News Brief No. 00/110

News Brief: IMF Endorses Tanzania's PRSP

December 1, 2000

The Executive Board of the International Monetary Fund (IMF) today endorsed Tanzania's Poverty Reduction Strategy Paper (PRSP).¹ Tanzania's PRGF-supported program and HIPC Decision Point were approved on April 5, 2000 (see Press Releases Nos. 00/25 and 00/26).

In commenting on the Board's discussion on Tanzania's PRSP, Mr. Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, said:

"The Fund's Executive Board welcomed Tanzania's Poverty Reduction Strategy Paper (PRSP) as providing a credible basis for sustainable improvements in the lives of the poor. Tanzania's strong track record in recent years of policy reform, macroeconomic stability, and growth provides an encouraging background for effective implementation of the strategy.

"Tanzania's program has strong country ownership and the poverty assessment has been built on a solid consultative process with civil society and other development partners. Within the context of sound macroeconomic policies, the strategy aims at addressing the main causes of poverty, including a history of low growth, lack of access to social services and infrastructure, and governance issues. The medium-and long-term targets and indicators of poverty reduction and human development are appropriate and realistic.

"Despite progress so far, a number of aspects of the strategy remain to be elaborated fully. Although available data together with inputs from the consultative process provide an adequate basis for designing an overall strategy, they are not fully adequate for analysis and monitoring of poverty incidence and trends, and improvements are needed. Continuing attention is also needed to macroeconomic and structural policies to sustain growth, the prime prerequisite for poverty reduction; to prioritization and costing of fiscal expenditures; strengthening governance; and to reforms currently underway in the monitoring, control, and auditing of government expenditures. Further work is also needed in some areas, such as education, agriculture and rural development, to develop and cost specific strategies, as well as on other topics, such as gender, HIV/AIDS, and the environment. The authorities plan to address these gaps so as to round out their strategy in the first annual PRSP progress report.

"In light of the government's commitment to implementing a comprehensive set of policies to help the poor, and to further developing the poverty reduction strategy in the first annual progress report, the Executive Board considers that the PRSP provides a sound basis for Fund concessional assistance to Tanzania," Mr. Sugisaki said.

1 On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty.