Descolectivización y descooperativización

Annual budget estimates, in-year execution reports, year-end financial statements and other fiscal reports for the public should cover all budgetary and extra-budgetary activities of governments to allow a complete picture of government revenue, expenditures and financing.

This indicator assesses the level of unreported extra-budgetary operations (EBOs) at the central Government level as defined by IMF GFS¹². Reporting of EBOs should cover planned/budgeted expenditure, actual expenditure, and annual financial statements either through consolidation with other central government expenditure, or shown in a separate

12 In GFS terminology, central government comprises all units at central level carrying out government policies including not only MDAs, but also non-market non-profit institutions that are controlled by and mainly financed by government (statutory funds, trust funds, special funds, social security funds and other autonomous agencies) but excluding local authorities and public business enterprises.

document presented to the legislature. The spending by MDAs of own-source revenues also potentially represents an EBO, if they are allowed to retain the revenue for spending, rather than surrendering it to MoF. The assessment covers 2011/12 (the last completed fiscal year).

(i) Level of extra-budgetary expenditure (other than donor-funded projects), which is unreported, i.e. not included in fiscal reports

Operations of Public Bodies

As noted in the 2010 PEFA assessment, the budgets and accounts of public bodies that receive funding from the central government (the bodies comprising executive agencies, public authorities, institutions, commissions, boards and other bodies) are not shown in GoT budget documentation, budget performance reports and annual financial statements. Only the budgeted transfers from the GoT budget are shown in budget documentation and only as one- line items under sub-votes.¹³ The summary of the transfers is not shown anywhere, the total being absorbed into Other Charges, contrary to GFS, which identify transfers separately. The total budgeted and actual transfers can only be found in the financial statements of the central government, as audited by NAOT.

The revenues and expenditures of these bodies are not reported on in other documentation, and therefore their operations constitute un-reported extra-budgetary operations. According to the Office of Treasury Registrar (TR), there are 213 active public bodies, many of which are non-commercial in nature, and therefore fall within the scope of this indicator (commercial bodies that do not receive transfers from GoT are covered under PI-9 in terms of the fiscal risk they may present).

Table 12 shows budgeted and actual transfers to public bodies, as indicated in the annual financial statements for 2010/11 and 2011/12 (the public bodies are referred to as public enterprises). The transfers are a proxy for the minimum level of the expenditures for these bodies.

Table 12: Transfers from GoT to public bodies

Types of Transfers: TZS blns. 2010/11

Budget 2010/11

Actual 2011/12

Budget 2011/12 Actual

Non-Financial Public Enterprises 374 330 461 374

Financial Public Enterprises 22 423 17 14

Departmental Enterprises 522 22 971 486

Other Enterprises 570 69 629 505

Total transfers 1689 844 2,078 1,379

Total GoT Expenditures (as per PI-1) 9,490 8,066 9,278 8067

% transfer/annual expenditure 17.8 9.1 22.4 17.1

Source: Report of the CAG on the Consolidated Financial Statements of GoT for FY10/11 and FY11/12

13 The respective economic classification codes at four digit level are: 270300, transfers to academic institutes; 270400, transfers to authorities; 270500, transfers to boards; 270600, transfers to agencies; 270700, transfers to Commissions;

270800, other transfers to non-financial units; and 270900; transfers to financial public units. Transfers disaggregated at 6 digit level are shown in the more detailed budget documentation, which is not presented to Parliament.

Internally Generated Funds (IGF)

Less than full disclosure of IGF and the spending thereof may lead to un-reported EBOs.

MDAs are authorised to retain IGF, according to stipulated retention formulae; the whole amount of IGF is supposed to be surrendered first to MoF, which then sends back the retention proportion. IGF estimates are shown in annual budgets, along with the proportion for retention. The CAG’s reports, however, express concerns that disclosure of IGF may not be 100 percent through less than full compliance with receipting systems, notwithstanding the reporting and accounting requirements stipulated under Circular 3/2010. The Internal Audit Unit of the Ministry of Energy and Minerals (MEM) indicates in its reports unpaid rents on mining licenses and non-adherence to reporting procedures.

These observations are despite GoT being EITI compliant, having already disclosed two years of reconciled reports¹⁴ showing an independent assurance on the collection of revenues by MEM.

(ii) Income/expenditure information on donor-funded projects which is included in fiscal reports

The Development Budget incorporates the bulk of donor-funded programmes and projects (other than aid-in-kind, which is not covered by this dimension). The Aid Management Platform (AMP), developed in 2008 by the Development Gateway Foundation with the support of UNDP and managed by External Finance Department (EFD) in MoF, has been a useful tool for donors to provide information on their planned and actual disbursements.

Expenditures of funds provided by donors through GoT-sanctioned bank accounts systems are required to be reported on in IFMS through a “dummy voucher” mechanism wherein the required Exchequer release is obtained.¹⁵ The assessment team was provided with a copy of a report on AMP prepared earlier in 2013 that analyses the development assistance portfolio for 2010/11 and 2011/12.

The data inputted by donors into the AMP may not cover all projects (approximately 2,500 projects at the time of the assessment) and may not be completely accurate due to fiscal year differences and data entry errors. Furthermore, as noted in the AMP report, although most planned spending is captured by AMP, not all actual spending under donor projects may be recorded if donor agencies provide funding directly to programmes/projects rather than through MDAs (an issue also in some other countries in the region), Records of actual expenditures financed by Basket Funds tend to be more accurate than project funds; basket funds comprised 20%--30% percent of total Basket and Project Funds disbursements in 2010/11-2011/12., as indicated in Table 11 (Table 3.3. (a) of AMP report)).

Table 13: Donor aid commitments and disbursements (excl. budget support) Modality Commitments Disbursements Commitments Disbursements

2010/11 (US$ mlns.) 2011/12 (US$ mlns.)

Basket Funds 366.4 381.1 430 292.2

Projects 1478.8 878.4 1284.2 865.3

Total 1845.2 1259.5 1714.2 1157.5

The bulk of planned and actual spending under USAID-funded programmes is not reflected in budget documentation and expenditure reports. US Government institutions have been inputting information into AMP since 2010/11, but most of the information relates to Millennium Development Corporation and Centre for Disease Control. ¹⁶ The USAID website indicates spending of $215 million in Tanzania in 2011 spread over several projects, most of which are not indicated in the AMP report. If added to the total donor commitments for projects/programme aid indicated in AMP, USAID funding would comprise about 12 percent of the total, though some may be at LGA level or be in the form of support to NGOs/CSOs that have no connection to GoT operations (these are substantial, amounting to $504.4 million and $744.8 million in 2010/11 and 2011/12 respectively).

According to the AMP report, some other DPs – OPEC, Abu Dhabi, Brazil, India, China and Korea – do not record information in the AMP database on a regular basis. The bulk of this assistance is aid-in-kind.

Table 5 of the AMP report shows actual disbursements by agency and whether loan or grant financed. The World Bank, AfDB and Japan are the only lenders, the World Bank comprising over 80 percent, and all operations are reported on. All Basket Fund grants are reported on.

The exact extent of under-reporting of actual expenditures funded by project-related grants is difficult to determine, but even if only half of these expenditures are reported on and all of USAID aid is at central government level, then just over 50% of the total expenditure financed by grants is reported on.

On-going and planned activities

USAID has recently started to input data into AMP.

PI

(M1) Score 2010 PEFA

Score 2013 PEFA

Assessment

PI-7 C+ D+ No change in performance. The extent of unreported domestic EBOs remains significant. Dimension (i) in the 2010 PEFA assessment may have been over-scored.

(i) C D No change in performance. It is difficult to estimate the total magnitude of unreported EBOs as the extent of un-reported IGF and the spending thereof is not known. Nevertheless, the extent of non-reporting of the budgets and actual expenditures of public bodies can be quantified, and it is clear that it amounts to significantly more than 10 % of public expenditure. This was probably also the case during the period covered by the 2010 PEFA assessment.

(ii) B B No change in performance: Information on most planned (committed) donor aid is included in Development Budget documentation, with the exception of USAID-funded projects

16 Information provided by USAID shortly after the August 29^th workshop shows: USG assistance amounting to $325 milllion in 2011/12 and recorded in AMP consisted of: $84.7 million from MCC, 2.8 million from USAID, $19.6 million from Department of Defence and $18.7 million from Department of Defence.

PI (M1)

Score 2010 PEFA

Score 2013 PEFA

Assessment

(USAID has recently started reporting, however) and a few other agencies, whose aid is mainly provided in kind. Actual spending may be significantly under-reported in the case of donor project operations, which comprise about three-quarters of all aid. As mentioned in the AMP report, donor project aid tends to be disbursed directly to the projects rather than through GoT-held bank accounts. Nevertheless, at least 50% of the spending of grant-funded aid provided in cash form is reported on. Loans in the form of cash (rather than aid-in-kind) are provided by only 3 lenders, and the expenditure out of these is fully reported on.