RAPID BUDGET ANALYSIS 2009

Presentation for the

PPP/PER Annual Consultative Meeting

20/11/2009

Joint work of DPs

Presentation Outline

Macro-fiscal framework

Budegt Allocation

Impact/ equity

2

0

5

10

15

20

25

30

Domestic revenues

Total expenditures

Deficit after grants

Total aid

Fiscal trends - Budget Estimates (as % of GDP)

2007/08

2008/09

2009/10

3

Global crisis

The FY09/10 budget was developed in the relatively difficult circumstances of a major international crisis that led to a growth slowdown in Tanzania.

The rescue package

The Government responded adequately to the crisis by identifying a narrowly-targeted and time-bound rescue package, while acting to counteract the macroeconomic effect of the slowdown by modestly expanding budgeted public expenditures.

Improve the reliability of the fiscal framework• More prudent and grounded forecasting of revenue• More robust estimaters of Budget Support• DPs need to avoid last minutes changes or additonal conditions.

4

0102030405060708090

Composition by economic categories (as % tot. expenditures

2007/08

2008/09

2009/10

5

2009/10 Overall budget by Economic Nature of Spending

6

MKUKUTA cluster allocations as % of total expenditure (including LGA transfers and MDA wages)

Prioritize additional resources towards MKUKUTA

7

8

Rank Allow. (in bill . Tsh.)

as a share of total

allow.

as the share of

PE of associated

ministry RankAllow. (in bill . Tsh.)

as a share of total

allow.

as the share of

PE of associated

ministry

1 The National Assembly Fund 27.4 6.9 456.8 1 Ministry of Education and Vocational Training 39.7 7.5 157.4

2 Ministry of Home Affairs-Police Force 26.7 6.7 40.7 2 The National Assembly Fund 39.6 7.5 549.5

3 Ministry of Educ. and Vocat. Training 25.5 6.4 22.9 3 Ministry of Home Affairs - Police Force 33.7 6.4 36.3

4 Ministry of Foreign Affairs 17.6 4.4 631.3 4 Ministry of Agriculture, Food Security and Cooperatives 31.0 5.9 209.4

5 Ministry of Health and Social Welfare 14.6 3.7 75.2 5 National Service 28.9 5.5 103.5

6 Prime Ministers's Office- RALG 11.8 3.0 300.5 6 Ministry of Foreign Affairs and International Co-operation 24.4 4.6 258.1

7 Ministry of Home Affairs - Prisons Serv. 11.4 2.9 37.3 7 Ministry of Home Affairs - Prison Services 18.0 3.4 37.3

8 Defence 10.9 2.7 7.8 8 Accountant General’s Department 17.6 3.3 50.5

9 Ministry of Agric., Food Sec. and Coop. 10.1 2.6 74.3 9 Ministry of Health and Social Welfare 16.6 3.2 71.8

10 Accountant General's Department 9.4 2.4 28.1 10 Prime Minister’s Office - Regional Administration and Local Government15.3 2.9 100.8

11 Judiciary 8.2 2.1 66.1 11 Ministry of Finance and Economic Affairs 12.1 2.3 393.0

12 Public Debt and General Services 6.7 1.7 4.3 12 The Treasury 11.1 2.1 15.813 Ministry of Finance and Econ. Affairs 6.5 1.6 157.8 13 Ministry of Natural Resources and Tourism 10.7 2.0 86.7

14 Ministry of Water and Irrigation 6.3 1.6 71.3 14 Defence 10.5 2.0 6.0

15 Vice President 's Office 5.5 1.4 532.9 15 National Audit Office 10.2 1.9 315.9

16 The Treasury 5.4 1.4 1.5 16 Ministry of Energy and Minerals 9.9 1.9 178.6

17 Ministry of Natural Res. and Tourism 5.2 1.3 70.6 17 President’s Office - Public Service Management 8.8 1.7 388.1

2008/09 2009/10

9

Education Health Water Agriculture Roads

Ratio of:Maintenance to Sector Infrastructure Expenditure 22.7% 14.1% 110.9% 33.6% 46.2%Maintenance to Total Sector Expenditure 0.9% 1.1% 30.1% 6.3% 25.2%

Ratio of:Maintenance to Sector Infrastructure Expenditure 38.8% 31.2% 1.6% 85.0% 52.1%Maintenance to Total Sector Expenditure 1.7% 1.5% 1.0% 2.2% 26.1%

Ratio of:Maintenance to Sector Infrastructure Expenditure 16.1% 17.1% -109.3% 51.4% 6.0%Maintenance to Total Sector Expenditure 0.8% 0.4% -29.1% -4.1% 0.9%

2008/09

2009/10

Change

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Education Health Water Agriculture Roads

2008/09 2009/10

10

Overall share of LGA spending : Increase from 21% in 2008/09 to 23% in 2009/10

Education Health Water Agriculture Roads Overall

2007/08 44.5% 34.3% 44.6% 25.9% 11.0% 19%

2008/09 53.1% 31.3% 60.4% 38.4% 11.1% 21%

2009/10 62.6% 43.8% 24.8% 21.3% 14.8% 23%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Education Health Water Agriculture Roads Overall

2007/08 2008/09 2009/10

11

MKUKUTA: Prioritize MKUKUTA allocations in line with increase in total expenditure, while paying attention to quality of expenditures

Capital v.s Current: Increase allocations for capital investment, in line with MKUKUTA objectives for growth

Allowances: Control proliferation of allowances in MKUKUTA Sectors

Sectors: Continue to increase allocations to key sectors while paying attention to sectors expenditure composition and quality of expenditures

Maintenance policy: Increase the share of infrastructure maintenance in health and education budgets.

D by D policy : Continue to strengthen the implementation to reach the 25% objective of LGA transfers. 12

2007/082006/07 2008/09

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4

Original estimatesExchequer releasesExpenditure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4

Original estimatesExchequer releasesExpenditure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4Original estimatesExchequer releasesExpenditure

MDAs development budget, release and expenditure

13

14

Improve budget execution, especially development budget, through

• Improving capacity to plan and execute large capital investment projects in key sectors

• Continuing to improve cash flow and procurement plans in key sectors

• Implementing and monitoring improved cash flow and procurement plans

• Improve quality of aid submissions and predictability by DPs

Address inequity issue among districts • Fast track and implement proposed national incentive

scheme• Allocate equalization grant to underserved LGAs • Allocate PE according to formula/desired postings.

15

ASANTE SANA

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