Donors release nearly Sh26bn in budget support

Ms Sinikka Antila, Finnish ambassador and development  partners chairperson  PHOTO | FILE

In Summary

  • The money, part of the budget support that was withheld over the Tegeta escrow account scam, was released in December, according to a statement by the Development Partners Group Tanzania

Dar es Salaam. Donors have released $15 million (Sh25.8 billion) of the $558 million (Sh959 billion) budget support they withheld over the Tegeta escrow account scam. The money was sent in December, according to a statement by the Development Partners Group Tanzania.

Development Partners chairperson Sinikka Antila said last October that they would not release a single dollar of the $558 pledged to boost the 2014/2015 Budget until they were satisfied with the outcome of the investigations into the controversial payment of Independent Power Tanzania Limited (IPTL) escrow money to Pan Africa Power Solutions Tanzania Limited.

The donors maintained their stand even after Parliament discussed the Controller and Auditor General’s report, saying the money would be released only in the face of evidence of the government’s commitment to resolving the matter.

Ms Antila told this paper that the donor community was concerned about how the escrow money was paid to the company that claims to have bought 70 per cent shares of IPTL that were held by the Malaysian firm Mechmar Berhad Corporation.

But a statement released yesterday took note of the progress made as a result of the work by the CAG, PAC and Parliament, which led to a further $15 million in December. So far, $84 million (about 15 per cent) of the budget support funding for 2014/15) has been handed over. Of this amount, $6 million was disbursed in July.  Decisions on the rest of the funding depend on further discussions and the actions of the government of Tanzania. The President’s speech of December 22 and the resolutions approved by Parliament went some way to ease the tensions but the donors are still reportedly assessing the situation and consulting the Ministry of Finance on further disbursements. “Development Partners will still maintain dialogue with the Ministry of Finance and any decisions on further disbursements will be communicated to the minister,” said the statement.

Ms Antila, who doubles as the Finnish Budget Support Chairperson and Finland’s ambassador to Tanzania, is reportedly in constant dialogue with the ministry of Finance at the highest level. In March 2014, firm commitments for budget support in the financial year 2014/15 worth $558 million were communicated to the government–with the caveat that disbursements would be informed by developments in the IPTL case.

The contribution to budget finances of development partners is approximately five percent of the national public expenditure programme. Those currently giving budget support to Tanzania are Canada, Denmark, Finland, Germany, Ireland, Japan, Sweden, the United Kingdom, the African Development Bank, the European Commission and the World Bank.

The Tegeta escrow scandal involved the fraudulent withdrawal of Sh306 billion from the Central Bank to pay IPTL. The money, part of which a parliamentary investigation found to be public, was then shared among public figures and influential individuals.

Prof Anna Tibaijuka was sacked from the Lands, Housing and Human Settlements Development portfolio last month on the grounds that she received Sh1.6 billion from VIP Engineering and Marketing owner James Rugemalira. President Kikwete said the fate of the Energy and Minerals Minister, Professor Sospeter Mhongo, would be decided after he receives the report of a team formed to investigate him.

The former Attorney General, Judge Frederick Werema, resigned a week before the Head of State addressed the nation on the matter. Two days later, Energy and Minerals Permanent Secretary Eliakim Maswi was suspended pending investigations into his involvement in the withdrawal of the Sh306 billion. President Kikwete said then that the Chief Justice  would handle the case of Judges Aloycius Mujulizi and John Ruhangisa, whose names appeared on a list of people who received cash from Mr Rugemalira.

Earlier this week, Deputy Minister for Finance Mwigulu Nchemba said donors had started releasing funds in response to President Kikwete’s interventions. The donor decision was a lesson to the nation, Mr Nchemba said, and a big challenge that calls for proper use of public funds and a measure of financial independence.