0 TEMPORARY ACTIONS 5.1 This column serves two purposes: Still outstanding issues from the Mid Year Review 2005/old PAF, and A limited number of actions in areas where underlying processes are not yet in place, including suggestions on how to establish credible underlying processes. 5.2 Once an outstanding issues has been resolved or an underlying process been established the corresponding action in the column would be removed. Eventually the whole column could be removed. ========================================================
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