Seventh Poverty Reduction Support Credit - Supplemental Financing

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The objectives of the Supplemental Financing for the Seventh Poverty Reduction Support Credit Program (PRSC-7) series focuses on two overarching objectives: (a) sustaining high and shared economic growth; and (b) expanding the effective delivery of basic public services through the government budget. The (PRSC-7) series supports the implementation of the country assistance strategy and contributes to the achievement of Tanzania's Growth and Poverty Reduction Strategy, or MKUKUTA. At the time of negotiations, the international financial and economic crisis had already started denting Tanzania's economic performance, albeit the details of Government's response and impact on the FY09-10 budget were still being defined. Since that time, the authorities have articulated their response, which seeks to protect employment and income levels, ensure food security, protect key investments, and protect social services programs. Accordingly, the FY09-10 budget submitted to the national assembly in June 2009 provides for a sizable increase of expenditures. In addition to this expenditure increase, the approved budget now appears underfinanced by the equivalent of at least 0.7 percent of Gross Domestic Product (GDP), or about US$170 million, due in part to an unanticipated domestic revenue shortfall. The authorities are seeking additional financing resources to help close this gap and ensure priority expenditures are maintained and MKUKUTA objectives preserved.