A new loan to reduce poverty through more transparency and accountability in the management of public funds was signed on Wednesday, 26 November 2008, in Dar es Salaam, between the Tanzanian government and the African Development Bank (AfDB) Group.

After less than a month from its approval by the Board, the Bank fast tracked the signing of the loan agreement to make resources available to the government in good time.

The signing of the third Poverty Reduction Support Loan (PRSL III) coincided with the overall joint Donor and Government review of progress in Tanzania's Poverty Reduction Strategy (MKUKUTA in Swahili) currently taking place in the capital.

Through the upcoming release of the first tranche of almost 100 million dollars, the Government will have an immediate opportunity to improve on a number of challenges raised at the Annual Review, namely the reduction of poverty, the improvement and equitable distribution of basic services, the improvement of the business climate and the fight against corruption.

"Thanks to a more focused loan and a limited number of conditions, we will monitor closely and expect tangible improvement in public financial management, in public procurement and in the performance of the road sector through better governance," The Bank's Tanzania Field Office Resident Representative, Sipho Moyo, noted.

The loan is part of a broader assistance program for the period 2006-2010, which is focused on two of the three pillars of the country's Poverty Reduction Strategy, namely, growth and reduction of income poverty, and improvement of the quality of life and well being.

The PRSL III aims at creating synergies with the Bank's on-going portfolio that includes support for infrastructure (roads and energy), agriculture, the social sector (education and health), water, and public finance management (procurement reform). The operation is designed to leverage reforms aimed at strengthening the policy environment for the effectiveness of ongoing interventions. While the Bank-supported projects in roads, energy, and water are helping to boost the government's infrastructure investment program, the PRSL III will complement that support by strengthening the policy, legal and regulatory environment.

Tanzania is the largest beneficiary of African Development Bank (ADF XI) resources with an allocation of UA404 million, as a result of it high performance ratings. The World Bank and 12 bilateral donors are also providing budget support to the country.

The Bank Group commenced operations in Tanzania in 1971. To date, the institution's cumulative commitment in the country stands at US$ 1.86 billion for 106 operations.

• 1 UA = US$ 1.48830 as at 26/11/2008

CONTACTS - Felix Njoku - Tel: +216 71 10 26 12 Fax: +216 71 10 37 52 - Email: f.njoku@fdb.org