1. Development partners in Tanzania’s Planning and Budgeting system DPG Orientation :Aid management September 12, 2006 Allister Moon

2. Tanzania’s planning and budgeting system Planning and budget cycle MKUKUTA linkage PER process PRBS interface with planning and budgeting Sector reviews, cluster/sector PERs

3. Planning and budget cycle Macro framework preparation, PER Macro group MDA submissions, SBAS Budget Guidelines, BG Committee IMTC, Cabinet PER/PEFAR consultations Annual budget, MTEF Parliament July-September Sept/Oct Nov-Dec January May June July -August

4. MKUKUTA- budget linkage MKUKUTA : domestically driven policy content and development of implementation instruments implementation through MTEF/annual budgets Priority sectors > clusters SBAS MKUKUTA monitoring system

5. Strategic Budget Allocation System “ The Tanzanian authorities have gone furthest in any country to develop a hard and structured link between a PRSP and the Budget through the SBAS” - conclusions in a recent multi country study on PRSP/budget linkage

6. SBAS continued SBAS micro – MDAs prepare submissions based on MKUKUTA/Strategic Plan SBAS macro – MoF/Budget Guidelines Committee use to to review submissions and link to macroframework Challenges – wage bill planning, performance focus, link to MKUKUTA monitoring Local Government – PLANREP to be linked 2007/8

7. Key: Input/information Approval/decisions Public Expenditure Review Process Parliament Cabinet MKUKUTA Monitoring System Inter Ministerial Technical Committee Budget Guidelines Committee (output: Budget Guidelines) Technical Committee (MKUKUTA Secretariat) PER Working Group Monitoring Advisory Committee Surveys & Routine Data TWG Communications TWG PER Macro Group Cluster 1 WG Growth Research & Analysis TWG Cluster 2 WG: Well being Sectors (output: Sector Reviews) Cluster 3 WG: Governance Cluster 4 WG: Financial Acct MKUKUTA Secretariat MPEE MDAs M&E and MIS units (Policy & Planning Depts) PM-RALG LGAs M&E unit Budget and MKUKUTA monitoring

8. Public Expenditure Reviews : a short history –Pre-1998: Bank product by Washington missions => Focus on restoring fiscal equilibrium (introduction of cash budget system). –1998 to 2000: Introduction of Participatory annual PERs & MTEF; =>Focus on consolidating fiscal prudence; improving budget predictability & Accountability –2001-2004: Participatory annual PERs to support implementation of PRSP => Focus on protecting social sector expenditures. –2005 to date: “One Process One Assessment” = Integrated PEFAR review of PE + PFM + PP. => Focus on aligning the budget to support the growth focus of MKUKUTA.

9. Key features of PER process Govt-led & Participatory process (PS-MoF; Secretariat; Broad membership of Macro & Sector PER WGs; Regular meetings); Jointly agreed work program that dovetails with the budget cycle Joint External Evaluation: WB, IMF/East AFRITAC, DFID, KfW, EU, Finland, Ireland, Canada, NGOs – Haki Elimu, Water Aid, NPF, REPOA + consultancy support (local & international) Annual Stakeholders Consultative meeting => Provide feedback to stakeholders + Get feedback on draft budget frame/cross-sector allocations.

10. PRBS: interface with budget Redesign of PRBS : simplification of PAF, alignment with MKUKUTA, use of national systems, underlying processes, key role of sector reviews Timing of annual review in the cycle – in time to assess prior year outturn, early indication of next year financing PEFAR as annual fiduciary assessment

11. Sector reviews : three functions integral components of the national planning and budgeting system, feedback on sector performance,broad dialogue on sector policy and expenditure plans, input for annual budget instrument for strengthening domestic accountability, contributing to a broad public awareness of sector issues that can strengthen the role of formal institutions of accountability, especially Parliament Less centrally, but very importantly for aid strategy, the base for performance monitoring and policy dialogue for DPs, supportive/catalytic for broad accountability to all stakeholders.

12. Sector reviews : challenges Long way to go in realising these goals across key sectors Few sectors have established track record on annual review process (eg health) Sector review task force : currently working on tighter definition of ‘satisfactory review’ and how PRBS use of reviews Need to recognise that extensive use of sector reviews is an experiment in hybrid instituions, specific to high aid context

13. JAST – joint analysis, joint programming Part 1 JAST text – MoU to be signed October Part 2 Joint analysis Part 3Joint programming Part 4Agency specific supplement Parts 2+3 = Joint Program Document, final draft by end September Part 4 – timetable as required by individual agencies, should be minimum additional required to meet agency program doc requirements, with minimal additional consultation/ transaction costs

14. Part 3 outline Intro, context, lessons learnt Managing external finance Issues for developing aid strategy: MTEF projections, scaling up, consistency with MKUKUTA,JAST Response to MKUKUTA cluster strategies M&E/Results matrix Risk analysis Other JAST issues

15. Managing external finance Institutional challenges of high levels of aid Vision of DP role as catalyst for strengthening domestic accountability Key role of sector reviews in realising this vision,balancing national planning and budget role, domestic accountability and monitoring/dialogue for DPs Recognising the responsibilities of high aid dependence, DPs as integrated particpants in budget process

16. Key changes in DP input to planning/budget cycle PRESENT Got passive recipient of individual agency projections One off DP input Exclusively bilateral FUTURE GoT actively assesses projections,leads dialogue Iterative, interactive DPG role in coordination quality review, facilitating adjustment

17. Work in progress Consistency with JAS: key indications one year ahead – number of projects increasing 25%, average project size falls by 20%, slight fall in % budget support Summaries of aid programs by cluster: Cluster priorities, MKUKUTA alignment, financing strategy, development of dialogue/sector reviews

18. Figure ?: Total External Financing (actual+projections)

19. Figure ?: DPs MTEF Projections

20. Average Forecast Error (in percent)

21. Improving DP projections : some options Individual agencies prepare comprehensive MTEF projections annually (commitments, pipeline + unallocated) DPG takes more collective responsibility for quality of projections (ex ante), and realisation (ex post) Reserve funds set aside to assure stable medium term flows(DP or GoT) Recommendation : pursue all three approaches, option 1 to be included in next GoT MTEF call, PER macro group to work on detailed proposals on 2 and 3

22. Work program for DP working groups Review sector MTEF projections – identify gaps, encourage WG members to improve coverage (commitment/pipeline) Review Joint program doc: –Proposed drafting revisions for cluster text, covering: sector priorities, developments in external financing, status of sector review/policy dialogue institutions –Results matrix : review indicators (col 1), review DP inputs and summarise (col 3), insert summary of strategies/intermediate results (col 2) –comments on other sections

23. Finalising the joint program doc First draft with GoT, comments expected mid Sept, including views on any broader consultation process required Similar for civil society Still aiming for final draft end Sept/next DPG DP views on facilitating HQ engagement/ comment/agreement on final draft ?

24. Orientation challenges DP Government institutions: an increasingly complicated map, changing rapidly Important to get a sense of dynamics : where have we come from, what’s the collective vision of future institutions No textbook solutions : resource transfers at this level have been rare historically, no models of how this works over the long term, consistent with national ownership and domestic accountability Best to view Tanzania institutions not as a model but rather a complex experiment in how to make sustained aid levels consistent with national ownership, with aid as a catalyst for building institutions of domestic accountability