The United Republic of Tanzania
Ministry of Finance
Memorandum of Understanding
Between
The Government of the United Republic of
Tanzania
And Development Partners
In Support of
The Public Financial Management Reform
programme – Phase IV (2012/13-2016/17)
Through the Basket Fund Modality
1
The Government has implemented PFM reforms over the past two decades with
significant successes including: the enactment of Public Audit Act No. 11 of 2008 to
enhance operational independence of the National Audit Office; enactment of Public
Finance Act No. 6 of 2001 and its amendment 2010 and Public Procurement Act
No.21 of 2004 as amended 2011 to enhance transparency and accountability;
strengthening the capacity of Parliamentary Accounts Committees to execute
oversight function; and capacity building to staff involved in public financial
management.
Despite the achievements recorded in PFMRP implementation there still number of
challenges to be addressed in the next phase of the programme. The Government
has developed PFMRP IV strategy which aims at strengthening and improving public
financial management systems in a comprehensive manner. PFMRP IV will focus on:
revenue management; planning and budget management; budget execution
transparency and accountability; budget control and oversight and program
management, monitoring and communication including change management.
A. This Memorandum of Understanding (MOU) sets out the principles of cooperation
between the Government of the United Republic of Tanzania and the undersigned
development partners providing financial support though the basket fund modality
in support of Phase IV of the Public Financial Management Reform Programme.
The MOU comprises the following key provisions:
I.
Principles and Objectives: This section defines the principles and objectives
of the Memorandum of Understanding.
II.
Cooperation and Administration: This clause defines the periodicity of the
meeting between the Government of Tanzania and Development partners and
the objectives of the meeting.
III.
Contribution and Obligation of Development Partners: This clause
provides that development partners will provide in a certain month the amount
of assistance to be delivered the following year based on the needs articulated
in the MTEF, to align policies among development partners. The section also
notes that the bilateral agreement prevails over the Memorandum of
Understanding.
IV.
Procurement Arrangements: This section briefly outlines the procurement
arrangements;
V.
Auditing Arrangements: This section briefly outlines auditing arrangements;
2
VI.
Reporting Requirement: This clause specifies the types of monitoring and
evaluation reports that GoT will provide to Development Partners
VII.
Non-compliance to the MoU: This section outlines the process for managing
non-compliance to the MoU.
VIII.
Withdrawal from the MOU: This clause provides the opportunity to any
participant to withdraw from the arrangement
B.
The following Annexes form an integral part of this MoU:
 Annex A – PFMRP Phase IV document including M and E annex (will be
continuously up-dated)
 Annex B – The PFMRP IV - Operations Manual
A ‘terms of reference’ for DPs supporting PFM reforms, regardless of their
financing modality will also be developed.
C.
For the purposes of this MOU the following terms have the following
meanings:
a) “Development Partners” means all representatives of
development partners participating in this MoU;
b) “GoT” means the Government of the United Republic of Tanzania;
c) “PFM” means Public Financial Management
d) “PFMRP” means GoT’s Public Financial Management Reform
Programme set out in Annex A
e) “PFMRP Activities” means the activities and associated
expenditures specified in the Work Plan and Budget as eligible for
financing in the respective GoT financial year;
f) “Signatories” means the GoT and the Development Partners; and
g) “Work Plan and Budget” or “WPB” and “Annual Work Plan and
Budget” or
h) “AWPB” means each plan and budget prepared and approved in
accordance with this MoU
D.
Now therefore, the Government and the undersigned Development
Partners have reached the following understandings:
3
I.
Principles and Objectives
1. This MoU sets forth the basic roles and responsibilities of the Government
Ministries, Departments and Agencies implementing PFM reforms and the
Development Partners providing financial support for the implementation of
PFM reforms and outlines the general principles and objectives of the
partnership between GoT and DPs. Details of institutional, planning,
budgeting, disbursement, procurement, financial management and monitoring
and evaluation arrangements and documentation formats for implementation
of the PFM reforms are further detailed in the Operations Manual under Annex
B of this MoU.
2. The MoU is neither a binding legal agreement nor does it constitutes an
international treaty and it is not intended to create any legal commitments. It is
understood by the Signatories that each Development Partner will sign a
separate bilateral agreement or arrangement with the Government. Any matter
that is not expressly provided for in this MoU will be governed by the bilateral
agreements. In the event of any conflict between the provisions of this MoU
and the bilateral agreements, the latter will prevail.
3. To advance the spirit of harmonisation and alignment, the Development
Partners will strive to adhere to bilateral agreements or arrangements that are
compatible with the provisions of this MOU. In order to ensure such
harmonisation and avoid potential inconsistencies between the
understandings set out in this MOU and the legal commitments set out in the
bilateral agreements, the Signatories will ensure that all PFM reform activities
and associated expenditures, and procurement and other fiduciary actions
approved or carried out under this MOU are consistent with the provisions of
such bilateral agreements. In the event of any conflict between the provisions
of this MOU and the bilateral agreements, the latter will prevail.
4. Any controversy that may arise in relation to the MOU will be settled through
dialogue and consultation and unilateral actions will be avoided. The Joint
Steering Committee (“JSC”) and the Programme Management Committee
(“PMC”), referred to in paragraphs 10 and 13 respectively will in the first
instance, be used as the forum for such discussion. In the unlikely event that a
problem cannot be resolved at the JSC, the Ministry of Finance (“MOF”) will
convene a special meeting at any higher level needed to achieve a
satisfactory outcome for the Signatories.
5. This MOU together with the Annexes thereto will come into effect on the date
of signature by the GoT and one or more Development Partners, and will
supersede any previous MOU relating to PFMRP executed by the GOT and
any Development Partner The MoU will be valid until June 2016.
4
This MOU covers the Phase IV PFMRP Strategic Plan, which will be
implemented over a five year period from 2012/13-2016/17 unless it is earlier
terminated or extended by the Signatories in accordance with its terms.
6. Any undersigned Development Partner may withdraw from this MoU, following
consultation with the Government and other Basket Funding Development
Partners by submitting a written notice to the Government and the other
undersigned Development Partners.
7. This MoU together with its annexes may be revised as needed by written
acceptance of such revision by the parties to this MoU, provided that such a
revision will not contradict the bilateral agreements and the Laws of the United
Republic of Tanzania. Any entity that is not currently a party to this MoU and
wishes to fund the programme through the PFMRP Basket Fund may, with the
consent of the Government and in consultation with the undersigned
Development Partners, become an additional party to this MoU upon
confirming in writing its acceptance of the provisions of the MoU.
8. The Government will require that its staff and consultants or assignees;
involved in the implementation of the PFM reforms shall refrain from offering
third parties, or seeking, accepting or being promised from or by third parties,
for themselves or for any other party, any gift, remuneration, compensation or
benefit of any kind whatsoever, which could be interpreted as an illegal or
corrupt practice. The Government will promptly inform the Development
Partners of any instances of corruption as referred to in this paragraph.
II.
Cooperation and Administration
1. The arrangements put in place for GoT’s leadership and co-ordination of the
PFM reforms build on existing arrangements for policy formulation and
implementation of public sector reforms. In particular:
The Joint Steering committee (“JSC”) is the formal decision making organ.
The JSC is chaired by the Ministry of Finance’s Permanent SecretaryTreasury. It is composed of MoF’s DPS-PFM Reforms, DPS-PMO RALG,
MoF’s Programme Manager, the RCU and the designated co-chairs of the
PFM Development Partner Group. Representatives from the GoT and DP
PFM Secretariats will also be present to provide a supportive role only. Other
representatives from GoT and DPs will participate on invitation. The main
mandate of the JSC is to provide strategic oversight and direction to PFMRP
IV. JSC meetings shall be held semi-annually or more often if required to
consider and endorse the Annual Plan and Budgets, Annual Procurement
Plans, Progress and Financial Reports and fund releases. It also considers
and endorses PMC’s recommendations on strategic directions to ensure that
expected results are achieved as agreed in the M&E framework. It receives
and note audit reports of the programme. Any Signatory may request for an
5
extraordinary meeting of the JSC and the GoT will convene such a meeting
promptly.
2. The Programme Management Committee (PMC) is co-chaired by Ministry of
Finance’s Deputy Permanent Secretary- PFM Reforms (DSPFM), and the
designated representative of the PFM DPG. It is composed of representatives
from the PFMRP IV Components, DPs who are signatories to the MoU, the
Ministry of Finance’s Programme Manager and the Government and DPG
Secretariats. The main mandate of the PMC is to provide regular direction to
guide the implementation of the programme, ensuring that the results are
delivered efficiently and effectively at good value-for-money. PCM meetings
shall be held quarterly.
Technical Working Groups (“TWGs”) are formed within each of the five Key
Result Areas to link the component managers with their DP counterparts. The
main mandate of the TWGs is to provide a forum for detailed technical
discussions in order to build consensus on implementation issues prior to the
PMC and JSC meetings. TWG meetings will be arranged according to the
need and issues arising during implementation.
3. Component Managers are the most senior officers within a division,
department, agency or office responsible for implementation of the PFMRP IV
activities within the Key Result Areas.
4. A Government Coordination Secretariat, housed within the MoF and reporting
to MoF’s Director of Planning Division is responsible for supporting GoT in the
coordination of PFMRP implementation.
5. The Ministry of Finance’s Deputy Permanent Secretary-Public Financial
Management (DPS-PFM) will be responsible for managing the programme on
a day to day basis on behalf of the Permanent Secretary, Treasury. DSPFM
will assess whether the programme’s objectives are met and ensuring efficient
use of available funds and resources. In this task he will be supported by
MoF’s Director of Planning Division (DPD), who is responsible for managing
the programme on a day-to-day basis. DPS-PFM and DPD are supported by
Component Managers (referred to above), who will ensure that the
programme is delivered on time, to the required quality, within budgeted
resources and achieves the results specified.
6. To respect of the independence and autonomy of the NAOT from executive
authority and administration, the External Audit Services component will not be
managed by the PFM Manager. The CAG will appoint one of his/her deputies
to manage this component. The CAG will at the same time exercise oversight
of the implementation of the component, and will report to the JSC on its
progress. In line with GoT legislation, the External Audit Services component
will be subject to audit by a private sector firm.
6
7. PFMRP financial management arrangements comply with all the laws of the
United Republic of Tanzania and their regulations.
III.
Contributions and Obligation of Development Partners
1. The Development partners commit to make known the amount available for
coming financial year in line with the Budget calendar and it´s timetable. The
commitment is based on the assumption that all other terms and conditions as
stipulated in agreements with relevance to PFM reforms are fulfilled and that
required documents to enable commitments to be made are produced on time
and to an acceptable quality. It should be noted that bilateral agreements prevails
over the Memorandum of Understanding
2. Funds provided by the DP Signatories will be used exclusively to finance eligible
expenditures for PFMRP Activities, as specified in Annual Work-plans and the
Operations Manual. While implementing the programme, Government will strictly
apply value for money principles according to the respective budget guidelines.
Development Partners’ contributions will not be used to pay the cost of any import
duties, customs duties or domestic taxes imposed directly or indirectly by the
GoT, nor any salaries of civil servants of the GoT or allowances other than Per
Diem.
3. In line with GoT rules and regulations, at the end of each GoT financial year, nonutilised PFMRP Basket Fund balances will be returned to the basket fund account
and, subject to approval by the JSC may be used to finance PFMRP activities for
the following financial year.
IV.
Procurement Arrangements
1. All procurement shall be done in accordance to the Public Procurement Act No. 7
of 2011 and its respective regulations. The PFMRP procurement of works, goods
and services will be in accordance with procedures and methods and maximum
limits for various methods of procurement outlined in the Operational Manual,
Section 4. To ensure value-for-money, programme procurement will be guided by
a Procurement Plan, which will be prepared on the basis of an Annual Work Plan
for the Programme. The Procurement Plan will be approved by the JSC. DPs will
review Terms of Reference for the particularly financial amounts and expenditure
categories as indicated in the Operations Manual.
2. Procurement audits that assess compliance and value-for-money will be
undertaken annually by an Independent Auditor to be selected by PPRA. The
Terms of Reference for this exercise will be determined by the JSC. Where
necessary, any development partner may also be allowed by JSC to undertake on
7
own special review of PFMRP procurement and provide results to the
Government for action.
V.
Auditing Arrangements
1. The National Audit Office has legal responsibility to undertake PFMRP’s financial
and physical performance audits within nine months after financial year end. The
Controller and Auditor General may appoint and authorise private registered
auditor to undertake audits on his/her behalf.
VI.
Reporting Arrangements
1. The PFMRP monitoring system is designed to provide regular feedback to
stakeholders to enhance decision-making. The range of approaches and M&E
tools are available to collect data from programme Implementers and the
coordination unit has a role to analyse and consolidate the data that informs the
quarterly and annual reporting.
2. The following performance reports will be produced by GoT: Quarterly Progress
Reports and an Annual Progress Report. These reports cover:




An assessment of the implementation progress against the Annual
Work Plan and where necessary, the multi-year M&E Framework. This
should include quantified data on measuring actual indicators (results)
against targets;
An assessment of the challenges and risks to achieving the results in
the Annual Work Plan.
Financial information on actual expenditures for activities and
milestones against budgets and.
Procurement management.
The Annual Report: will be prepared within two months of the financial year end
and will focus reporting on accomplishments achieved against the results
committed to in the agreed M&E framework.
4. All Progress Reports will be submitted to the PMC for discussion and then to the
JSC for approval, after which they will be circulated a wider group of stakeholders.
5. During the period of implementation of the PFM reforms, an independent midterm and end of programme reviews will be conducted in September/October
2014 and in July/August 2017 respectively. Their specific purpose and terms of
reference will be endorsed by the JSC.
6.
In addition to reviews outlined in Operation Manual, at any time throughout the
validity period of this MOU, the Development Partners may request the GoT to
commission an independent assessment of the PFMRP performance. To
instigate an independent assessment, the concerned Development Partners
8
will declare their concerns and intentions in writing to the Chair of the JSC.
The request will either be incorporated into the JSC’s agenda for the next
meeting or decided upon by written procedure, whichever occurs earliest.
7. The Signatories commit to fully cooperate with each other on all matters relating
to the execution of the PFM reforms with a view of achieving a full and free
exchange of all relevant information.
VII.
Non-Compliance to the MoU
8. In the event of serious non-compliance with the terms of this MOU or violation of
the principles set out in this MOU on the part of the GoT, or in the event that
extraordinary circumstances have arisen which make it improbable that the PFM
reforms or a significant part of it will be carried out, the Development Partners
may, in accordance with their respective bilateral agreements or arrangements
with the GoT, suspend or terminate in full or in part further disbursements to the
PFM reforms, and reclaim any funds already transferred that have been used in a
manner inconsistent with the provisions of this MOU. If a Development Partner
intends to suspend or terminate disbursements, the Development Partner will
either call for a meeting of the JSC in order to reach a joint position on the
measures, remedial or otherwise, required or inform the other Signatories of its
intentions regarding the continuation or discontinuation of support. Suspensions
of disbursements by the Development Partners will be lifted when the
circumstances which gave rise to the suspension have ceased to exist and/or
appropriate actions satisfactory to the Development Partners have been
implemented by the Government
9.
Without limitation to the provisions of paragraph X in the event of violation of the
procurement rules or arrangements specified or referred to in this MOU and/or
Operations manual during the procurement or execution of a contract financed
Funding Development Partner may after consultation with the other Funding
Development Partners and subject to the applicable remedies under their
respective bilateral agreements, cancel an amount equivalent to the contract
amount.
VIII.
Withdrawal from the MOU
1. Any Development Partner may, following consultation with the other Signatories
to this MOU, give a six month notice of the intention to withdraw from this MOU.
9
SIGNED:
FOR THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA:
By: ___________________________________
Title: __________________________________
Date: __________________________________
FOR THE DEVELOPMENT PARTNERS
GOVERNMENT OF ..................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF ................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF ................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
10
GOVERNMENT OF ..................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF ....................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF ..................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF .........................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
11
GOVERNMENT OF...................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF ...........................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
GOVERNMENT OF ...................................
By: ___________________________________
Title: __________________________________
Date: __________________________________
12