20 November 2009
 We
acknowledge the key observations as
outlined in the Synoptic Note – RBA
In terms of Challenges, and
Good progress made in various areas
 The
challenges form the stepping stone for
future improvement.
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9.
The underperformance in domestic revenue for the first
quarter of 2009/10
The increase in expenditure over 3 years does not reflect
priority towards growth and poverty reduction objectives
Roads: Over commitment and inadequate funding in roads
sector
Education: Inadequately financing of capitation grant
component of the recurrent budget at primary and
secondary school levels.
Agriculture: Increased bias towards current expenditure Vs
capital spending
Inadequate funding of Health sector
D by D: Inequity in resource allocation
Arrears in Education and roads
Definition of Personal Emoluments (PE)
 The
underperformance in domestic revenue
for the first quarter of FY2009/10
Domestic revenue collection for the first quarter of
2009/10 was TShs. 1,107.2 billion against the
target of TShs. 1,231.8 billion, or 90% performance
level partly attributed to:
impacts of the global financial crisis
If this trend continues, it will require adjustment in
expenditure on goods and services, but protect
MKUKUTA expenditures
 The
increase in Public expenditure over 3
years does not reflect priority towards growth
and poverty reduction objectives.
The share of MKUKUTA expenditure has increased
from 65% in 2005 to 71.2% in 2009/10.
This trend is encouraging and we intend to
maintain it around that level at the minimum
 Roads:
Over commitment and inadequate
funding in roads sector
The government continues with its commitment to road
maintenance as a key priority
There is a financing gap due to the increase in allocation
of fund to newly signed road construction; upgrading
and rehabilitation projects in FY 2009/10.
The government has taken the following measures:
Stopped the signing of new contracts which do not have
enough funding in the approved budget
Consider reallocating funds from ongoing but
underperforming road projects during the mid-year
review.
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Education: inadequate financing of capitation grant
component of the recurrent budget at primary and secondary
school levels.
The government is committed to improve education delivery
at all levels
In 2004/05 the government introduced formula-based
recurrent grants for primary education to provide funding for
the effective administration and delivery of universal primary
education including operation costs
 Allocation of block grant is 100% based on the number of school aged
children in each council.
 Capitation grants are allocated to councils according to PEDP formula,
 USD10 for each enrolled student.
 Currently, capitation grants stands at an average of TShs 7,500/= per
student.
 The government will consolidate these achievements and continue to
improve so as to realize the desired target of USD10 per student as
per PEDP capitation grant formula.
 Agriculture:
Increased bias towards current
expenditure Vs capital spending
 With the current government motto “Kilimo
Kwanza”, agriculture continues to be the
backbone of Tanzania economy in terms of
production, employment, income and foreign
exchange generation.
 Current expenditure increased significantly
compared to capital expenditure in 2009/10
mainly due to:
allocation of specific fund for purchase of fertilizer,
enhancing National Food Reserve and strengthening of
extension services by training and recruiting of
extension officers.
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Inadequate funding of Health sector:
The government continues to implement various
interventions directed to improve health sector
◦ health infrastructure,
◦ control of endemic diseases, by providing preventive
education to the communities.
Implementation of Primary Health Service Development
Program (MMAM) by phases and other health sectoral
programmes.
In the medium term the major focus will be on improving
human resource capacity at all levels
Other interventions include: constructing, rehabilitating
and equipping health facilities with basic equipment.
D
by D: Inequity in resource allocation
 The Government remains committed to fully
implement Decentralization by Devolution.
This requires that resources (financial and human)
be provided to each Government level in
accordance with their functions- “resources follow
functions”.
The formula based allocation is determined objectively
and LGAs have greater stability in their budget
allocations.
To address the inequity in LGAs allocation, some
studies are underway to review the effectiveness of
formula based allocations of resources.
 Arrears
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in Education and Roads
The issue of arrears is a problem which hinders
smooth implementation and execution of
Government Budget.
The Government has continued to strengthen public
financial management by improving expenditure control
and thus ensuring efficiency, transparency and
accountability at all levels.
Arrears consist of verified claims/certificates. The
verified bills that were not paid at the end of 2008/09
were settled in the first quarter of 2009/10.
The government continues to verify various claims and
will subsequently pay them.
Definition of Personal Emoluments (PE)
 The government continues to implement the
Public Service Reform Program

The definition used in the classification of PE in RBA
differs from the way the Government allocates
resources to PE (i.e: basic salary, annual increment
and promotion).
According to RBA, PE includes allowances and other
employee’s statutory payments which are not part of
PE in government definition.
Since 1996 the Government consolidated all
allowances related to salary into employee basic
salary.
THANK
YOU
AHSANTENI
SANA