GENERAL BUDGET SUPPORT
Presentation by the Ministry of Finance and Economic Affairs
During the Incoming DPs workshop
Dar es Salaam, Tanzania
Contents
 Aid modalities
 What is General Budget Support?
 Advantages of General Budget
Support
 Conclusions
INTRODUCTION

The Government of Tanzania (GoT) receives
aid in 3 different aid modalities
I. General Budget Support (GBS)
II. Basket Funds (BFs)
III. Direct Project Funds (DPFs)
TANZANIA OFFICIAL DEVELOPMENT
ASSISTANCE
GENERAL BUDGET SUPPORT

What is General Budget Support?
General Budget Support (GBS) is a modality of delivering Official
Development Assistance (ODA) as financial assistance to the
Government. Other funding modalities that exist in Tanzania are
sector budget support, basket (or pooled) funds, and project funds.
GBS is provided by Development Partners directly to the national
budget and is allocated by the Government according to its own
priorities (currently for the implementation of
MKUKUTA/MKUZA) in the same way and process as domestic
resources. It is hence subjected to the same degree of contestability
in the national budget process as domestic resources.
TANZANIA OFFICIAL DEVELOPMENT
ASSISTANCE
GENERAL BUDGET SUPPORT
Which Development Partners provide General Budget Support?
Currently, 14 Development Partners provide GBS to the
Government. They are 11 bilaterals – Canada, Denmark, Finland,
Germany, Ireland, Japan, the Netherlands, Norway, Sweden,
Switzerland, and the United Kingdom, and 3 multilateral agencies –
the African Development Bank, the European Commission, and the
World Bank.
TANZANIA OFFICIAL DEVELOPMENT
ASSISTANCE
GENERAL BUDGET SUPPORT
How is GBS Delivered and Managed?
GBS is fully integrated in the national budget and Exchequer system.
GBS commitments are usually recorded in their full amount in the national
budget, as they are committed by Development Partners. (GBS is thus far
more predictable than other aid modalities, i.e. basket and project funds).
GBS funds are treated in the national budget preparation process in
the same way as domestic resources (i.e. they are allocated to MDAs,
Regions and LGAs through the same process of contestability). They are
used to finance MKUKUTA implementation.
GBS is disbursed by Development Partners into specific GBS accounts at
the Bank of Tanzania and thereafter deposited into the Government
Consolidated Fund (Exchequer) accounts, after which it follows the same
Government channels and procedures for funding flows as domestic
resources. GBS funds can therefore no longer be separately traced in the
national budget and Exchequer (accounting) system.
Advantages of GBS
 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
Advantages of GBS



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
Advantages of GBS



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
Advantages of GBS
 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
3.What is PAF Matrix
o
o
o
PAF Matrix is the framework to assess Government
performance on an annual basis for the provision of
GBS funding
It contains Government commitments that have been
jointly agreed between the Government and GBS –
DPs
GBS-DPs decide their GBS funding commitments on
the basis of Government performance against the PAF
o
All GBS-DPs commonly use the PAF as the basis for
their funding decisions – no individual/separate
criteria
What is PAF Matrix
 PAF Matrix commitments are grouped
into four areas: –
1) Growth and Reduction of Income
Poverty;
2) Improvement of Quality of Life and
Social Well-being;
3) Governance and Accountability);
4) Public Financial Management and
Macroeconomic Stability, including Public
Expenditure Management
PAF Matrix (cont)



Commitments listed in the PAF Matrix are grouped into three
categories:
Underlying processes;

usually sector or programme reviews. These reviews consist of
an ongoing process of dialogue between the Government, DPs
and other stakeholders throughout the year and usually with an
annual (or semi-annual) multi-stakeholder review event
Temporary process actions


are specific actions that the Government commits itself to
complete by a specified timeframe before the GBS Annual
Review at which Government performance is assessed.
Outcome indicators


indicators measure broader outcomes in the five areas of the
PAF and in most cases are taken from the MKUKUTA Monitoring
System. They have baseline values for 2005 and targets for
2010, corresponding to the MKUKUTA targets wherever
applicable
Progress towards these targets are assessed annually – it is
determined whether progress is on track, already achieved, is at
risk of being achieved by 2010, or progress is off track
Asante Sana