Chapter 4
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How will we pay for poverty reduction?

bulletSources of funds
bulletPriorities for spending
bulletSpecial poverty reduction extras

We are still not sure exactly how much money we will need nor how much money will be available in the future. It is clear, however, that we will not have as much as we would like and that we will have to spend what we have very carefully and effectively.

We will not know exactly how much will be available specifically for poverty reduction until all the other Government plans have been drawn up.

Sources of funds

bulletSome of the money will come from the government budget but we will not know how big this will be until improvements in the tax system have been made. 
bulletSome of the money will come from foreign donors but we cannot always predict how much this will be in the medium to long term.
bulletThe Government will use its money to capture other money through co-financing and match-funding with ordinary people and businessmen who have well thought out ideas and projects.
bulletThe Government may borrow money to fill gaps.

Bearing in mind these uncertainties, and the need for a stable economy, the targets set for the next three years are that total budgetary expenditure will increase from 15.5 to 17-18 per cent of the total wealth created. Of this 70 per cent will come from the Government and 30 per cent will come from foreign donors either as grants or loans. 

If the Government reforms are successful then Tanzania will meet the conditions for Highly Indebted Poor Country (HIPC) debt relief by mid-2001. This means that some of the money that would have gone to repaying foreign debts can be used locally to reduce poverty.

Many of the poverty reduction activities will be managed by local government. The exact details of this will be worked out in the ongoing Local Government Reform Programme (LGRP).

Priorities for spending

In response to what ordinary people said in consultations to prepare this document, the Government has decided that the most important poverty reduction activities should be repairing and improving services for the priority sectors and items. These are described below:

 

 

Millions of shillings

Sector

Item

Education (item = primary education)

182,061

142,424

Health (item = primary health care)

65,970

42,314

Roads (item = in the rural areas)

50,147

28,849

The Court System

 

7,855

Agriculture (item = research and extension)

8,213

6,893

Water

 

5,064

HIV/AIDS

 

4,800

Special Poverty Reduction Extras

Abolition of primary school fees

The government will stop collecting primary school fees in July 2001. This is because the government believes that more children, especially those from poor families, will be able to get a primary school education if they do not have to pay fees.

Stimulating contributions from communities and other stakeholders

Local communities have always been active in reducing poverty through self-help schemes to build classrooms, health centres, water supplies, rural roads and so on. The Government will encourage more of this by sharing the costs of some of these schemes and by encouraging other donors to do the same.

Training for work

The Government intends to spend about Tsh. 100 million every year to help people learn what they need to get jobs. This money will be targeted particularly at vulnerable people.

 

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