aleesha
JF-Expert Member
- Oct 17, 2016
- 792
- 1,144
Intervention by
Roeland van de Geer, Head of the Delegation of the European Union
on the occasion of the signing of the
Financing Agreement of the Sector Reform Contract on Economic and Fiscal Governance
Ministry of Finance and Planning, Monday 3 April 2017
in Dar es Salaam
Permanent Secretary in charge of Finance and Planning and EDF National Authorising Officer, Mr Doto James,
Deputy Permanent Secretary, Mrs Amina Shaban,
Commissioners and Directors in the Ministry of Finance and Planning,
Members of EU diplomatic missions,
Members of the Press
Ladies and Gentlemen,
We are here together today for the signature of the Sector Reform Contract on Economic and Fiscal Governance, a contract that has been prepared with great care and with much consultation between Tanzania and the European Union over a considerable period of time. During this period Tanzania, Europe and the world as a whole have seen a global financial crisis, massive migration flows, threats to global security and a further evolution of our thinking about development cooperation. All this has resulted in a strong call for better governance and the need to strengthen partnerships.
To meet these challenges, the European Union is preparing a new European Consensus for Development to enhance alignment with the Sustainable Development Goals and to contribute to peace and security, prosperity and to people's empowerment and to address climate change and to strengthen partnerships.
The EU is committed to channel its aid to Tanzania's own systems - as laid down in the Paris, Accra and Busan declarations on aid effectiveness - and this means that the EU works with Government in support of the Second Five Year Development Plan, adopted in June 2016. The contract signed today is to improve Tanzania's public finance management and accountability systems, which we hope will make Tanzania both more democratic and more prosperous.
Let me underline here that the cooperation between the European Union and Tanzania is much wider than today's contract as Tanzania and the European Union have signed a framework for the 2014-2020 period on which basis we work - strategically and consistently - with Government in sectors that are key to Government's central policies. While with the signature of this contract, governance is confirmed as the main sector in the EU's cooperation programme with Tanzania, agriculture, including rural roads and energy are also of great importance in our cooperation and we are looking into the continuation or the introduction of sector budget support as part of the programmes in these sectors.
The Second Five Year Development Plan is intended to make Tanzania less of an agriculture-based economy and more of an industry-based economy. This requires substantial amounts of money and these financial resources will need to come from domestic taxes, financial markets, the private sector and development partners. The contract that will be signed here today, will help the Ministry of Finance and Planning to do exactly that; it will help the Ministry to achieve enhanced revenue mobilisation, improved accountability and greater efficiency in public expenditure.
While this contract is an important part of what the EU makes available to Tanzania in the period 2014-2020, we are at the same time launching an External Investment Plan for Africa to finance agriculture and industrial development. In this plan, we seek to attract funds from both the private sector and from international financial institutions. But to do this, to attract financing from both the private and the public sector, a structured dialogue with the local private sector and foreign direct investors is essential. Perceptions of the current business climate in Tanzania are not good and investors both domestic and international are facing a broad range of problems and increasing unpredictability. If Government wants to make progress with its industrialisation drive, these are the issues it has to address. Not tomorrow, but now and very, very urgently.
Let me come back to the contract that we are signing today. Over the past period, the EU has reviewed its development cooperation with Tanzania which, amongst others, resulted in the decision to make a new start and also to no longer provide General Budget Support to the country. However, it was decided that sectoral budget support would be continued under the present conditions in Tanzania.
Today's Sector Reform Contract on Economic and Fiscal Governance, which amounts to 205 Million Euro, was approved in late 2016 in Brussels, including by the 28 EU Member States.
The formulation of this Sector Reform Contract required detailed preparations as it was necessary to develop an instrument that was adapted to the situation in Tanzania, where Government was in the process of reassessing it relations with Development partners. Also, it was needed to take into account the policies formulated in the current Five Year Development Plan.
The funds under this contract will be made available in tranches over the coming years, with the decision to disburse depending on progress made by Government in the areas specified in the Financing Agreement.
While we are fully aware of the considerable political and economic challenges that remain in present day Tanzania, we consider that this Sector Reform Contract is best suited to assist Government in improving its economic and fiscal governance, which in the difficult times ahead will be more needed than ever.
The design of this new contract is building on the lessons that we have jointly learnt of the past programmes and we trust that this innovative approach will best fit the needs of the Government of Tanzania.
In other words, we are making a new start.
Firstly, the contract will concentrate on policy dialogue. Concrete indicators on progress will be the basis to decide on performance tranches, but the focus of discussion will be on the wider policy reforms which are critical to improve fiscal and economic governance. Our joint ambition, by the Ministry of Finance, by Government and by the EU is high; a truly problem solving dialogue while working as real partners.
Secondly, we have evolved jointly away from General Budget Support and we are now focussing on policy reforms that the Ministry of Finance and Planning is in control of and on issues such as budget credibility, revenue mobilisation, efficiency of public expenditure, transparency and accountability and in these areas concrete and measurable progress is required for our tranches to be disbursed. To this end, the assessment of the performance indicators has been reviewed, allowing for a more flexible approach to disbursement than in the past.
This contract will hopefully inspire others to work with us towards a well-coordinated approach and I am happy to say that my colleagues, the Ambassador of the Kingdoms of Denmark and the Ambassador of the Kingdom of Sweden have conrimed their commitment to join the approach laid down in today's contract.
The success of our cooperation will, in the end, depend on the strength of dialogue on policy reforms between Government, development partners, the private sector and civil society, and on the progress made by the Government in implementing these reforms. The principles of ownership, alignment and mutual accountability shall continue to prevail. We welcome Government's efforts to enhance consultation with development partners on the basis of the facilitation by former African Development Bank President Donald Kaberuka, which we trust will result in a much more predictable and structured environment for the development partners and ultimately for the private sector.
While dialogue on economic governance, solidly based on this contract is essential, we are, as I said earlier, fully aware of the considerable political and economic challenges that remain in present day Tanzania. Therefore, the EU and Government continue their dialogue on a broad range of other issues which include press freedom, civil society, continued arrest of Members of Parliament, the need to refrain from any form of discrimination and the need to address the situation in Zanzibar. Also, it is important that we intensify our dialogue on trade. While we read in the press that Government will not sign the Economic Partnership Agreement between the European Union and the East Africa Community, we need at the same time to look forward and to work on enhanced trade between the EU and the EAC and we expect Tanzania to play an active part in that discussion.
The EU and Tanzania remain partners. We may have our differences, but in the end, we need to continue to work together, based on decades of close political, economic collaboration and on a very dynamic programme of development cooperation.
Let me conclude by saying that we hope that today's contract will assist in the urgently required economic and fiscal governance reforms, which in turn will nurture the prosperity and the livelihoods of all Tanzanian citizens.
Asanteni Sana!