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News, 6/1/2012

Aid governed by the recipient country

Minister for International Development Heidi Hautala and Tanzania's Minister of Finance William Mgimwa signed a budgetary support agreement between the countries in Arusha, Tanzania on 30 May. The Ministers said that the budgetary support increases Tanzania's ownership of the received aid.

Cameras were flashing as Minister of International Development Heidi Hautala and Tanzania's Minister of Finance William Mgimwa signed a budgetary support agreement between the countries. The agreement was signed in Arusha, Tanzania, where the ministers participated in the annual meeting of the African Development Bank.

"Budgetary support is the support form Tanzania wished for, because it increases the government's ownership and power of decision and thus reinforces the use of national systems," said Minister of Finance Mgimwa in his speech. He thanked Finland for the important support, which strengthens the long-term relations between the countries and helps Tanzania reduce poverty.

Budgetary support increases transparency

According to the agreement, Finland's budgetary support to Tanzania is 10 million Euro this year. This is the only support form that is directly allocated to the country's budget, assigning the parliament responsible for its use and control according to the country's legislation, decision-making and control mechanisms. In addition to Finland, budgetary support is granted, for example, by other Nordic Countries and international development financing institutions, such as the African Development Bank and the World Bank. In total, the aid amounts to 350 million Euro.

In the Kisarawe municipality near Dar es Salaam people have been learning how to observe the use of public funds. Photograph: Tiina KirkasIn the Kisarawe municipality near Dar es Salaam people have been learning how to observe the use of public funds. Photograph: Tiina Kirkas

Minister for International Development Heidi Hautala believes that budgetary support is a sign of trust between the countries.

"The aid is a signal of the countries' mutual willingness for developing openness, transparency and responsible governance."

Not a blank cheque to the partner country

Even though budgetary support as an aid form underlines the beneficiary's internal power of decision and follow-up, it is not a blank cheque to the partner country. There's a set of specific objectives subject to annual follow-up and assessment. Among other things, the contributors have had a good chance to influence on developing of, inter alia, Tanzanian auditing mechanisms during the budgetary support negotiations.

Earlier, Tanzania has had difficulties in implementing the agreed changes in governance, which has reduced the amount of budgetary support. The cases of corruption revealed in 2007 are now under court proceedings, but the processes are slow and as yet unfinished.

Focus on human rights and good governance

Annual assessment for 2011 reports improvements in the country's situation. Particularly welcomed improvements include results oriented approach, increased transparency and enhanced anti-corruption activities, all pledged by the country's top leaders.

Minister Hautala said that a recently adopted EU policy will underline human rights and good governance even more in future budgetary support agreements. In Tanzania, the questions of good governance and accountability are all the more important now that the country's vast natural gas deposits have been discovered.

"It is a top priority that the benefits gained from the natural resources will be distributed to all and used for promoting equal opportunities."

This document

Updated 6/1/2012

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