Urban Local Government Strengthening Program

closed

Closed

The development objective of the Urban Local Government Strengthening Program Project for Tanzania is to improve institutional performance for urban service delivery in program urban local government authorities. The growth outlook for Tanzania continues to remain optimistic, although there are certain risks. The economy is estimated to grow by 6.8 percent in 2012, slightly lower than the previous year. The medium term growth outlook remains positive. Achieving a buoyant outlook is dependent on addressing infrastructure bottlenecks, structural reforms, and carrying out sound public finance policy and public financial management. However, this remains vulnerable to domestic and external shocks including the Euro zone debt crisis. The level of foreign aid is already projected to decline significantly in FY2012/13. Fiscal consolidation for the central government is on track and is in line with the International Monetary Fund (IMF) policy support instrument program. The budget framework for 2012/13 is expected to reduce the fiscal deficit to 5.5 percent of Gross Domestic Product (GDP), closer to the level before the global financial crisis. The latest debt sustainability analysis (June 2012) shows that Tanzania's risk of debt stress remains low but is sensitive to borrowing terms and the government's fiscal position. Given the uncertainties in the external environment and the public investments through parastatals, Tanzania needs to manage its fiscal and debt sustainability. In 2004, Government of Tanzania (GoT) introduced the Local Government Capital Development Grant (LGCDG) as a grant flow to local governments. Prior to the introduction of the LGCDG, direct development grants to Local Government Authority (LGAs) were minimal and not performance based. LGAs received certain additional development resources from sectoral development programs and from area-based development programs. The LGCDG has evolved into the Local Government Development Grant (LGDG) program with several sub-programs and has become a mainstream performance based fiscal transfer. By introducing LGDG the government program the Government created a formula-based, transparent and predictable fiscal flow mechanism to disburse funds to all 133 LGAs in the country, on the basis of the institutional performance achieved. The main thrust of the LGDG system is to incentivize the improved institutional performance of LGAs while providing discretionary and sector-specific funding for development purposes. The LGDG system's chief goal is to improve the overall, long-term functioning of the local government system in Tanzania, so as to improve the quality of investments. More specifically, its objectives are to:1) enhance the delivery and management capabilities, productive efficiencies and financial sustainability of local governments; 2) improve access of communities especially the poor, to local services through expanding the physical stock of new and rehabilitated infrastructure; 3) improve the sustainability of local development infrastructure through ensuring proper planning and adequate operations and maintenance (O&M); and 4) provide a national system for the delivery of development grants to LGAs.

FY17 - Public Administration

World Bank

Project

Road, Residential, Forest Products and Packaging, Commercial, Government