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Implementation Completion Report (ICR) Review - SIMPLIFIED - Poverty Reduction Support Credit


  
1. Project Data:   
ES Date Posted:
03/22/2005   
PROJ ID:
P074072
Appraisal
Actual
Project Name:
SIMPLIFIED - Poverty Reduction Support Credit
Project Costs(US $M)
 132  132
Country:
Tanzania
Loan/Credit (US $M)
 100  100 (see section 2C below)
Sector, Major Sect.:
General agriculture fishing and forestry sector, Central government administration, Sub-national government administration, Micro- and SME finance, Water supply,
Agriculture fishing and forestry; Law and justice and public administration; Law and justice and public administration; Finance; Water sanitation and flood protection
Cofinancing (US $M)
   
L/C Number:
C3772; CH040      
   
Board Approval (FY)
  3
Partners involved
 
Closing Date
06/30/2004 06/30/2004
         
Prepared by: Reviewed by: Group Manager: Group:  
Michael R. Lav
Fernando Manibog Kyle Peters OEDCR

2. Project Objectives and Components:

a. Objectives
This first PRSC (in a projected series of three PRSCs) supports the implementation of Tanzania's Poverty Reduction Strategy (PRS) as summarized in the Poverty Reduction Strategy Paper (PRSP) and, within the PRS and PRSP, focuses on improving private sector development and public sector management to lay the groundwork for attacking income poverty more aggressively.

b. Components
(i) Accelerating growth through higher private investment by reducing the cost of doing business and stabilizing the economy while enhancing its efficiency.

(ii) Broadening the impact of growth (to date, incomes in urban areas have grown more rapidly than in rural areas while 70 percent of the population lives in rural areas) by:

  • enhancing the profitability of agriculture broadly and export products of rural origin in particular through better quality, higher productivity, reduced marketing costs and improved access to markets
  • removal of remaining institutional constraints on rural activities
  • correcting the disincentives arising from the overall tax regime, especially those resulting from the overbearing/multiplicity of local taxes affecting income earning activities in rural areas

(iii) Aligning public investment with PRS goals

(iv) Increasing the efficiency of public service delivery through measures to strengthen accountability mechanisms combined with capacity building at the local and central government level.

c. Comments on Project Cost, Financing and Dates
The project's cost was US$132 million, financed by an IDA credit for US$100 million and an IDA grant for US$32 million, both of which disbursed in one tranche on effectiveness. The project was appraised in February, 2003, approved by the Board on May 29, 2003, made effective on July 18, 2003, and closed on schedule on June 30, 2004.


3. Achievement of Relevant Objectives:

As reported in Annex 1, Table 1 of the ICR, the following has been achieved for the major components outlined in Section 2 above: (NOTE: Table 1 presents these under a different organizing scheme than that used for the presentation of project's objectives. Items have been realigned in the presentation below for consistency between the achievements as listed in Table 1 and the PRCS's objectives as presented in the Program Document):


(i) a national debt strategy has been formulated and implemented, government exemptions on VAT and import duties have been removed, a Large Tax Payers Department was established in the Treasury, diagnostic studies were completed of the Treasury's tax administration system, and a strategy was developed for the harmonization of local government taxes and levies and relevant guidelines were issued to local authorities. In addition, an implementation plan for Business Environment Strengthening for Tanzania (BEST) program was approved by the Integrated Framework Steering Committee to support accelerated growth.

(ii) an Agriculture Sector Development Programme (ASDP) Framework and Process Document was prepared. This includes measures such as developing monitoring benchmarks for expenditures for ASDP priorities. However, the ICR does not comment either on the quality of the ASDP nor its implementation. A Poverty Reduction Strategy (PRS) stakeholder-reviewed progress report for FY02 was published and a positive review was given for the 2nd PRS Progress Report.

iii) The government has approved realigned sector development programs for basic health, basic education, agriculture and water (as noted in the text of the ICR), the approved budget for 2002/2003 is in line with PRS objectives, the budget guidelines for 2003/2004 and 2005/2006 are consistent with PRS priorities, priority sectors are classified by GFS codes and an expenditure tracking baseline survey was initiated. (The ICR does not comment on actual expenditures.) Pay enhancement for FY04 was in line with the approved budget.

(iv) The Government has issued a revised public financial management reform program incorporating the recommendations of the CFAA, new Local Government Authority procurement regulations were prepared and issued, quarterly reports depicting progress in key ministries, agencies, and departments are being issued, a national Anti-Corruption Strategy and Action Plan for 2003-2005 was revised and approved, a concept paper to guide the preparation of an anti-corruption plan for local government authorities was completed. A new system was implemented for ministries, departments, and agencies to report to the Ministry of Finance on levels of direct external assistance budgeted and disbursed. The ICR does not comment on the quality of implementation or whether this will be adequate to better promote priority programs.


4. Significant Outcomes/Impacts:

Real per capita public sector expenditure in sectors and areas defined as pro-poor more than doubled between FY99 and FY04. A high degree of donor coordination is reported to have been achieved. The follow-on PRSC II operation was approved by the Board on July 29, 2004.

5. Significant Shortcomings (include non-compliance with safeguard features):

The FY03 PER points to remaining weaknesses in fully aligning sector spending plans with the PRSP.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactoryThis is the first PRSC in what is expected to be a series of three PRSCs. In keeping with the guidelines for a Simplified ICR as is applicable in this case, this ICR contains little which would enable a real evaluation of outcomes and impacts. The performance ratings given by OED in this ICR Review will be revisited with the review of the ICR to be prepared after the last PRSC in this series. See also comments on the quality of the ICR in section 9 below.
Institutional Dev.:
SubstantialSubstantial
Sustainability:
LikelyLikely
Bank Performance:
SatisfactorySatisfactory
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

Operations such as this should seek to strengthen government processes underlying implementation of program components rather than attempting to circumvent these problems and weaknesses by developing separate processes. (The ICR states that the focus of implementation in this operation is through strengthening underlying government processes.)

8. Audit Recommended?  Yes

          Why?  A performance assessment is recommended at the termination of this series of PRSCs, because of the size of the loans, the scope of reforms intended to be covered, and the central role of such operations in donor coordination and donor relations.

9. Comments on Quality of ICR:

The ICR meets the guidelines for simplified ICRs. In keeping with these guidelines, it reports on implementation of a number of measures without, however, specifying the impact of these measures on real variables such as government expenditures or the economy. While this is acceptable for simplified ICRs in early stages of PRSCs, these matters will need to be addressed in subsequent ICRs.

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