Year 2000 country profile: the status of Tanzania with the IMF and the World Bank

Globalization Challenge Initiative (GCI) publishes the SAP Information Alert Series in order to promote informed debate about IMF and World Bank-financed operations, including the potential political, economic, social and environmental consequences of sectoral and strucural adjustment programs. Adjustment programs attempt to promote export-oriented growth along with liberalization and privatization of economies. These programs are largely formulated in secrecy. Most adjustment-related documents are not publicly disclosed, despite the profound impacts of adjustment policies on the citizens of borrowing countries.Specifically with regard to the Government of Tanzania's Poverty Reduction Strategy Paper (PRSP) endorsed by the Executive Boards of the IMF and World Bank, this article is critical on several counts:the PRSP lacks credibility because key economic reform and structural adjustment policies were negotiated outside of the PRSP process and without the knowledge and consent of citizen’s groups. Citizen "participation for validation" of the PRSP arises when donors and creditors, especially the IMF and World Bank, negotiate with the GOT in secret and fail to discloseagreements and commitments to the public. This was the case in Tanzaniasecrecy, especially secrecy about the role of powerful foreign creditors, undermines democratic processes and the rights of citizensfifteen years of structural adjustment programs (SAPs) have not improved the quality of life for Tanzanian citizensthe excessive number of policy prescriptions, or conditions, attached to the new loans and debt relief amount to micromanagement of the Government of TanzaniaThe policy prescriptions will probably:set fiscal and monetary targets that may continue to undercut public services, reduce internal demand, aggravate unemployment, and handicap efforts to boost investment in infrastructure and human developmentimpose cost-sharing (i.e. new fees for services) in schools, health care centers and hospitals, which will continue to rob vulnerable communities of essential health and education servicesfurther reduce import tariffs. Such tariff reductions often result in a flood of imports that can undermine domestic industrial and agricultural producersrequire capital account liberalization to attract foreign investment. However, speculative transactions provide profits to foreign investors while offering few, if any, benefits to the poor majority of Tanzaniarequire privatization of public companies, which can increase unemployment, lower wages, increase the cost of goods and services, and decrease access to poor populationsrequire the GOT to remain current on debt service payments. This is a standard condition of IMF loans. However, nearly a quarter of the government’s 2001 budget is devoted to servicing external debt