Tanzania 
Tanzania gets US$ 3 billion in debt relief

afrol News, 28 November - The World Bank and the International Monetary Fund (IMF) yesterday agreed that Tanzania "has taken the steps necessary to reach its completion point under the enhanced framework of the Heavily Indebted Poor Countries (HIPC) Initiative." Tanzania becomes the fourth country to reach this point (joining Bolivia, Mozambique and Uganda).

Debt service relief under the enhanced HIPC Initiative from all of Tanzania's creditors will amount to approximately US$ 3 billion over time. As a result of HIPC assistance, "the net present value of Tanzania's total external debt is reduced by some 54 percent," according to IMF. Moreover, after taking into account additional bilateral assistance beyond the enhanced HIPC Initiative, the debt ratios fall even further.

Debt service payments are cut substantially - by an average of 47 percent over time - from about US$ 193 million in fiscal year 1999/2000 to an average of US$ 116 million during 2001/02 to 2010/11, and US$ 87 million during 2011/12-2020/21. 

Debt service as a percentage of government revenue thus is reduced from 19 percent in 2000/2001 before HIPC assistance to an average after HIPC relief of 7.7 percent over 2000/01-2010/11 and 4.4 percent over 2011/12 - 2020/21. "Resources made available by debt relief provided under the HIPC Initiative will be allocated to key anti-poverty programs, which are outlined in Tanzania's Poverty Reduction Strategy Paper (PRSP)," IMF informs. 

Poverty reduction
Tanzania's eligibility for debt relief under the enhanced HIPC Initiative underscores recognition by the international community of its continued progress in implementing sound macroeconomic and structural policies, and of the overall quality of its Poverty Reduction Strategy Paper (PRSP)

- Tanzania's PRSP has been welcomed within Tanzania and by the donor community as an important step forward in the process of focusing on poverty as an explicit objective of public policy, IMF informs. It built on a process that started with the adoption of the National Poverty Eradication Strategy in 1997 and has been continued in the context of annual and multi-year public expenditure reviews. IMF holds that "participation in public discussions leading up to the PRSP has been broad, and the document represents a truly homegrown development strategy." 

Tanzania has established a solid record of economic performance over the past several years. GDP growth increased to 4.9 percent in 2000 and is expected to remain at a similar level in 2001, despite the negative effects on commodity prices and tourism of the slowdown of the world economy. Inflation was reduced from seven percent to five percent from 1999 to 2001, and the current account deficit of the balance of payments declined from 12 percent of GDP in 1999 to less than 10 percent of GDP for 2000.

IMF and the Worldbank stress that Tanzania has made "substantial progress in carrying out the specific structural reforms and institutional strengthening the authorities identified at the time of the decision point." Examples mentioned are governance, the health sector and education.

In governance and financial management, important steps have been taken to improve transparency, including by adopting, publishing and disseminating the national action plan for the control of corruption. Significant progress was also made in other areas, such as tax reform, improvement of the business climate, and strengthening the performance of utilities.

In the health sectors, Tanzania has successfully implemented a program to ensure immunization of at least 75 percent of children under the age of two against measles and diphtheria, and has implemented a national campaign against HIV-AIDS, including completion of visits to three-quarters of all districts. 

In education, the government has undertaken important initiatives to increase access to, and improve, education. In cooperation with donors, the government has launched an Education Sector Development Program with a chief aim of increasing access to schools, particularly in poor and underserved areas while alleviating the cost burden on households. Progress has been achieved, particularly at the primary level. Budgets have been increased, school fees have been abolished, and a school mapping exercise is well underway. 

Sources: Based on Worldbank and IMF

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