Objective 3: Promote Sound Public Financial Management I. Summary of the CSAR 572. In order to evaluate the efficacy of public financial management, the CSAR examined overall development challenges, namely: a good record of economic growth of over 7 per cent per annum between 2001 and 2008 followed by a decline in the same since 2009; an annual single-digit inflation rate until 2009 when it increased to an estimated 13 per cent; enlistment of Tanzania as a Heavily Indebted Poor Country (HIPC) requiring debt relief; an unfavorable trade balance; enhanced fiscal and budget deficits, from 2.7 per cent to 3.8 per cent between 2007/08 and 2008/09; implementation of a substantial economic stimulus package in anticipation of a growth rate of more than 7 per cent per annum without any estimation of the impact on inflation; enhanced levels of public debt; increased unemployment; inability to be on track in achieving several MDGs; about 34 per cent of the 34 million population living below the basic needs poverty line; rapid annual 2.9 per cent population growth; Tanzania being one of the world’s poorest countries for human resources development; and, an international financial and economic crisis.93 573. The development philosophy is articulated in the Tanzania’s Development Vision94. The Vision specifically states that “Tanzania cherishes good governance……in the process of creating wealth and sharing benefits in society and seeks to ensure that its people are empowered with the capacity to make their leader and public servants accountable” (p3). The Vision also recognises four main impediments that have constrained past development initiatives. These are: donor dependency syndrome and a dependent and defeatist development mindset; weak and low capacity for economic management; failure in good governance and in the organisation of production; and, the ineffective implementation syndrome. 574. The national strategy for growth and poverty reduction recognises that “good governance and accountability are fundamental components to shaping a favorable environment for economic growth and poverty reduction”95. One element of good governance is accountability whereby leaders and public servants are supposed to be accountable to the people. 575. The MKUKUTA Annual Implementation Report 2009/20196 asseses progress using the following indicators: revenue collected as a per centage of revenue due; proportion of procuring entities complying with Public Procurement Act and Procedures; proportion of government entities awarded clean audit certificates by the National Audit Office; proportion of local government authorities that receive the full calculated amount of their annual formula-based budget allocation; number of convictions in corruption cases; revenue received from concessions and licenses for mining, forestry, fishing and wildlife; and, the pace of implementation of the Local Government Reform Programme. 576. Interrogation and consultation with stakeholders on the validity of the content of the CSAR, the manner in which the challenges identified in the CSAR are effectively addressed and the pace of implementation of the proposed Plan of Action. Policy framework 577. The CSAR rightly recognises that institutionalising internationally accepted elements of good public financial management is a necessary condition for development. The CSAR covered three areas of policy framework, namely: i) financial sector reforms; ii) budgeting processes; and, iii) the expenditure framework and peoples’ participation. On financial sector reforms, the CSAR gives an overview of recent financial sector developments. The financial sector went through a number of reforms aimed at: enhancing competition, viability, integrity and sustainability of financial institutions through the liberalisation of commercial banking and other financial sector activities; liberalising forex exchange and trade regimes; enhancing the penetration of financial services United Nations Development Assistance Plan (UNDAP):2011-2015 p.7, United Nations, Tanzania, 2011. The Tanzania Development Vision 2025, the President’s Office Planning Commission, Dar es Salaam, United Republic of Tanzania,1999. National Strategy for Growth and Reduction of Poverty II, p.82. United Republic of Tanzania, 2010. 96 MKUKUTA Annual Implementation Report 2009/10: Taking Stock of Achievements and Challenges over the last five years, United Republic Of Tanzania, 2012. 93 94 95 123