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General Budget Support

Presentation by the Ministry of Finance

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Presentation outline

1. Composition of ODA

2. Advantages of GBS over other aid modalities

3. JAST principles on ODA and the role of NGOs

4. Conclusion

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1. Composition of official development assistance (ODA)

External resources are an important element of the budget

ODA to the Government is delivered through three main instruments – GBS, Basket Funds, and Project Funds

Aid Management in Tanzania is guided by the Joint assistance for Tanzania as a step towards National aid effectiveness agenda

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4. Tanzania’s Composition of Aid GBS – Is the GoT Preferred Aid Delivery Modality –

Why? It provides financial assistance to the overall national

budget (Government Consolidated Fund) in line with the (Constitution) Laws of the country.

It is allocated by the Government according to its legal and budgetary process and hence subjected to the same degree of contestability as domestic resources

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Composition of ODA to the Government by modality in the national budget estimates

TYPEFY

2002/03FY

2003/04FY

2004/05FY

2005/06FY

2006/07

GBS 30% 38% 34% 38% 42%

Basket Funds

16% 18% 21% 20% 16%

Project Funds

54% 44% 45% 42% 42%

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4. Tanzania’s Composition of Aid, Cont.

I. GBS – Why? It strengthens the Parliamentary role for decision making in

resource allocation as more external resources will have to adhere to the national (Parliamentary) approval process thus, contributing to shifting Government accountability from donors to citizens through the Parliament

It strengthens national public financial management and accountability systems by making use of existing structures and systems

It increases the predictability of external resource availability and disbursements by basing funding decisions on outcomes of a joint review Performance Assessment Framework, which takes place prior to the FY in which disbursements are to be made

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4. Tanzania’s Composition of Aid, Cont.

I. GBS – Why? It is the only modality that fully complies with the country’s legal

budgetary framework, i.e. the Constitution of the URT, Chapter 7, Articles 135 and 136, which require that all revenues/finances must be deposited in the Government’s Consolidated Fund and appropriated by the Act of Parliament – Others use parallel systems

It increases the proportion of external resources subjected to the national budget process thereby increasing national ownership, transparency and domestic accountability

It strengthens the national budget process by limiting the access of Government agencies to extra budgetary finance by emphasizing national budget as the main framework for identifying priorities and programming resource use

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4. Tanzania’s Composition of Aid, Cont.

I. GBS – Why? It contributes to transaction cost reduction, development

partners harmonization and the alignment process through the adoption of single process for reviews, assessment, dialogue, etc.

It is consistent with the Tanzania Assistance Strategy (2002), Monterrey Consensus (2002), Rome Declaration (2003), Marrakech Memorandum (2004), Paris Declaration (2005) and Joint Assistance Strategy for Tanzania (2006) commitments on aid effectiveness.

It provides space for the Government to manage her business within the agreed priorities

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2. Advantages of GBS over other aid modalities

GBS is the Government’s preferred aid modality GBS allows Government full ownership over resource

allocation in line with national priorities for implementing MKUKUTA

GBS is fully integrated in national budget and accountability system – is subjected to the same degree of scrutiny as domestic resources

This allows for greater transparency and enhanced domestic accountability and helps to strengthen the national budget process

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3. JAST principles on ODA and the role of NGOs

JAST promotes increasing shift to GBS for delivering aid to the Government

JAST spells out clear criteria for using basket and project funds to deliver ODA to the Government in order to allow for Government ownership, alignment of DP support to Government structures, systems and processes, and the reduction of transaction costs

JAST also specifies that project funding will continue to be used by DPs to support non-state actors directly

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3. JAST principles on ODA and the role of NGOs

JAST recognizes independence of NGOs in managing their resources

JAST however also calls for greater transparency and accountability of NGOs (in line with existing regulations, e.g. NGO Act 2002)

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4. Conclusion

NGOs and non-state actors in general are important partners in implementing the national development agenda (MKUKUTA/MKUZA)

Government acknowledges that they will continue to directly receive support from DPs

Government and DPs also consider non-state actor contributions to dialogue around GBS as useful – have for first time invited non-state actors to the GBS Review 2006 and agreed to consider ways of increasing and enhancing non-state actor involvement in the future