Dialogue in Pursuit of Development - Are you looking for one of ...

137
Improved dialogue and future challenges
The macro economic reforms and the liberalising and privatising of the Tanzanian
economy started in the mid-1980s. However, it was not until 1995
that the economic reforms took off. Most macro economic indicators have
since then improved considerably. The budget deficit has been reduced, no
net domestic borrowing is necessary to finance the budget expenditure, the
inflation has been reduced from around 30 to less than 5 per cent, the foreign
exchange reserve covers more than five months import, etc. Budget and financial
management reforms are under implementation. The country reached
the HIPC completion point in November 2001. The GDP growth has increased
gradually and was 5.6 per cent in 2001. During this period Tanzania
has moved from being regarded by the donor community as one of the bad
reform cases, into the position as one of the shining stars in the reform class.
The dialogue with the Bretton Woods Institutions on macro economic
policy during the last few years has therefore been very smooth, and controversies
are rare. The PRGF (Poverty Reduction Growth Facility) missions
by the IMF have declared Tanzania ‘on track’ four consecutive times, and
the Government of Tanzania received a lot of praise from the donors during
the consultative group-meeting in September 2001. It can be argued
that the Tanzanian government, as represented by the President and the
Ministry of Finance, has internalised the Washington Consensus. It should
however be noted from the increasingly open public debate in Tanzania,
that neither all government institutions, nor all Chama Cha Mapinduzi
(CCM) representatives in the Parliament, seem to be convinced of the virtues
of the ongoing privatisation of parastatals or the trade liberalisation.
The public debate regarding the privatisation of utility parastatals, such as
the electrical company TANESCO, the DAWASA water and sewage authority,
Air Tanzania and Tanzania Railways shows that the present smooth
dialogue on economic reforms may be more problematic in the future. It
cannot be precluded that the government has to change its position, due to
strong political pressure from its own political constituency.
One important part of the reform process is the Public Expenditure Review,
PER. Initially, it was driven by the World Bank, mainly as an instrument
to monitor HIPC conditions related to budget performance. Gradually
it has emerged as an important part of the Tanzania budget preparation
process, led by the Ministry of Finance. Over a period from September to
May, representatives from various Tanzanian ministries and other authorities
linked to the PRSP and the donors supporting this programme meet
regularly. Together they identify important issues to be analysed as a preparation
for next budget, the need for capacity strengthening and financial
management reforms, and improved coverage and integration of external
resources in the government budget. PER as such has developed into an
integrated part of the Tanzanian budget preparation process. The donor representatives
in the PER Working Group are participating in a discussion,