The Citizen (Dar es Salaam)
Vicent Mnyanyika
5 November 2008
Tanzania yesterday signed a loan agreement of $160 million (Sh190 billion) with the World Bank to help boost the country's poverty reduction initiatives.
The funds, which will be disbursed in a month's time, come under the sixth Poverty Reduction Support Credit facility.
The credit line focuses on sustaining high and shared economic growth and expanding the effective delivery of basic services through financing the Government budget.
Speaking after the signing ceremony, Treasury permanent secretary Gray Mgonja said the money was the bank's general budget support (GBS) to Tanzania for the current financial year..
The GBS mechanism channels donors' funds directly into the Government budget from which they are directed to priority areas.
Areas which would benefit from the loan are projects under the National Strategy for Growth and Reduction of Poverty (Mkukuta).
The funds will be invested in infrastructure, education, health, agriculture and water projects.
"This is one of the cheapest loans which we are supposed to pay in 50 years from now in which we will start paying after the first ten years and it will be paid in 40 years with an interest of less than one per cent,"said Mr Mgonja.
The money will boost the execution of this year's budget and implementation of projects earmarked for the current financial year.
World Bank country director John McIntire said the bank board approved the provision of the funds last month.
The approval was delayed pending fulfillment of donor demands that the Government deal with graft cases before the release of GBS funds.
"The fund will help in the development of both primary and secondary education, agriculture, health, water and all projects connected to the Mkukuta,"Mr McIntire noted.
Diplomatic sources say the 14 GBS donors have pledged $700 million, or 12 per cent of the 2008/09 spending plan.
Tanzania expects 34 per cent of that budget to come from external sources making it one of Africa's largest aid recipients.
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