The World Bank has signed a loan deal with Tanzania to help boost the country’s poverty reduction initiatives. The $160 million fund, which will be disbursed in a month’s time, comes under the sixth Poverty Reduction Support Credit facility and will be invested in infrastructure, education, health, agriculture and water projects.
The money is expected 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 because its approval was delayed pending fulfillment of donor demands and also to enable the Government deal with graft cases before the release of World Bank general budget support, (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.
According to reports, the GBS mechanism will channel donor 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).
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.
Mr. Gray Mgonja, Tanzania treasury permanent secretary said that 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.