TZ-Sep22-PFMPR-Public With PEFA Check

The United Republic of Tanzania
MINISTRY OF FINANCE AND PLANNING
ASSESSMENT OF THE PUBLIC FINANCE MANAGEMENT

SYSTEMS OF THE CENTRAL GOVERNMENT
APPLYING THE PEFA 2016 FRAMEWORK
FINAL REPORT
September, 2022
TANZANIA MAINLAND
Public Expenditure & Financial Accountability (PEFA)
Performance Assessment Report
Repeat Assessment
Based on PEFA 2016 Framework
September 2022
Final Report
(Incorporating peer review comments and PEFA Check)
Andrew Lawson, Finn Hedvall and Wangari Muikia
****
Tanzania Fiscal Year: 1st, July – 30th. June
Currency: Tanzanian Shilling (Tsh.)
US $ 1 = Tsh. 2,311 (February 2022)
****
The United Republic of Tanzania
Public Expenditure and Financial Accountability (PEFA)
Assessment of Tanzania
The quality assurance process followed in the production of the PEFA

report satisfies all the requirements of the PEFA Secretariat and
hence receives the ‘PEFA CHECK’.
PEFA Secretariat,
September 16, 2022

PEFA assessment of the PFM systems of the Tanzania Central Government 2022
Table of Contents
Acronyms and Abbreviations ..................................................................................... 7
Executive Summary................................................................................................... 10
1. Introduction .......................................................................................................... 15
1.1 Rationale and Purpose .................................................................................................................... 15
1.2 Assessment management and quality assurance ....................................................................... 15
1.3 Assessment methodology .............................................................................................................. 17
2. Country Background Information ...................................................................... 19
2.1 Country economic situation .......................................................................................................... 20
2.2 Fiscal and budgetary trends ........................................................................................................... 22
2.3 Legal and regulatory arrangements for PFM .............................................................................. 23
2.4 Institutional arrangements for PFM ............................................................................................. 26
3. Assessment of PFM Performance ...................................................................... 28
3.1 Overview ........................................................................................................................................... 28
3.2 Pillar I – Budget Reliability .............................................................................................................. 30
3.3 Pillar II – Transparency of Public Finances ................................................................................. 37
3.4 Pillar III – Management of Assets & Liabilities ........................................................................... 58
3.5 Pillar IV – Policy-based Fiscal Strategy and Budgeting ............................................................. 78
3.6 Pillar V – Predictability and Control in Budget Execution ...................................................... 95
3.7 Pillar VI – Accounting and Reporting ........................................................................................ 133
3.8 Pillar VII – External Scrutiny and Audit ..................................................................................... 141
4. Conclusions of the analysis of PFM systems .................................................... 151
4.1 Integrated assessment of PFM performance ............................................................................ 151
4.2 Key strengths and weaknesses of the Tanzania PFM system ............................................... 159
4.3 Performance changes since last PEFA assessment ................................................................. 160
4.4 Effectiveness of the Internal Control Framework .................................................................. 161
5. The PFM Reform Process ................................................................................. 169
Fiscus, September 2022, Final Report Page |4

5.1 Approach to PFM reforms ........................................................................................................... 169
5.2 The Mid Term Review of PFMRP V ........................................................................................... 170
5.3 Observations on PFM emerging from the 2022 PEFA assessment..................................... 171
Annex 1: 2022 Performance Assessment in comparison with 2017................... 175
Annex II: Observations on the Internal Control Framework ............................. 191
Annex III: Sources of Information .......................................................................... 193
Annex IV: Calculations for Budget Reliability Pillar (PI-1,2 & 3) ........................ 205
Table of Boxes, Figures and Tables

Box 1-1: Assessment Management & Quality Assurance Arrangements ................................... 16
Box 2-1 Legal & regulatory arrangements for PFM in Tanzania ................................................... 23
Box 3-1: Introduction to the Government Electronic Payment Gateway (GEPG)................101
Box 5–5-1 Key objectives of the different phases of the Tanzania PFMRP .............................169
Table 0-1 Tanzania PFM system in 2022: Strengths, Weaknesses, Opportunities & Threats11
Table 0-2: Summary of 2022 PEFA Scores for Tanzania Central Government ........................ 14
Table 2-1: Selected Economic Indicators 2018/19 - 2020/21 ........................................................ 21
Table 2-2: Aggregate Fiscal Data 2012/13 - 2021/22 (in percent of GDP) ................................ 22
Table 2-3: Structure of the Entities of the Tanzania Public Sector .............................................. 26
Table 3-1 Aggregate Budgeted Expenditure vs/ Actual Expenditure 2018/19 – 2020/21 ...... 30
Table 3-2: Expenditure Composition Variance by Institution (Vote), 2018/19 – 2020/21..... 32
Table 3-3: Variance from Budget in Expenditure composition outturn by institution ............ 33
Table 3-4: Variance from Budget in the expenditure composition outturn by economic
classification, 2018/19 to 2020/21 ................................................................................................ 33
Table 3-5: PI-5: Assessment of 2021/22 Budget documentation .................................................. 41
Table 3-6: Performance Audits published by NAOT in 2019/20 ................................................. 54
Table 3-7: PI-9: Assessment of Public Access to Fiscal Information ............................................ 56

Table 3-8: Trend in Annual Audits of Public Authorities & Other Bodies, 2016/17 – 2019/20
.............................................................................................................................................................. 61
Table 3-9: Annual Audits of Local Government Authorities, 2016/17 – 2019/20 ................... 62
Table 3-10: Reporting of Contingent Liabilities and Other Fiscal Risks in Annual Consolidated
Financial Statements for 2019/20 ................................................................................................. 63
Table 3-11: New Budget Formulation Calendar for 2021/22 Annual Budget ........................... 92
Table 3-12: PI-19: Domestic revenue collections by TRA, by type (Tsh. billions), 2020/21 .. 97
Table 3-13: Estimated Stock of Central Govt. Arrears, 2017/18 – 2019/20 (Tsh. Bn.) ........108
Table 3-14:Age profile of accounts payable and accruals at 30th June 2020 ...........................108
Table 3-15: Summary of Public Sector Procurement data reported in TANePS, 2020/21 ..119
Table 3-16: Planned Procurement Methods for 2020/21 as reported in TANePS ................120
Table 3-17: PI-24 - Public Access to Procurement information .................................................121
Table 3-18: PI-24 Assessment of Procurement complaints mechanism, 2020/21 ..................122
Table 3-19: Planned & Actual Submission of Internal Audit Reports, 2018/19 – 2020/21 ...130
Table 3-20: PI-29 - Content & Timing of Annual Financial Statements 2019/20 ....................139
Table 3-21: PI-30 - Implementation of CAG audit recommendations, 2016/17 - 2018/19 ..144
Table 3-22: PI-31 - Timing of scrutiny of Audit report by the PAC ..........................................148
Table 3-23: PI-31 Implementation of PAC Directives, 2016/17 - 2018/19 ..............................149
Table 4-1: 2022 PEFA Assessment of Tanzania Mainland - PEFA scores by Pillar .................151
Table 4-2: 2022 PEFA Assessment: Where is Tanzania achieving good practice? .................152
Table 4-3: 2022 PEFA Assessment: Where do Tanzania’s systems need improvement? .....152
Table 4-4 Summary of Changes recorded between 2017 and 2021 PEFA assessments ......161
Table 4-5: Areas of Improvement and Deterioration in PFM Performance 2017 -2022 ......161
Table 4-6 Implications of 2022 PEFA assessment for Internal Control Framework .............167
Table 5-1: Mapping of PFM-related IT systems ..............................................................................174

Acronyms and Abbreviations

ACGEN Accountant General
AfDB African Development Bank
AFROSAI-E African branch of the International Organisation of Supreme Audit
Institutions, English language subgroup
APER Annual Performance Evaluation Reports (for Procurement)
BCG Budgetary Central Government
BER Budget Execution Report (Quarterly)
BoT Bank of Tanzania
CAG Controller & Auditor General
CASFAR Country’s Annual State of Financial Accountability Report (Wajibu)
CBA Cost Benefit Analysis
CG Central Government
CS-DRMS Commonwealth Secretariat Debt Recording & Management System
CF Consolidated Fund
COFOG Classification of the Functions of Government
CPO Central Payments Office
DART Dar es Salaam Rapid Transit (bus system)
DSA Debt Sustainability Analysis
ECA Export Credit Agency
EFD Electronic Fiscal Device
EIN Exchequer Issue Notification
FY Fiscal Year
FYDP (II) (Second) Five Year Development Plan
GAMD Government Asset Management Division
GAMIS Government Asset Management Information System
GARI-ITS Government Audit Recommendation Implementation - Information Tracking
System
GDP Gross Domestic Product
GePG Government electronic Payment Gateway
GFSM Government Finance Statistics Manual (of the IMF)
GLGGA Government Loans Guarantees & Grants Act
GIZ Deutsche Gesellschaft für Zusammenarbeit (German Agency for
International Cooperation)
GoT Government of Tanzania
HCMIS Human Capital Management Information System
HRO Human Resource Officer
IA Internal Audit
IAG(D) Internal Auditor General’s Department
ICB International Competitive Bidding

IDI INTOSAI Development Institute

IFMIS Integrated Financial Management System
IIA Institute of Internal Auditors
IMF International Monetary Fund
IMTC Inter-Ministerial Technical Committee (of Permanent Secretaries)
INTOSAI International Organisation of Supreme Audit Institutions
IPC Interim Payment Certificate
IPPF International Professional Practices Framework (of the IIA)
IPSAS International Public Sector Accounting Standards
ISSAI International Standards of Supreme Audit Institutions
JICA Japan International Cooperation Agency
JPIMC Joint Public Investment Management Committee
LGA Local Government Authority
LPO Local Purchase Order
LTD Large Taxpayers’ Department
MDAs Ministries, Departments & Agencies (of Central Government)
MESTVT Ministry of Education, Science, Technology & Vocational Training
MKUKUTA Mpango wa Kukuza Uchumi na Kupunguza Umasikini Tanzania (Tanzania
National Strategy for Growth & Poverty Reduction)
MoFP Ministry of Finance & Planning
MTDS Medium Term Debt Strategy
MTEF Medium Term Expenditure Framework
MTSPBM Medium Term Strategic Planning & Budget Manual
MUSE Mfumo wa malipo ya Serikali (Government Payments System)
MWTC Ministry of Works, Transport & Communications
NAOT National Audit Office of Tanzania
NBS National Bureau of Statistics
NCB National Competitive Bidding
NDF Net Domestic Financing
NPMIS National Project Management Information System
NTR Non Tax Revenue
OC Other Charges
OECD Organisation for Economic Cooperation and Development
OTR Office of the Treasury Registrar
PAA Public Audit Act
PAC (Parliamentary) Public Accounts Committee
PAD Policy Analysis Division (of MoFP)
PA&OB Public Authorities & Other Bodies
PBB Programme Based Budgeting

PBG Plan & Budget Guidelines

PE Personnel Emoluments
PE Procuring Entities
PEFA Public Expenditure & Financial Accountability
PER Public Expenditure Review
PFM Public Finance Management
PFMRP Public Finance Management Reform Programme
PG Paymaster General
PI Performance Indicator (of the PEFA framework)
PIM Public Investment Management
PIM-OM Public Investment Management-Operational Manual
PO-PSM President’s Office – Public Service Management
PO-RALG President’s Office – Regional Administration & Local Government
PPAA Public Procurement Appeals Authority
PPP Public Private Partnerships
PPRA Public Procurement Regulatory Authority
PS Permanent Secretary
PSPF Public Services Pension Fund
QA Quality Assurance
RAS Regional Administrative Secretariat
RTAC (IMF) Regional Technical Assistance Centre
SAI Supreme Audit Institution
SAI-PMF Supreme Audit Institutions’ Performance Measurement Framework
TADAT Tax Administration Diagnostic Assessment Tool
TANePS Tanzania electronic Procurement System
TANESCO Tanzania Electricity Supply Company
TCCIA Tanzania Chamber of Commerce, Industry & Agriculture
TRA Tanzania Revenue Authority
TRIMS Treasury Registrar Information Management System
URT United Republic of Tanzania
VAT Value Added Tax
WB World Bank

Executive Summary
This Report presents an independent assessment of the status of public financial management
(PFM) in Mainland Tanzania and an assessment of progress in the implementation of PFM
reforms. It is based on the application of the PEFA methodology, as updated in 2016, and thus also provides
a consistent basis of comparison with the 2017 PEFA assessment. The report has three objectives:
(i) To assist the Government in prioritising the implementation of PFM reforms and systems
enhancements;
(ii) To inform the dialogue on PFM between Government and its Development Partners;
(iii) To provide an input into how the next phase of PFMRP should be designed, implemented and
monitored.
The sixth phase of the PFM reform programme (PFMRP VI, 2022 – 2027) begins from the start of fiscal year
2022/23. The design process has been taking place in parallel with the implementation of this PEFA
assessment and the final programme draws closely on the findings of this Report.
The Government of Tanzania (GoT) has led the 2022 PEFA assessment through the
Permanent Secretary of the Ministry of Finance & Planning (MoFP), with financial support and
technical guidance from Norway. The Government appointed a Management & Oversight team to
oversee the assessment, as well as a Task Force Secretariat to provide managerial and logistical support.
The assessment has been undertaken by Fiscus – a UK based public finance consultancy company, working
in conjunction with staff of United Efforts, Sweden and Expertise Global Consulting Ltd., Nairobi.
The assessment covers the Central Government of Mainland Tanzania, which is comprised of 67 ministries,
departments and commissions, 26 Regional Administrative Secretariats and 215 autonomous or semi-
autonomous agencies (extra-budgetary units). The assessment does not cover the 185 Local Government
Associations (LGAs) which comprise a lower tier of Government, or the 4 social security funds or the 82
Public Corporations, which comprise part of General Government and the Public Sector, but not part of
Central Government.
The assessment is based upon information from the three most recent completed financial
years (2018/19, 2019/20 & 2020/21), and, where relevant, on information on the process of the
formulation of the 2021/22 Budget. Field work was undertaken in November 2021 and the analysis in
this report is based on data and reports available up to 31st, May 2022, the agreed deadline for receipt of
comments and additional data from the authorities following the circulation of the first draft of the report
to the Ministry of Finance & Planning and the ‘PEFA Check’ peer reviewers.
Table 0-1 presents an overview of the strengths, weaknesses, opportunities and threats identified through
the 2022 assessment of the PFM system. A summary presentation of the 2022 scores against the 31
indicators of the 2016 PEFA Framework is presented in Table 0-2
Fiscus, September 2022, Final Report P a g e | 10

Table 0-1 Tanzania PFM system in 2022: Strengths, Weaknesses, Opportunities & Threats
Strengths Weaknesses
§ PI-6: Reporting on Central Government § PI- 1,2 & 3: Budget Credibility indicators
extra-budgetary operations § PI-4 Budget Classification
§ PI-10: Fiscal Risk reporting § PI-5: Budget Documentation;
§ PI-12: Public Asset Management § PI-9: Public Access to Fiscal Information
§ PI-13: Debt Management § PI-11: Public Investment Management
§ PI- 15: Fiscal Strategy § PI-16: Medium-term perspective in
§ PI-17: Budget preparation process; expenditure budgeting
§ PI-18: Legislative Scrutiny of Budgets § PI-21: Predictability of In-Year Resource
§ PI- 19: Revenue Administration Allocation;
§ PI-20: Accounting for Revenue; § PI-22: Expenditure Arrears;
§ PI-23: Payroll Controls
§ PI- 24: Procurement Management
Areas where reform progress is slowing:
§ PI-30: External Audit
§ PI-26 Internal Audit
Emerging strengths/ areas improving: § PI-31 Legislative Scrutiny of Audit Reports
§ PI- 27 Financial Data Integrity
§ PI-29 Annual Financial Reports
Opportunities Threats
ü Good potential for further improvement in Ø Continued discrepancies between Budgets and
areas of strength to reach international best Actual Expenditures have undermined credibility
practice standards of the Budget, reinforcing bad budgeting
ü Consolidation of MUSE system should further practices and a lack of confidence in the system
improve financial data integrity at MDA level.
ü Shift from IPSAS cash to IPSAS accruals presents Ø An approach to cash management based on cash
an opportunity to strengthen consolidated rationing rather than cash planning has
financial statements, once new procedures are undermined the system of commitment
fully embedded controls, resulting in expenditure arrears.
ü Potential for “quick wins” on Budget Ø These two problems undermine what is
documentation and Public access to Fiscal otherwise a strong PFM system and reduce its
information, through careful attention to the ability to promote the allocation of resources in
format of reports & their timely publication. line with strategic priorities and to facilitate
ü Public Investment Management Operational efficient service delivery.
Manual (PIM-OM) and the related procedures Ø High vacancy rates and staff turnover are slowing
offer sound basis for strengthening investment the pace of progress in Internal Audit.
management, but significant work is needed to Ø Website Publication of PAC reports is no longer
build capacity and establish improved processes. regular and should be restored.
ü By re-thinking the approach to the MTEF so as
to simplify formats and procedures and
eliminate the activity-based focus, a re-designed
MTEF could become an effective tool of
strategic medium-term planning & budgeting.

The overall picture emerging from the 2022 PEFA assessment is positive: there are several
important areas of strength and quite a number of the weaknesses identified could be
addressed without too much difficulty in the short to medium term. A reading of the strengths,
weaknesses and opportunities identified in Table 0-1 confirms this conclusion.
Government has a strong set of procedures by which to monitor and control the major
potential threats to aggregate fiscal discipline, based upon the processes relating to debt
management, the reporting of Central Government extra-budgetary operations, and the monitoring of fiscal
risk from the wider public sector. Legislative scrutiny of the Budget works well and improvements are being
recorded in Internal and External Audit and in most aspects of accounting and financial reporting, as the
Government progresses towards the full implementation of IPSAS accrual standards, and the consolidation
of the new MUSE integrated financial management system. Payroll controls have been further tightened
since 2017 and significant improvements have been recorded in procurement management. These systems
provide the basic ‘nuts and bolts’ for efficient service delivery.
Several of the weaknesses identified in this PEFA assessment could be corrected relatively
straightforwardly by dedicating attention to the shortcomings identified in this report. In
particular, careful attention to the format of public reports and to their timely publication could generate
‘quick wins’ in relation to Budget documentation, Public access to Fiscal information, and In-Year Budget
Reports. Strengthening Public Investment Management will be a longer term process, with extensive
investment still required but the Public Investment Management Operational Manual (PIM-OM) and the
related structures and procedures introduced since 2015 offer a sound basis for strengthening investment
management, so long as a properly phased and resourced programme of capacity development and
consolidation of systems can be implemented.
Strengthening of medium term expenditure budgeting will also be a medium term process
but it will require a willingness to review the current, overly complex approach that has been
adopted to the implementation of the MTEF. The peculiarly detailed format that has been chosen
for the formulation of medium term projections on the basis of activity-based costings generates a heavy
burden of work for MDAs and, in addition, complicates the process of adapting MTEF projections during
the annual budget scrutiny process. This same observation was made in the 2017 PEFA assessment: a review
of the approach to the MTEF is therefore overdue, with the basic objective of developing a framework for
medium term budgeting that is simple and fit for purpose, starting from a careful reassessment of what
should be the core objectives of such a system in Tanzania. However, a precondition for an effective medium
term budget is a credible annual budget, which is not currently the case.
The lack of a reliable, credible annual budget remains the biggest threat to the Tanzania PFM
system. The continuing weaknesses in core aspects of PFM – budget credibility, cash management,
commitment control – threaten to undermine the value of the improvements achieved in other areas. High
levels of expenditure arrears and weaknesses in the monitoring of arrears have been persistent problems
in Tanzania, reported in the 2010 and 2013 PEFA assessments, as well as the 2017 assessment. Although

there is evidence that procedures to control new arrears and clear past arrears have improved, the stock
of payment arrears continues to hover at around 10 - 11% of total expenditure.
The primary obstacle to prudent monitoring of arrears and accounts payable is the cash
rationing system and the way MUSE is set up to restrict payments, as the system rejects any expenditure
entries – including entries for commitments - that go above the monthly payment ceilings, or beyond the
current month. As a result, the commitment function in MUSE is rendered effectively useless because it is
only possible to make commitments for payments which will be paid in the same month and which fall
within the available payment ceiling.
The cash rationing system has created a situation where the budget is not credible and arrears
build up: aggregate fiscal discipline is maintained but the strategic allocation of resources is
undermined and service delivery suffers. With a gradually improving economic situation as the global
economy emerges from the Coronavirus pandemic, coupled with a strong financial management system
based on MUSE, the time is ripe for substantial improvements, focused on more modern, and more flexible
systems of cash planning and commitment control, which support the predictability of the budget, while
controlling the fiscal deficit. Some steps have been taken in this direction, with salary payments and regular
recurrent expenditures now being fully financed each month but development expenditures and non-regular
(“lumpy”) recurrent expenditures continue to be subject to monthly cash controls.
PFMRP VI should provide a strong basis for addressing these threats but it will be essential to
ensure the scope and direction of reforms are targeted to correct the weaknesses identified.
Only if these threats are properly tackled can Tanzania strengthen the ability of the PFM system not only
to ensure aggregate fiscal discipline but also to allocate resources in line with strategic priorities and to
promote efficient service delivery.
A comparison of the scores of the 2017 and 2022 assessments points to a significant aggregate
improvement in PEFA scores over the period. Of the 31 indicators of the 2016 PEFA framework, it
shows an improvement in 12 indicators, deterioration in 3 indicators and 16 with no changes. There is
strong evidence of positive changes in a wide range of areas, with 4 of the 7 pillars of the PEFA framework
showing net improvements. In most cases, this reflects the results of steady and continuous improvements,
introduced across various phases of the PFM reform programme. These improvements have included
reforms in legislation and regulations, the building of human resource capability, as well as modernisation
and greater integration of IT systems – notably with the introduction of the Government electronic
Payment Gateway (GePG), and the shift to MUSE. Systemic improvements in PFM take a long time to
implement - particularly in a large country like Tanzania with a substantial public sector – but the signs are
that the fruits of past investment in PFM improvement are now being reaped. The challenge for PFMRP VI
is to ensure that the remaining weaknesses are comprehensively addressed, while continuing to maintain
the high standards already being attained in other aspects of the PFM system.

Table 0-2: Summary of 2022 PEFA Scores for Tanzania Central Government
PFM Performance Indicator Scoring Dimension Scores 2022 2022 2017

(2016 PEFA Framework) Method i. ii. iii. iv. Score Score
Pillar I. Budget reliability
PI-1 Aggregate expenditure outturn M1 D D C
PI-2 Expenditure composition outturn M1 D C A D+ D+
PI-3 Revenue outturn M2 D C D+ D+
II. Transparency of public finances
PI-4 Budget classification M1 D D C
PI-5 Budget documentation M1 D D D
PI-6 CG operations outside financial reports M2 A A B A B
PI-7 Transfers to subnational Governments M2 D A C+ C+
Performance information for service
PI-8 M2 B C D C C C
delivery
PI-9 Public access to fiscal information M1 D D D
III. Management of assets and liabilities
PI-10 Fiscal risk reporting. M2 C A B B B
PI-11 Public investment management M2 C C D D D+ D+
PI-12 Public asset management M2 A C A B+ B
PI-13 Debt management M2 B B C B B
IV. Policy-based fiscal strategy and budgeting
PI-14 Macroeconomic and fiscal forecasting M2 A C D C+ C+
PI-15 Fiscal strategy M2 C A B B D+
Medium-term Perspective in expenditure
PI-16 M2 D D C D D D
budgeting
PI-17 Budget preparation process M2 A A A A A
PI-18 Legislative scrutiny of budgets M1 A A A A A B+
V. Predictability and control in budget execution
PI-19 Revenue administration M2 A A C C B C+
PI-20 Accounting for revenue M1 A A A A B+
PI-21 Predictability of in-year resource allocation M2 C C D C C D+
PI-22 Expenditure arrears M1 D D D D
PI-23 Payroll controls M1 A B B B B+ B+
PI-24 Procurement management M2 C A C A B C
PI-25 Internal controls on non-salary exp. M2 B C C C+ D+
PI-26 Internal audit M1 B C C C C+ C+

VI. Accounting and reporting
PI-27 Financial data integrity M2 B na D B C+ C
PI-28 In-year budget reports M1 C C C C D
PI-29 Annual financial reports M1 C B B C+ C+
VII. External scrutiny and audit
PI-30 External audit M1 B B B B B C+
PI-31 Legislative scrutiny of audit reports M2 C A B D C+ B

1. Introduction
1.1 Rationale and Purpose
1. The purpose of this study is to present an independent assessment of the status of public
financial management (PFM) in Tanzania and an assessment of progress in the
implementation of PFM reforms. This assessment is based on the application of the PEFA
methodology, as updated in 2016 – the objective being to provide a point of comparison with the 2017
assessment, which was the first PEFA assessment to apply the 2016 methodology in Tanzania. The
comparison of the two assessments thus provides a robust basis for measuring progress in the
Government’s efforts to strengthen the PFM system through the ongoing PFM reform programme,
which has completed its fifth phase (2017-2022).
2. This document comprises the final draft of the Report. Corrections and additions have been made to
the report in the light of the comments made by the Tanzanian authorities, by the PEFA Secretariat
and by the other peer reviewers who have undertaken the PEFA Check process (See Box 1-1).
3. As noted in the Concept Note, the findings of the assessment will be used in three principal ways:
• To assist the Government in prioritising the implementation of PFM reforms and systems
enhancements;
• To inform the dialogue on PFM between Government and its Development Partners;
• To provide an input into how the new phase of PFMRP should be designed, implemented and
monitored.
4. The sixth phase of the PFM reform programme (PFMRP VI, 2022 – 2027) will commence
from the start of fiscal year 2022/23. The design process has taken place in parallel with the
implementation of the PEFA assessment and it has drawn closely on the findings of this Report. The
timing of this assessment was scheduled, on the one hand, so as to feed into that exercise and, on the
other hand, to ensure the availability of a maximum number of financial reports and other information
for fiscal year 2020/21.
5. A number of PEFA assessments have been undertaken in Tanzania, all of which may be found on the
website of the PEFA Secretariat. Four assessments have been conducted for the Central Government
of Mainland Tanzania in 2006, 2009, 2013 and 2017. Subnational PEFA assessments in Local
Government Authorities (LGAs) were conducted in 2006 and 2016, and two in Zanzibar in 2010 and
2018. A new assessment for Zanzibar is scheduled to take place later in 2022.
1.2 Assessment management and quality assurance
6. The Government of Tanzania (GoT) has led the 2022 PEFA exercise through the
Permanent Secretary of the Ministry of Finance & Planning (MoFP), with financial and
technical support from Norway. GoT appointed a Management & Oversight team to oversee the

assessment, as well as a Task Force Secretariat to provide managerial and logistical support1. (Box 1.1).
The structure of the assignment has been based on a Concept Note prepared in July 2021, and reviewed
as a draft and final document by the same peer reviewers who have checked the assessment report.
Management & Organisation of PEFA Assessment:

• Oversight Team:
o Chair: Permanent Secretary, Treasury
o Members: Deputy Permanent Secretary (PFM), MoFP
Deputy Permanent Secretary (Economic Mgt.), MoFP
Director of Planning, MoFP
Commissioner for Budget
Chief Accountant, Accountant General’s Office
Commissioner for Policy Analysis
Trond Augdal, Country Economist, Royal Norwegian Embassy
Milou Vanmulken, PFM/ Governance Advisor, European Union.
• Task Force Secretariat:

o Moses Dulle, Director of Planning, MoFP
o Denis Mihayo, PFMRP Programme Coordinator, MoFP
o Simon Moshy, Coordinator PFM Development Partners Group.
o PFMRP Secretariat, MoFP.
• Assessment Team:
o Andrew Lawson, Director Fiscus, UK (Team Leader)
o Finn Hedvall, United Efforts, Sweden (Accounting & Audit Specialist)
o Wangari Muikia, Expertise Global Consulting Ltd, Nairobi (Tax & Budgeting Specialist)
Concept Note:
• Date of presentation of Draft Concept Note: July, 2021
• Date of Final Concept Note: 19th, August 2021
Review of Assessment Report:

• Date of presentation of Draft Assessment Report: 26th, April 2022
• Invited Reviewers:
o Government of Tanzania
o PEFA Secretariat
o Trond Augdal, Country Economist, Royal Norwegian Embassy
o Milou Vanmulken, PFM/ Governance Advisor, European Union.
Date of Final Assessment Report: August, 2022
Box 1-1: Assessment Management & Quality Assurance Arrangements
1 The assessment team would like to place on record their gratitude for the excellent support which has been
provided by the Task Force Secretariat, led by Moses Dulle, Director of Planning.

7. The assessment has been undertaken by Fiscus – a UK based public finance consultancy company,
working in conjunction with staff of United Efforts, Sweden and Expertise Global Consulting Ltd,
Nairobi. There has been close coordination with the Government of Tanzania (GoT) in the
management and organisation of the assessment but the assessment and drafting work has been
undertaken exclusively by the team led by Fiscus. As such, it is a fully independent assessment.
8. The initiative to undertake this PEFA assessment came from Norway, who have provided the necessary
financing, as well as playing a leading role in the quality assurance process, as a peer reviewer for both
the Concept Note and this assessment report. The EU have also participated as peer reviewers of both
the Concept note and the assessment report. The PEFA assessment process forms part of the wider
Public Finance Management Reform Programme, now completing its fifth phase (2017 – 2022). This
enjoys strong financial and technical support from a wide range of Development Partners2, and many
of these have contributed to the exercise either as formal peer reviewers for the PEFA check process
(Norway and the EU), or informally through the provision of comments and supporting technical
reports. The assessment team has also benefitted from the information and guidance provided by two
key civil society actors, namely the Tanzania Chamber of Commerce Industry & Agriculture (TCCIA)
and the Wajibu Institute of Public Accountability. The assessment team would like to express its
gratitude for the support and assistance of these donors and civil society partners.
1.3 Assessment methodology
9. The assessment covers the Central Government of Mainland Tanzania, which is comprised
of 67 ministries, departments and commissions, 26 Regional Administrative Secretariats and 215
autonomous or semi-autonomous agencies and funds (extra-budgetary units) 3. The assessment covers
neither the 185 Local Government Associations (LGAs), which comprise a lower tier of Government,
nor the 82 Public Corporations and 4 Social Security Funds, which comprise part of General
Government and the Public Sector respectively, but not part of Central Government. On the other
hand, the question of the obligations and liabilities (actual or contingent) of the Central Government
in relation to these other parts of the public sector does, of course, comprise an important part of this
PEFA assessment of Central Government4.
10. The assessment is based upon information from the three most recent completed
financial years (2018/19, 2019/20 & 2020/21), and, where relevant, on information
2 The fifth phase has been supported financially by the African Development Bank, Canada, Denmark, European
Union, Finland, GIZ, Irish Aid, JICA, Norway, Sweden, UK FCDO, USAID, and the World Bank. In addition, the
IMF has provided technical support to the programme both from Washington DC and through the East Africa
Regional Technical Assistance Centre (RTAC), which is coordinated from Dar es Salaam.
3 The data on numbers of MDAs and other institutions is taken from the list of ‘reporting entities’ in the financial
statements for 2020/21.
4 These questions are addressed primarily in indicators PI-7, Transfers to subnational Governments, and PI-10, Fiscal
risk reporting.

regarding the process of the formulation of the 2021/22 Budget. Field work was undertaken
in November 2021 and the analysis presented in this report is based on data and reports available up
to 31st, May 2022, which was the deadline agreed for receipt of data and reports from the Government
of Tanzania (GoT), following the circulation of a preliminary draft of the report.
11. The principal source of information has been the Government of Tanzania, and in
particular the Ministry of Finance & Planning (MoFP). Extensive interviews were undertaken
with the different divisions of MoFP, as well as the Controller & Auditor General (CAG), the Internal
Auditor General (IAG), the Tanzania Revenue Authority (TRA), the Office of the Treasury Registrar
(OTR) and the Public Procurement Regulatory Authority (PPRA).
12. Meetings were also held with the Public Accounts Committee of Parliament (PAC), as well as with the
President’s Office (Public Service Management, and Regional Administration & Local Government
divisions), TANROADS, the Medical Stores Department (MSD), Dodoma Municipality, the Ministry of
Works, Transport & Communications (MWTC) and the Ministry of Education, Science, Technology &
Vocational Training (MESTVT). Lengthy interviews were also held with the Wajibu Institute of Public
Accountability and the Tanzanian Chamber of Commerce, Industry & Agriculture (TCCIA). The
assessment team would like to express its sincere gratitude for the time dedicated by all the persons
interviewed and for the open and constructive spirit in which discussions were conducted.
13. The primary sources of documentary evidence for the report have been the planning, budgetary and
accounting documents for financial years 2018/19, 2019/20 and 2020/21, as well as the corresponding
external audit reports for those years prepared by the Controller & Auditor General (CAG) and the
Internal Auditor General. The various annual reports of the other core PFM entities, notably OTR and
PPRA, have also been consulted in addition to the relevant official websites.
14. Official sources of information have been complemented by reference to studies prepared by the IMF,
the World Bank and other Development Partners and international organisations. Especially relevant
have been the reports of the IMF, notably the annual Article IV reports and the various technical
assistance reports on Tanzania produced by the East Africa Regional Technical Assistance Centre
(RTAC). A listing of the sources of information consulted for each indicator is included in Annex III,
Sources of Information, and these sources are also clearly described in Chapter 3, in the explanation of
the assessment of each of the 31 indicators of the 2016 PEFA framework.

2. Country Background Information

15. This chapter provides background information on Tanzania, so as to permit an understanding of the
core characteristics of the PFM system as well as an appreciation of the wider context for the PFM
reform process. It draws on publicly available information from the Government of Tanzania and other
relevant sources, such as IMF and World Bank reports.
16. The United Republic of Tanzania (URT) was created on 26th, April 1964 - a union between
the Mainland, formerly called Tanganyika, and the island of Zanzibar, after their
independence in 1961 and 1963 respectively. Zanzibar retains a high degree of autonomy, with its own
Parliament and budget. Tanzania (URT) has a population of 59.7 million inhabitants as estimated in
2020. The demography reveals a youthful population with two thirds under the age of 25. Around 65
% of the population live in rural areas, but urbanization is steadily advancing.
17. Dodoma was instituted as the formal capital in 1996. However, most Government offices, except for
the National Assembly, the President’s Office and the Prime Minister’s Office - resided in the largest
city – Dar es Salaam – until a comprehensive move of Government offices to Dodoma was initiated by
the late President John Magufuli. As of 2019, the majority of the offices of Central Government have
been located in Dodoma.
18. The President and the National Assembly are elected in general elections in the
constituencies through majority vote. The assembly has 357 seats, (239 elected by simple majority
vote, 102 seats reserved for women by simple majority vote, 5 seats elected from Zanzibar, 10
appointed by the President and one reserved for the Attorney General). Members serve for a five-year
term. The President also serves for a 5-year term, renewable once. The most recent election was held
in November 2020, at which President John Magufuli was re-elected. Following his passing whilst in
office, his Vice President, Samia Suluhu Hassan became Tanzania’s new President in April 2021, the first
woman to hold this position.
19. Regional and district administration in Tanzania is divided into 31 regions (mikoa), 26 on the Mainland
and five in Zanzibar (three on Unguja, two on Pemba). Ninety-eight districts (wilaya) were established
to increase local authority, each with at least one council, (but some with both a district and a
municipality or town council). The district and town councils and municipalities are known collectively
as Local Government Authorities (LGAs) and currently number in total 185. LGAs have important
service delivery responsibilities related to health (primary health centres and district hospitals),
education (primary and secondary schools), agriculture, water and local roads.
20. The country borders Rwanda, Burundi, and the Democratic Republic of the Congo to the West;
Zambia, Malawi and Mozambique to the South; and Kenya, and Uganda to the North. The coastline
bordering the Indian Ocean is 1, 424 km. (See Figure 2-1)

Figure 2-1: Map of the United Republic of Tanzania (URT)
2.1 Country economic situation
21. Tanzania’s macroeconomic performance was strong over 2015-2019 but GDP growth was
negatively affected by the Coronavirus pandemic and the related restrictions. Over 2015-
2019, GDP growth remained robust, averaging 6.7 per cent annual growth over the period, driven by
mining & quarrying, construction, arts & entertainment, transport, communications and trade.
However, the COVID-19 pandemic negatively impacted on Tanzania’s macroeconomic outlook, as well
as its population’s health and well-being. Tourism collapsed in the face of travel restrictions and the
economy decelerated to 4.9% growth in 2020/21 (IMF, July 2022). However, real GDP growth was
higher than initially anticipated (by the Authorities and the IMF) and, overall, Tanzania weathered the
economic impact of the pandemic relatively well due to its robust macro-economic situation at the
outset of the pandemic, and its relatively diverse economic structure without excessive reliance on
external trade. Although most travel restrictions have been lifted and the effects of the COVID-19
pandemic have receded, the impact of the Russia-Ukraine war on energy, fertilizer and food prices has
continued to affect Tanzania during 2022, and the situation of economic uncertainty persists.

22. The external current account continues to show a deficit, but this has been substantially reduced in
recent years, with the IMF staff projection anticipating a deficit of 4.5 % of GDP in 2021/22. Inflation as
indicated by the consumer price index has gradually been reduced – from 5.3 % per annum in 2016/17
to 3.6 % for 2020/21, although upward revisions of inflation projections have been made in the light of
more recent energy, and food price increases – with inflation now projected at 6.4% for 2021/22 (IMF,
July 2022). Government’s stock of debt as a percentage of GDP increased to 40 % in fiscal year 2016/17
and has remained broadly at that level, being projected to reach 42.2 % of GDP in 2021/22. This is low
compared to many countries in the region and internationally (Table 2-1.) but it is notable that Tanzania
has been downgraded by the IMF from low risk to moderate risk of debt distress.
Table 2-1: Selected Economic Indicators 2018/19 - 2020/21

2018/19 2019/20 2020/21 2021/22
projection
GDP at current market prices, US $ m. 58,755 62,607 67,356 73,800
GDP at current market prices, Tsh. Trillion 134.5 144.2 155.5 170.2
GDP per capita (US$) 1,058 1,095 1,144 1,217
Real GDP growth (%) 7.0 % 5.9% 4.9% 4.8 %
Consumer Price Index (end of period, 3.7 % 3.2 % 3.6% 6.4%
annual change)
Stock of Government debt (% of GDP) 39.5 % 38.0 % 39.7 % 42.2 %
External terms of trade (annual percentage -3.5 % 11.8 % 5.1% -7.3 %

change)
Current account balance (% of GDP) -3.5% -1.7 % -1.9 % -4.5 %
Total external debt (% of GDP) 28.6% 28.0% 28.2% 28.1 %
Gross official reserves (months of imports) 5.3 6.4 4.9 4.5
Source: IMF, July 2022, Request for a 40-month arrangement under the Extended Credit Facility
23. The development agenda has been driven by the first and second MKUKUTA – Tanzania
National Strategy for Growth & Poverty Reduction, and reflected in the 5-year development
plans. The Government of President Magufuli, was elected in November 2015, incorporating the
remaining agenda items from MKUKUTA II and the First Five Year Development Plan (2011/12 –
2016/17) into a new Five Year Development Plan for 2016/17-2020/21 and the National Development
vision for 2025. These strategies continue to lay out the development vision of the current Government
under President Samia Suluhu Hassan, with a continued commitment to major large scale public
investment projects in energy, transport and infrastructure.
24. In terms of UNDP’s Human Development Index (HDI), Tanzania had a score of 0.529 in
2019, an improvement of nearly 43% from its score of 0.370 in 1990 but one which still left it
in the low Human Development group. This HDI score places Tanzania 163 out of 189 countries and
territories in the index. Unfortunately, the economic, social and health effects of the COVID-19
pandemic mean that the HDI performance is unlikely to have improved in subsequent years.

2.2 Fiscal and budgetary trends
25. The overall structure of the Budget is illustrated in Table 2-2, which summarises the Government of
Tanzania’s (GoT) actual and projected fiscal performance for the last four years, based upon official
reports from the Authorities and IMF staff estimates.
26. Efforts to increase revenue collection since 2015/16 have been partially successful and own
revenues reached the level of 14.6 % of GDP in 2019/20 (IMF, July 2022). Tax exemptions,
poor compliance and poor tax administration had been major challenges for the Tanzanian
Government, and the Government of President Magufuli declared that its aim was to improve revenue
collection through fewer exemptions, improved systems, a widened tax base, VAT registration and
control measures, including the increased use of Electronic Fiscal Devices (EFD). Fiscal data suggests
that these efforts have been successful in raising collections but concerns remain over the narrowness
of the tax base, the lack of stability in the tax policy environment, and the slow pace of implementation
of measures to modernise tax administration. Moreover, the economic slowdown due to the pandemic
is continuing to impact upon domestic revenue collections, which are now projected at 14.3 % of GDP
for2021/22 (IMF, July 2022; as presented in Table 2.2).
Table 2-2: Aggregate Fiscal Data 2018/19 - 2021/22 (in percent of GDP)
Actual Actual Estimated Projected

% of GDP 2018/19 2019/20 2020/21 2021/22
Total Revenue 14.1 15.2 13.7 15.0
- own revenues 13.8 14.6 13.2 14.3
- grants 0.3 0.6 0.5 0.7
Recurrent expenditure 10.8 10.3 10.0 10.6

- non-interest 9.0 8.7 8.4 9.1
- interest 1.8 1.6 1.6 1.5
Development expenditure 5.8 6.4 7.1 7.2
Statistical discrepancy -0.6 -0.4 0.5 0.0
Aggregate deficit (after
grants) -3.1 -1.9 -3.9 -2.8
Primary balance -1.4 -0.3 -2.2 -1.3
Net financing 3.1 1.9 3.9 2.8
- external 0.9 1.6 1.7 1.8
- domestic 2.3 0.3 2.2 1.1
Debt Amortisation 1.2 1.4 1.6 1.7
Source: IMF, July 2022, Request for a 40-month arrangement under the Extended Credit Facility.
27. Within the recurrent budget, interest costs rose steadily up to 2018/19 but have declined
subsequently due in part to debt relief and other pandemic support, despite the growth

of the public debt to over 40% of GDP (Table 2-1.). Interest constituted 1.8 % of GDP in 2018/19,
but is estimated to fall to 1.5 % of GDP in 2021/22. Interest was 10.8 % of total expenditure in 2018/19,
but is projected to decline to 8.4% of total expenditure in 2021/22.
28. The growth of development expenditure has been a notable feature of the budget, rising
from 5.8% of GDP in 2018/19 to a projected 7.2% in 2021/22. The majority of this is domestically
financed, with over three quarters of development expenditure being domestically financed in 2021/22,
(5.5 % of GDP).
2.3 Legal and regulatory arrangements for PFM
29. This section provides background information on the legislation and regulations for the different
elements of public finance management. Additional information is found in chapter 5 on PFM reform
and in chapter 3, which presents the assessment of the 31indicators of the 2016 PEFA framework.
Box 2-1 Legal & regulatory arrangements for PFM in Tanzania
PFM Area Relevant legislation & Regulations

Statutory arrangements - The Constitution of Tanzania 1997, amended 2005
- Standing Orders of the National Assembly, revised 2016
Budget preparation, - The Budget Act of 2015
execution, reporting - Public Finance Act 2001, amended 2004 & 2011
accounting. - Accounting Procedures Manual 2016
Tax administration - - Tax Administration Act of 2015, regulation 2016
- - VAT Act 2014, Regulations 2015
- - Income Tax Act 2006, revised 2008, regulation 2014
- - Electronic Fiscal Device Regulation 2012
- - Excise Management and Tax Act 2006, revised 2008, regulations 2013
- - Motor Vehicles Tax Act, rev 2006
- - Tanzania Revenue Authority Act, rev 2006
- - Tax Revenue Appeals Act, rev 2006, and planned 2016
- - Other acts and regulations for specific taxes.
Public sector entities - - Treasury Registrar Act 1959, amended 2010
- - Public Corporations Act (1992) amended 2002
Public Procurement - - The Public Procurement Act (2011), amended 2016.
Public Debt - - Government Loans, Guarantees and Grants Act (1974), amended 2004,
Amended 2017
Development partners - - National framework for managing development cooperation
PPP- Public Private - - PPP Act 2010 and regulation 2011

Partnerships
Parastatals - - Treasury Registrar Act 2002, amended 2010

- - Multiple Parastatal Acts
Local Government Finances- - Local Government Finances Act 1982, amended 2016

Internal Audit - - Public Finance Act 2001, amended 2004 and 2011
- - Internal Audit Manual
- - Audit Committee Guidelines
External Audit - - Public Audit Act 2008, amended 2011
Payments - - National Payment Systems Act, 2015
Internal control - - Tax Administration Act of 2015, regulation 2016
- - Tanzania Revenue Authority Act, rev 2006
- - Tax Revenue Appeals Act, rev 2006, and planned 2016
- - The Public Procurement Act (2011), amended 2016.
- - Public Finance Act 2001, amended 2004 and 2011
- - Internal Audit Manual
- - Audit Committee Guidelines
- Public Audit Act 2008, amended 2011
30. The Constitution’s Chapter 7 covers “Provisions regarding the finances of the United
Republic.” Amongst these, some important provisions are:
§ Unless otherwise specified, all revenue to be paid into one special fund, known as the Consolidated
Fund (CF) of the Government of the United Republic of Tanzania. Revenue not paid into this has
to be specified by law to be paid into another fund for a specified purpose. Money withdrawn from
the CF can only be used to finance expenditure: (i) authorised to be charged directly on the CF;
(ii) authorised under an Appropriation Act, as approved by Parliament; and (iii) authorised under
other Acts.
§ Article 137 provides for the preparation of estimates of revenues and expenditures for the next
financial year. After the estimates are approved, an Appropriation Bill is introduced to the National
Assembly for the purpose of authorising withdrawals from the CF for financing the expenditures
contained in the estimates. If the amounts approved are insufficient for a certain purpose, or if
funding is required for an activity not provided for in the Appropriation Act, or if money has been
spent in excess of what is provided for in the budget, or is not provided in the budget at all, then
a supplementary estimate/statement of excess shall be prepared and submitted to the Assembly
for approval. If approved, a Supplementary Appropriation Bill is prepared for the purposes of
authorising the issues of funds from the CF to meet the costs of the estimates or to pay for excess
expenditures.
§ No taxes shall be imposed unless provided for by law.
§ If an Appropriation Bill has not been approved by Parliament by the beginning of the new financial
year, then the President may authorise the issue of funds from the CF to meet the essential needs
of Government for up to four months.

§ Parliament may enact a law providing for a Contingencies Fund and authorising the President or a
minister appointed by the President to borrow money from the Fund to meet the costs of an
urgent and unforeseen need for which no funds had been provided. A supplementary estimate
shall then be presented to Parliament for approval, and, if approved, a Supplementary
Appropriations Bill shall be introduced to the Parliament to authorise the additional expenditure
and thereby ensure that funds borrowed from the CF shall be reimbursed.
§ Public debt shall be secured from the CF, including the interest charged on it.
§ Chapter 7 establishes the Controller and Auditor General and outlines the responsibilities of the
position.
31. Major changes in legislation and regulations in recent years include:
• Updating of Standing orders of the National Assembly;
• The Budget Act Cap. 439 describes the documents, contents, steps and responsibilities for the
budget and Medium Term Expenditure Framework (MTEF) and brings all finances under the
Consolidated Fund.
• The Accounting Procedures Manual (2016) reviewed to enable migration to accrual accounting.
• Tax Administration Act, Cap.438 reviewed to establish a common tax procedure by TRA and
enforce use of Electronic Fiscal Devices (EFDs).
• Local Government Finance Act Cap. 290 reviewed to increase and improve LGAs own source
revenue collection, including business licenses and property tax. Property tax collection has since
been centralized to TRA.
• Value Added Tax Act, Cap. 148 reviewed to reduce exemptions and bring in international best
practice.
• Public Procurement Act, Cap. 410 with amendments (2016) to reduce time, costs and prices for
the procurement process, to provide for a for a Public Procurement Policy Unit, and to strengthen
the complaints and appeals process.
• Government Loans, Guarantees & Grants Act, Cap.134 and regulations reviewed to establish the
Debt Management Office and introduce risk assessment requirements.
• Treasury Registrar (Powers & Functions) Act revised; Parastatal acts reviewed to harmonize with
the new TR Act. However, revised TR Act is yet to be enacted.
• Public Private Partnership Act revised to bring the PPP unit to MoFP from Prime Minister’s Office.
32. The PFM Internal Control environment in Tanzania is well defined in laws and regulations.
The Constitution Part II sets the conditions to draw moneys from the consolidated fund and
procedures for authorization of expenditure and rules for taxation as well as the role and mandate of

the Controller and Auditor General. The Public Finance Act defines roles and responsibilities of the
Minister of Finance, and Treasury as well as the Permanent Secretary, Paymaster General and
Accountant General. It also stipulates the responsibility of the Paymaster General to appoint accounting
officers for all votes and specifies their duties. The Office of the Internal Auditor General is established
in the Act which also provides for the key functions of the IAG. The Budget Act defines principles of
fiscal policies and management and responsibilities for other key officers in PFM such as the Treasury
Registrar, the Budget Commissioner and Accounting Officers. The legislation also defines the right to
prepare subsidiary regulations as well as principles for management of revenue.
33. Other key aspects of the legal framework for internal control include the following:
• The access to information Act of 2016 gives the right to all citizens of the Union to access information
under the control of information holders as well as the procedures to follow.
• The Public Audit Act defines the scope, responsibilities and duties of the Controller and Auditor
General.
• The Accounting Manual in its chapter 2 describes the roles of key actors and also has a section for
internal control and risk management that includes many of the internal control elements, such as
authorization and organizational structures, segregation of duties, ICT related controls, etc. The
manual has an elaborate description of payroll processes and management. In terms or risk
management guidelines it is less prescriptive and more elaborate methods are to be found
elsewhere, e.g. in manuals directly related to taxation, audit etc.
• The Public Finance Regulation 11 (2) requires Accounting Officers to establish and maintain an
effective system of internal control over financial and related operations.
2.4 Institutional arrangements for PFM
Table 2-3: Structure of the Entities of the Tanzania Public Sector
Central
Government
Budgetary 67 Ministries, Departments & Commissions
26 Regional Administrative Secretariats
General Extra-Budgetary 215 Executive Agencies, Funds & Boards
Government (autonomous or semi-autonomous)
Local Government 185 Local Government Authorities
Social Security 4 (National Health Insurance Fund, National
Funds Social Security Fund, Workman Compensation
Fund, Public Service Social Security Fund)
Financial 10 Financial Public Corporations (of which 8
Public commercial, including Bank of Tanzania)
Corporations Non-Financial 72 Non-financial Public Corporations (of which
32 are commercial)

34. The structure of the Tanzanian public sector is described in the table above. As noted in
Chapter 1, the focus of the assessment is on the Central Government, including the 67 ministries,
departments and commissions and 26 Regional Administration Secretariats which comprise Budgetary
Central Government and the 215 extra-budgetary units which are autonomous – being financially self-
sufficient from their own internal revenues (fees, charges and levies) or semi-autonomous – also
receiving subsidies or transfers from the Central Government via subventions budgeted by their parent
ministries, falling within Budgetary Central Government.
35. The wider general government also includes 4 Social Security Funds and 185 Local Government
Authorities, which are largely funded via transfers from Central Government but also receive 10-15%
of their funding from own revenues5, including property taxes collected on their behalf by the Tanzania
Revenue Agency (TRA). The wider public sector also comprises 10 financial and 72 non-financial public
corporations. The 72 non-financial public corporations include 40 River Basin and Water Supply &
Sanitation Authorities, which are non-profit making as well as 32 commercial public corporations. Two
of the financial public corporations (Deposit Insurance Board and the Tanzania Insurance Regulatory
Authority) are non-commercial, while the other 8 are commercial.
36. The Ministry of Finance & Planning is the principal regulatory and policy-making
institution within the Tanzanian PFM system. Its responsibilities include ‘preparing the Central
Government budget; developing tax policy and legislation; managing Government borrowings on
financial markets; determining expenditure allocations to different Government institutions;
transferring central grants to local governments; developing regulatory policy for the country's financial
sector in cooperation with the Bank of Tanzania, and representing Tanzania within international
financial institutions’. 6 The President’s Office – Planning Commission (POPC) is responsible for
developing ‘the vision and guidelines for the national economy’ and retains important functions with
regard to economic policy, economic management and research, and national development planning.
Nevertheless, since the transfer of responsibility for the Development Budget to the Ministry of Finance
in the late 1990s, MoFP retains final responsibility for resource allocation and management of the whole
national budget.
5 This ballpark estimate was provided in discussions with the President’s Office – Regional Administration & Local
Government directorate that has an oversight role over the LGAs.
6 Role and functions of the Ministry of Finance & Planning, www.mof.go.tz

3. Assessment of PFM Performance
3.1 Overview
37. This chapter presents on an indicator by indicator basis the assessment of the
effectiveness of the PFM system of the Central Government of Mainland Tanzania,
following the 2016 PEFA Framework. For each of the 31 indicators of the 2016 Framework, it
presents a score (A-D) by dimension and for the indicator as a whole, and explains the basis on which
these scores have been reached, following the methodological guidance provided by the PEFA
Secretariat in the PEFA Framework and the accompanying PEFA 2016 Handbook, Volume II, PEFA
Assessment Fieldguide, as well as Volume III, Preparing the PEFA Report 7.
38. For each indicator, this chapter also reports on the progress made in developing and strengthening
PFM systems and processes. Progress has been assessed on the basis of the information received and
analysed in order to apply the 2016 Framework and, by comparing the indicator scores with those
received in the 2017 PEFA assessment, which also applied the 2016 PEFA framework. The text boxes
at the top of each indicator present the scores by dimension and for the indicator as a whole for 2017
and 2022, providing a summary explanation of the justification of the score and the reasons for changes.
Annex I presents a table summarising the scores for all the 31 indicators against the 2016 Framework,
comparing the 2017 and 2022 assessments.
39. A good PFM system should enable the Government to implement its policies as intended and to pursue
its development goals effectively. In particular, a good PFM system should enable three high-level
objectives to be achieved:
§ Maintenance of aggregate fiscal discipline, through effective control of the total budget
and prudent management of fiscal risks;
§ Strategic allocation of resources, by planning and executing the budget in line with
Government priorities; and
§ Efficient service delivery, by applying budgeted revenues efficiently so as to attain the best
levels of public services achievable with the available resources.
40. PEFA identifies seven pillars of performance in an open and orderly PFM system that are essential to
achieving these objectives. The 31 indicators of the framework are grouped according to these seven
pillars:
7 These documents taken together provide a full description of the methodology applied. They are available at
www.pefa.org.

I. Budget reliability (PI 1-3) – The budget is realistic and is implemented as intended. This is
measured by comparing actual revenues and expenditures with the original budget approved by
the Legislature;
II. Transparency of public finances (PI 4 -9) – Information on PFM is comprehensive, consistent
and accessible. This is achieved through comprehensive budget classification, transparency of all
Government revenues and expenditures including inter-governmental fiscal transfers, published
information on service delivery performance and ready public access to fiscal and budget
documentation;
III. Management of assets and liabilities (PI 10-13) – Assets and liabilities are effectively managed
so as to ensure that public investments provide value for money, assets are recorded and managed,
fiscal risks are identified, and debts and guarantees are prudently planned, approved and monitored;
IV. Policy-based fiscal strategy and budgeting (PI 14-18) – the fiscal strategy and the budget
are prepared with due regard to Government fiscal policies and strategic plans and on the basis of
adequate macroeconomic and fiscal projections;
V. Predictability and control in budget execution (PI 19-26) – The budget is implemented
within a system of effective standards, processes and internal controls, ensuring that resources are
obtained and used as intended;
VI. Accounting and reporting (PI 27 – 29) – accurate and reliable records are maintained, and
information is produced and disseminated at appropriate times to meet decision-making,
management and reporting needs;
VII. External scrutiny and audit (PI 30-31) – Public finances are independently reviewed and there
is external follow-up on the implementation of audit recommendations for improvements to be
introduced by the Executive.
41. This chapter is complemented by Chapter 4, which presents an integrated analysis of the overall PFM
system, assessing how the performance of PFM systems is affecting the Government’s ability to deliver
the three high-level objectives of a good PFM system. The content of this chapter is also summarised
in Annex I, which presents, in the form of a matrix, the scores for each of the 31 indicators and their
component dimensions, together with a brief justification of the scores assigned. Annex 1 also
summarises in tabular form the performance changes observed, indicator by indicator, between the
2017 PEFA assessment and this 2022 assessment.

3.2 Pillar I – Budget Reliability
42. The first pillar of the PEFA framework, comprising three indicators, assesses the overall reliability –
and thus the credibility – of the national budget. It considers the extent to which the budget is realistic
and is implemented as intended. This is measured by comparing actual revenues and expenditures (the
immediate outcomes of the PFM system) with the original budget, approved by the Legislature. Details
of the calculations developed to assess budget reliability are presented in Annex V.
PI-1: Aggregate Expenditure Out-turn
43. This indicator measures the out-turns of aggregate actual expenditure as compared with the amounts
originally approved in the Budget by the Legislature. It includes all Central Government expenditures
voted within the Budget, including development projects financed by grants or concessional loans as
well as interest payments on debt. Actual expenditure out-turns may deviate from the originally
approved budget for reasons related neither to the effectiveness of control in execution nor to the
accuracy of budget forecasts – for example, because of the COVID pandemic from 2020, and the
resultant sharp policy changes. The calibration of this indicator therefore accommodates one unusual
or “outlier” year and assesses the extent of deviations from the approved budget occurring in the two
best years out of the last three fiscal years.
Previous New Performance

Indicator and Explanation for 2022
Score Score Change and
dimensions Score
2017 2022 rationale
Aggregate expenditure Deterioration in score,
outturn was below 85% of because previously the
PI-1: Aggregate the approved budget in two expenditure outturn was
Expenditure Out- C D out of three of the last three between 85% & 115% of
turn fiscal years under this the approved budget in 2
assessment (FY18/19=79% of the previous 3 fiscal
and FY19/20=84.1%). years.
Table 3-1 Aggregate Budgeted Expenditure vs/ Actual Expenditure 2018/19 – 2020/21
FY 2018/19 FY 2019/20 FY 2020/21

(Tsh Millions) Budget Actual Budget Actual Budget Actual
Allocated expenditure 22,462 17,450 23,344 18,480 24,392 30,520
Public Debt (including principals) 10,014 8,251 9,730 9,394 10,488 9,343
Contingency non-emergency 44 - 76 - 80 -
Total expenditure 32,520 25,700 33,149 27,874 34,960 39,863
Overall (PI-1) variance 79.0% 84.1% 114.0%
Source: Budget Management Department, Ministry of Finance and Planning
44. This indicator has been assessed based on the data available from the Centralized Budget and
Management System (CBMS) of the Budget Management Department (BMD) of the Ministry of Finance
& Planning (MoFP) for the fiscal years 2018/19, 2019/20 and 2020/21. This source records budget
allocations and budget expenditures on a cash basis; data on expenditures may therefore differ from

the information presented in the audited financial statements of the CAG, which are presented on an
accrual basis.
45. As may be seen from Table 3-1, aggregate expenditures comprised 79 %, 84.1 % and 114% of the
originally budgeted aggregate expenditure in 2018/19, 2019/20 and 2020/21 respectively. As aggregate
expenditure out-turn was outside of the 85% -115% range of the approved budget in two out of the
three fiscal years of this assessment, this indicator scores a “D”.
Progress since last assessment and key reforms under implementation or planned
46. The deviations of aggregate expenditure from the approved budget observed in the
previous PEFA assessment are lower than those recorded in this evaluation. In particular,
within the current evaluation period, there were significant levels of under-expenditure against the
approved budget in 2018/19 and 2019/20. As a result, the score against this indicator has declined
from a “C” in 2017 to a “D” in 2017. This has shown a steady decline since the 2013 PEFA assessment
where the score was a B.
47. In 2020/21, expenditures were higher than estimates by 14%. This was in large part due to unexpected
and therefore unbudgeted expenditures supported by international financing inflows to counter the
effects of the COVID-19 pandemic in the country, including US$ 14.3 million going to the Catastrophe
Containment and Relief Trust from the IMF announced in June 2020. What is interesting is that, in
terms of the PEFA criteria for budget reliability, this was the best of the last three fiscal years and
performance would have scored a “C” if out-turns had been above 85% in either of the two preceding
years.
PI-2 Expenditure composition outturn
48. This indicator measures the extent to which reallocations between the main budget categories during
execution have contributed to variance in expenditure composition. It examines whether the out-turns
of aggregate actual expenditure by institution (or function) and by economic classification reflect the
amounts originally approved in the Budget by the Legislature. As is the case for indicator PI-1, scores
are based on the two better performing years of the last three completed fiscal years.
49. The measurement of indicator PI-2 requires a comparison of the expenditure executed in relation to
the original budget, at a disaggregated level. When the composition of expenditure varies considerably
in relation to the original budget, the budget is no longer a useful statement of intent with regard to
Government policies. Moreover, frequent changes in the composition of the budget during the period
of budget execution undermine the predictability of budgets and complicate the processes of
programming and managing procurement, staff recruitment and service delivery.


Indicator Explanation for 2022
and dimensions Score
2017 2022 rationale
PI-2 Expenditure M1 Scoring Method No Change
D+ D+
composition outturn (WL)
(i) Expenditure Variance in expenditure
composition outturn by composition by
function (or by administrative classification
was more than 15% in each of
administrative D D No Change
the last three years (25.3%,
classification)
33.1% and 48.8% in 2018/19,
2019/20 and 2020/21,
respectively)
(ii) Expenditure Variance in expenditure
composition outturn by composition by economic
economic classification classification was more than
C C 10% but less than 15% in two No Change
of the three most recent fiscal
years - FY18/19 (13.6%) and
FY20/21 (12.4%)
(iii) Expenditure from Contingency allocations were
contingency reserves. transferred and spent within
A A the budget line items in need.
No Change
As a result, there were no
direct expenditures against
the contingency fund itself.
(i) Expenditure composition outturn by function or institution
50. The measurement of this dimension requires an empirical assessment at a disaggregated level of actual
expenditure implemented against the original budget. This may be done either for functions or
administrative institutions. The assessment here was done against the administrative classification
represented by the ministerial votes.
Table 3-2: Expenditure Composition Variance by Institution (Vote), 2018/19 – 2020/21

Votes 2018/19 2019/2020 2020/21
Defence 33% 33% 18%
Ministry in charge of Works 34% 94% 16%
Ministry of Education, Science and Technology 10% 15% 19%
Ministry of Energy 19% 28% 22%
Ministry of Health, Community Development, Gender, Elderly and Children - Health 10% 20% 7%
Ministry of Home Affairs-Police Force 53% 39% 12%
Ministry of in charge of Transport 52% 44% 48%
Ministry of Water 16% 2% 57%
National Service 52% 127% 16%
President's Office - Regional Administration and Local Government Authorities 12% 14% 50%
President's Office and Cabinet Secretariat 32% 30% 37%
RAS Arusha 6% 1% 33%
RAS Dar es Salaam 36% 20% 47%
RAS Dodoma 56% 4% 32%
RAS Kagera 28%
RAS Kilimanjaro 9% 17%
RAS Mbeya 4% 15% 21%
RAS Morogoro 1% 20% 28%
RAS Mwanza 6% 5% 32%
RAS Tanga 5% 13% 31%
The Treasury 63% 65% 61%
All other ministries 6% 18% 97%
Source: Ministry of Finance and Planning

51. The calculations for this dimension include an adjustment to remove the effects of changes in aggregate
expenditure. This is achieved by adjusting the budget outturn for each institution by the proportional
difference between the aggregate approved budget and the aggregate expenditure outturn. The
remaining deviation within each category is based entirely on the absolute value of changes that
occurred in between institutions, net of any change resulting from aggregate expenditure shifts. The
detailed tables showing these calculations are presented in Annex V.
Table 3-3: Variance from Budget in Expenditure composition outturn by institution
Composition variance by
Fiscal Year administrative
classification. (PI-2)
2018/2019 25.3%
2019/2020 33.1%
2020/2021 48.8%
52. The three-year period 2018/19, 2019/20 and 2020/21 presents a considerable composition variance by
administrative classification at 25.3%, 33.1% and 48.8%. Thus, the score for this dimension is "D".
53. Notably, the variations have increased across the board since the 2017 assessment and doubled for the
last years of comparison (2015/16 and 202/21), although a significant part of the variation in 2020/21
can be attributed to budget enhancements within year to cater for the effects of COVID-19.
(ii) Expenditure composition outturn by economic classification
54. This dimension measures the difference between the original approved budget and end-of-year out-
turn in expenditure composition by economic classification, including interest on debt but excluding
contingency items. The government has adopted the GFS 2014 standards and the codes have been
unified across government for recurrent and development expenditures. It is consistent at the four
levels of GFS 2014.
Table 3-4: Variance from Budget in the expenditure composition outturn by economic
classification, 2018/19 to 2020/21
Variance by Economic Classification
Economic head 2018/19 2019/20 2020/21
Compensation of employees 15.1% 20.4% 18.8%
Use of goods and services 29.0% 30.2% 26.2%
Consumption of fixed capital 0.0% 18377.8% 0.0%
Interest 24.2% 3.6% 0.2%
Subsidies 29.2% 43.7% 35.1%
Grants 4.8% 6.9% 4.4%
Social benefits 25.9% 4.3% 27.9%
Other expenses 33.9% 84.9% 50.9%
Variance 13.6% 15.2% 12.4%
Source: Ministry of Finance and Planning

55. Variance along economic classification performed slightly better than by administrative function in the
last three years, and slightly better than performance from the assessment in 2017. As variance in
expenditure composition by economic classification was less than 15% in FY18/19 (13.6%) and FY19/20
(12.4%), this second dimension therefore scores a “C”.
(iii) Expenditure from contingency reserves
56. Dimension (iii) measures the average amount of expenditure actually charged to the contingency vote
over the last three years. This dimension recognizes that it is prudent to include an amount to allow
for unforeseen events in the form of a contingency vote, although this should not be so large as to
undermine the credibility of the budget. Moreover, for reasons of transparency, expenditure should
not actually be charged to the contingency item but rather transferred to the votes/ items where
additional allocations are required and then expensed against those votes/ items.
57. In Tanzania, the contingency item is identified as “Contingencies Non-Emergency” (code 290700). It is
general practice to ensure that expenditure is not charged to this item but rather re-allocated to the
votes/ items where additional expenditure is required. As a result, expenditure against this contingency
item during the last three fiscal years was nil. In addition, as the contingency allocation is less than 3%
of the approved budget in the last three years, the score for dimension (iii) is an “A”.
58. Variance in the budget makes credibility a challenge especially if what is approved cannot be viewed as
stable by implementers and other stakeholders - including the public - as a useful statement of intent
regarding spending programmes and policies (see Table 3-3). However, the compositional variance by
administrative classification (i.e. by Vote) continues to demonstrate high variability similar to the last
assessment – at 25.3%, 33.1%, and 48.8% in 2018/19, 2019/20 and 2020/21 respectively compared to
19.2%, 31.5% and 24.2% in 2013/14, 14/15 and 15/16, respectively. With regard to the compositional
variance by economic classification, consumption of fixed capital was recorded in only two years (actual
expenditures 2018/19 and approved estimates 2019/20) which is why the figures appear high. Interest,
Subsidies and Other Expenses also show high variation.
59. Comparing the 2017 and 2022 scores, there has been no apparent change in the period,
scoring “D+” in both assessments. The overall average composition variance for administrative
composition has gone from 24.97% in the 2017 assessment to 35.7% in the 2022 assessment. Overall
average composition variance for economic classification has not changed significantly from 13.3% in
the 2017 assessment to 13.7% in the 2022 assessment. Thus the economic shares allocated in those
years of assessment are similar, but the administrative allocations are varied, mostly due to variations
in 2019/20 and 2020/21, each of which were affected by the Coronavirus pandemic.

PI-3 Revenue outturn
60. This indicator measures the extent to which aggregate revenue receipts reflect the amount originally
approved in the Budget by the Legislature. A correct revenue forecast is a key element for the
preparation of a credible budget. Optimistic revenue forecasts can lead to expenditure allocations
which are not financeable and thus to larger budget deficits, unless timely expenditure cuts can be made
in response to under-collection of revenue. On the other hand, an under-estimation of revenue
collections could lead to the resources from higher than budgeted revenues being used for
expenditures that were not well planned and programmed or that have not been subject to the scrutiny
of the budget process.
61. Revenue outturn can deviate from the originally approved budget for reasons unrelated to the accuracy
of forecasts, such as a major macroeconomic shock like the COVID-19 pandemic. For this reason, the
scoring calibration allows for one outlier year to be excluded. The focus is thus on the deviations from
the forecast that occur in the two “best” years of the three years covered by the assessment.
62. The indicator focuses on both domestic and external revenue, which comprises taxes, grants, and other
revenues including those from natural resources. External financing through borrowing is not included
in the assessment of this indicator. This means that grants from Development Partners – both budget
support and project grants – are included in the revenue data used for the indicator rating, but
borrowing on concessional terms from Development Partners is not.
63. The sources of data for this indicator for actual revenue in 2020/21 were not consistent and the figures
demonstrated significant variation. While the revenue data for 2018/19 and 2019/20 were derived from
the CBMS system, the actual revenues in 2020/21 were derived from the annual budget execution
report of 2020/21. Because of this, the revenue line categories did not match up one to one with the
budget as derived from the CBMS. Thus in order to disaggregate the data on revenue collections in
line with the categories provided in the CBMS, revenue aggregates were divided according to the shares
they represented within the budget estimates so as to derive actual revenues by category.


Indicator
Score Score Explanation for 2022 Score Change and
and dimensions 2017 rationale
2022
PI-3 Revenue No Change
D+ D+ Scoring Method M2 (AV)
outturn
(i) Aggregate revenue Actual revenue was less than 92%
outturn of budgeted revenue in not only
two, but all of the last three years
D D No change
(85.2%, 83.5% and 90% in
FY18/19, FY 19/20 and FY 20/21,
respectively)
(ii) Revenue composition Variance in revenue composition
outturn in two of the last three years
under review was less than 15%.
C C No change
(7.6%, and 11.6% and 53.3% in
FY18/19, and FY 19/20,
respectively)
(i) Aggregate Revenue outturn
64. The data received from MoFP show that receipts of Government revenue in the period under review
have been consistently below the targets forecast in the initially approved annual budget (See Annex
IV, which presents the full details of the calculations for each year.)
65. In the last three fiscal years, collections averaged 87.5% of the total revenue budgeted. In 2020/21,
deviation from the original budget was more satisfactory (90%) than the previous two years (85.2% and
87.3% in 18/19 and 19/20, respectively). However, this is largely due to the fact that the government
received Tsh 1.7 trillion in excess of what was budgeted in the form of grants from foreign governments
and international organizations, due to early COVID-19 support flowing into the country. However,
as actual revenue was less than 92% of budgeted revenue in all of the last three years, this
dimension obtains a "D" rating.
(ii) Revenue composition outturn
66. The second dimension seeks to capture the quality of forecasts and the ability of the Government to
collect each category of revenues as intended. As may be seen from the detailed calculations presented
in Annex V, variance in revenue composition was 7.6%, 11.6% and 53.3% in 2018/19, 2019/20 and
2020/21, respectively. Therefore, variance in revenue composition was less than 15% in two of
the last three years, which scores a “C” for this dimension.
67. Revenue outcomes overall have deteriorated since the last assessment. Aggregate revenue
outturn in all three years was less than 92% whereas in the 2017 assessment at least one year
performed better. Further, revenue composition variance in this assessment surpassed that of the 2017
assessment in all years except one (2018/19) when it performed at 7.6%. However, the effect of

COVID-19 on economic activity in part of 2019/20 and 2020/21 served to depress revenue collections,
which may partly explain the poor performance.
68. Over the three-year period, performance has been poor with regards to the consistency
of domestic revenue collections with respect to budget forecasts. Across the board, domestic
revenue forecasts have underperformed compared to budget estimates on average by 22% in 2018/19,
27% in 2019/20 and 34% in 2020/21. Revenue forecasting should be strengthened in order to better
deliver on planned activities as per the budget. We discuss in further detail the quality of revenue
administration, the reforms underway and the challenges faced in relation to indicator PI- 19, Revenue
Administration.
3.3 Pillar II – Transparency of Public Finances
69. The following indicators address questions relating to the transparency of public finances. Specifically,
they consider the consistency and comprehensiveness of reporting, as well as the accessibility of such
reports to the public. The pillar includes a new indicator (PI-8) which was introduced into the 2016
PEFA assessment framework, relating to the availability of information on service delivery performance.
PI-4 Budget Classification

Indicator
Score Score Explanation for 2022 score Change and
2022
An economic classification Apparent
consistent with GFSM 2014 is deterioration in the
applied to all revenues and score but this is due
recurrent expenditures but not to to a mis-scoring in
development projects, due to the 2017. The factors
PI-4 Budget C D difficulties of its application to constraining
Classification externally funded projects. A improvement in the
framework for applying the score pertained then
COFOG functional codes and for as now.
applying programme codes is in
place but it is not yet applied.
70. This indicator measures the extent to which the Government budget and accounts classification is
consistent with international standards. A robust classification system allows transactions to be tracked
through the budget formulation, execution and reporting cycle according to administrative units (votes
and sub-votes), economic categories and either functions/ sub-function or programmes. The
classifications should be embedded in the Government’s chart of accounts to ensure that every
transaction can be reported against each of the classifications and to help ensure that they are reliably
and consistently applied.

71. The GoT Chart of Accounts and the related Budget classification system is explained in detail in the
Accounting Procedures Manual, produced by the Accountant General’s Department8. This provides
the framework for an extensive classification system including the following components:
§ Vote: the spending or collecting unit within central government.

§ Sub-vote: the spending unit under the vote
§ Agency/council: the implementing entity outside vote with its own organisational structure
§ Cost centre: agencies, departments or divisions relating to a specific ministry to which
costs can be allocated
§ Geographical: the department or section within the cost centre
§ Facility: the location where the fund will be utilized
§ Sub-budget class: exchequer types including Other Charges (OC), Personnel Emoluments
(PE), Development (DEV)
§ Project: Project number for every project (found in the development budget Volume IV
of the Budget Books)
§ Service Output: The output produced by the service provider attached to budget
§ Objective/Target/Activity: predefined objectives, targets and activities analysed by the
MTEF module to fulfil visions and missions
§ Budget/Fund Type: the nature of the fund - recurrent, development, deposit expenditure
and revenue
§ Functional classification: categorizing expenditure using the Classification of the Functions
of Government (COFOG)
§ Sources of Funds
§ GFS-Input: revenues, expenditures, assets and liabilities using the GFS 2014 framework
72. Thus a coherent framework exists for comprehensive classification of revenues, expenditures, assets
and liabilities, although not all of these classification systems are, as yet, utilized systematically. In
relation to the four main types of classification addressed by this indicator, the degree of usage may be
summarized as follows:
§ Budget Formulation: The Government uses administrative classifications consistently

across budget formulation in all four volumes of the Budget9 and all financial reports. Economic
classification is only used in the recurrent estimates and local government estimates and not
in the Development Budget estimates. The economic classification is based on GFS coding and
is used at the 5 digit level. Functional (programme) classification is not consistent across votes
8 Accountant General’s Department (2021), Accounting Procedures Manual, pp. 19-22.

9 The Central Government budget is presented in four Volumes: I) Revenue Estimates; II) Recurrent expenditure
estimates for MDAs; III) Recurrent expenditure estimates for Regions and LGAs; IV) Development expenditure
estimates.

nor is it presented in the COFOG categories or subcategories as per the Accounting

Procedures Manual for 2021.
§ Budget Execution: The Government uses administrative and economic classifications
consistently across all phases of budget execution for recurrent expenditures. It also uses a
functional classification but it is not consistent with COFOG categorization, in particular at
sub-function level.
§ Reporting: The Budget Execution Reports are currently only reporting in Annex A
(Revenues) by economic classification. Annexes B through E which provided a breakdown by
classification (though not based on GFS) and by vote were not provided in the BERs of
2020/21. The CBMS system can also produce reports using the COFOG classification on
request, but for its regular reporting it does not use reports using COFOG classification.
§ The economic classification is fully consistent with GFSM 2014, and it is applied
throughout the accounting system and to all revenues and recurrent expenditures. It is not
applied to Development projects (as listed in Volume IV), which are classified by organizational
classification (Vote/ sub-vote) , by project number and source of funds but without an itemized
breakdown of expenditure, following the economic classification. This is because the majority
of projects are externally funded and follow the itemized expenditure classifications of the
funders, which are not consistent with the Tanzanian economic classification nor with GFSM
2014.
73. Thus, an organizational/ administrative classification is applied, comprehensively and consistently. An

economic classification consistent with GFSM 2014 is applied to all revenues and recurrent
expenditures but not to development projects, due to the difficulties of its application to externally
funded projects. A framework for applying the COFOG functional codes and for applying programme
codes is in place but is not applied in regular reporting structures. This indicator is therefore
scored a “D”.
74. There has been no material change in this indicator since the 2017 assessment. The score
would appear to have declined from a “C” to a “D” but a more careful analysis suggests
that the 2017 assessment mis-scored this indicator. The low score is attributable to two key
factors: 1) the fact that the economic classification is not applied to the projects in the Development
Budget; and 2) the fact that neither a comprehensive functional classification nor a comprehensive
programme classification are yet in place. These factors pertained both in 2017 and in 2021/22.
75. The Accounting Procedures Manual was revised in 2021 and has an updated economic classification
structure – with GFS now going up to five digits, but this has been implemented for recurrent
expenditures but not yet for development expenditures. The functional coding outlined in the manual
and aligned to COFOG has not yet been implemented in its formulation, execution and reporting
structures.

76. There is scope for providing training and supervision to finance officers to ensure that the
functional classification is applied correctly in expenditure registration and thus in
reporting. The Budget Department also has plans to further develop the use of programme classifiers
as part of reforms aimed at moving to a Programme Based Budget (PBB). However, they have not yet
moved to the PBB framework as of 2021.
PI-5 Budget Documentation
77. This indicator assesses the comprehensiveness of the information provided in the documentation for
the Executive’s Budget Proposal (EBP) submitted to the Legislature, as measured against a specified list
of basic and additional elements. The assessment includes four basic elements of budgetary/ fiscal
information that are considered crucial to enable the Legislature and other relevant decision-makers
to understand the Government’s fiscal position and the implications of the proposed revenue,
expenditure and borrowing measures in the Executive’s Budget Proposal (EBP). Eight additional
elements of budget documentation are considered good practice.

2017 2022 rationale
Budget documentation is
presented in the Budget
No material change:
Speech, the four Volumes of
coverage of additional
the Budget and the Plan &
elements has
Budget Guidelines submitted in
PI-5 Budget increased from 4 to 6
D D advance of the Budget.
Documentation of the 8 listed but, as
However, only 2 of the 4 basic
in 2017, only 2 of the
elements of information are
4 basic elements are
fulfilled, although 6 of the 8
fulfilled.
additional elements are
present.
78. The scoring of this indicator has been based on an analysis of the budget documentation submitted by
the Executive to the Legislature for the 2021/22 fiscal year. This documentation comprises the Budget
Speech of the Minister for Finance & Planning and the 4 Volumes of the Budget: I) Revenue Estimates;
II) Recurrent expenditure estimates for MDAs; III) Recurrent expenditure estimates for Regions and
LGAs; IV) Development expenditure estimates.
79. In addition to the formal budget documentation, the Planning & Budgetary Guidelines (PBG) are
typically presented to Parliament in February. The PBG includes a review of plan and budget
implementation for the past fiscal year and the first half of the current year, a macro-economic outlook
for the next budget year and over the medium term, and a Resource Envelope and Expenditure
Framework for the three years of the MTEF. In effect, as well as instructions for budget and MTEF
formulation, the PBG thus constitute a ‘Budget Strategy Paper’. Given that they are presented to the
Legislature shortly before the Executive’s Budget Proposal (EBP), following the PEFA guidelines, the
assessment team have also considered the PBG as part of the budget documentation.

80. Table 3-5 presents the team’s assessment of whether the basic and additional elements categorized for
this indicator are present in the budget documentation. As may be seen, the current budget
documentation fulfils 6 of the 8 ‘additional elements’ but only 2 of the 4 ‘basic elements’. The score
for this indicator is therefore a “D”.
Table 3-5: PI-5: Assessment of 2021/22 Budget documentation
Budget Documentation Available Notes

Elements 2021/22
Basic Elements
1. Forecast of Fiscal Yes The budget speech indicates a fiscal deficit ceiling of 3% of GDP in
Deficit/ Surplus line with EAC macroeconomic convergence criteria. As mentioned
in the 2017 PEFA assessment, a GFS-consistent table showing its
derivation is missing and would be desirable.
2. Previous FY budget Yes Previous Budget Outturn for 20219/20 and current 2020/21 is
out-turn in same shown in the same format as the budget proposal and the figures
format as EBP are comparable across years at the same aggregate level (Vote).
3. Current FY budget in No Volumes I – IV show only the approved estimates for the current
same format as EBP year, not the revised budget nor the projected out-turn. The
Budget Speech and the PBG present the likely outturn for the
current year but only in aggregated form.
4. Aggregated budget No The aggregated data for revenue is in Volume 1 by Vote but with
data for Revenue & no further breakdown, and the aggregated data for expenditures
Expenditure for main are in Volumes II-IV by Vote. There is no presentation of revenue
by categories nor of expenditure by the main heads of the
classification heads,
economic classification. The Budget Speech presents only a highly
with breakdown
aggregated summary.
Additional Elements
5. Deficit financing & No The Budget Speech does not provide a clear breakdown of deficit
anticipated financing nor its anticipated composition. The budget frame shows
composition the total resources expected by the Government, but does not
elaborate what the specific financing for the deficit will be. The
Budget Speech and the PBG in the ‘budget frame’ provide details
of anticipated domestic borrowing and foreign non-concessional
borrowing but they merge concessional loans and grants and hence
total borrowing is not clear. Here, a GFS-consistent presentation
would be useful.
6. Macroeconomic Yes The budget speech presents the macroeconomic assumptions for
assumptions GDP growth and inflation, and the PBG additionally includes
assumptions for interest rates and key exchange rates.
7. Debt Stock, including Yes The Debt stock is provided in the Budget Speech as well as new
details for start of domestic and external debt. The Debt Sustainability Analysis
current FY figures and ratios from the preceding November are also included.
However, it is not provided in a GFS format.
8. Financial Assets, No No information on the stock of CG financial assets is provided in

including details for the Budget documentation, although it is contained in the audited
start of current FY CG financial statements.

Budget Documentation Available Notes

Elements 2021/22
9. Information on Fiscal Yes Section IV of the Planning and Budgeting Guidelines describes fiscal
Risks, including risks arising out of guarantees and unexpected lawsuits, although it
contingent liabilities does not include documentation on the potential longer-term fiscal
risks of Public-Private Partnerships (PPPs).
10. Budget implications of Yes The Budget Speech includes a section detailing new revenue
new policies measures and their expected fiscal impact (including managing tax
laws and improving ICT systems), although a summary table is not
presented. Estimates of the anticipated savings from steps to
control expenditure are not presented.
11. Documentation on Yes The PBG provides fiscal estimates on revenues and expenditures
medium term fiscal in the medium term economic framework, alongside an
forecasts explanation of the same.
12. Quantification of tax Yes The Budget Speech discusses planned exemptions and indicates a
expenditures total expected reduction in revenue as a consequence.
(exemptions)
81. The quality and comprehensiveness of the Budget documentation has improved modestly
since the 2017 PEFA assessment. In 2017, it was scored as a “D” because 2 of the basic elements,
and 4 of the additional elements were available. In this assessment, the two same basic elements are
achieved, and a further two of the additional elements are also achieved. While this is progress, the
main determinant of change is compliance with what are considered the basic elements.
82. The data necessary to improve the comprehensiveness of the information presented in
the Budget documentation is readily available and relatively simple to incorporate. For
example, the budget and accounting systems produce regular reports based on the revised budget
allocations for different Votes and expenditure items and it would not be complicated to include these
data in the Budget documentation, instead of simply the approved budget estimates as at present.
Similarly, the Policy Analysis Division (PAD) and the Budget Management Directorate (BMD) of MoFP
produce in-year reports on revenue and expenditure according to the main heads of the economic
classification, thus it should be a simple matter to include similar summary tables in the Budget
documentation. Discussions between the authorities and the IMF normally centre on the review of CG
fiscal operations based on a GFS-consistent table, which again could easily be included in the Budget
documentation.
83. This guidance was provided in the 2017 PEFA assessment, but no improvements to date have been
achieved. An update of the current presentation format of Budget documentation would be advisable
because revisions could be introduced, without any apparent difficulty, which would serve to
significantly improve the quality of information available to the Legislature and the general public.

PI-6 Central Government operations outside financial reports
84. This indicator measures the extent to which there are significant Central Government revenues and/or
expenditures which are not captured in the financial reports of Central Government. Government
financial reports should cover all budgetary and extra-budgetary activities of Central Government in
order to allow for a complete picture of revenue and expenditure. This is essential for aggregate fiscal
discipline and also to ensure that all the resources available to Government are used in line with given
policies and priorities. Wherever the revenues and expenditures of extra-budgetary units are
significant, it is therefore essential that these should be captured at least in the ex post financial reports
of Central Government.

Indicator Explanation of 2022
2017 2022 rationale
PI-6 Central Government
B A Scoring Method M2 (AV) Improvement
operations outside
financial reports
The historical sources of Performance has
under-reporting of improved due especially
expenditures have been to the improved capture
largely addressed. Although of expenditures from
some under-reporting of non-tax revenues, and
expenditures from grant- to a lesser extent from
financed projects may have the improved capture of
(i) Expenditure outside continued, there is no audit or expenditures from
B A
financial reports other evidence of its value. grant-financed projects,
Assuming an under-reporting through the newly
rate of 30% of the value of introduced “D-fund”
grant-financed project system. These
expenditures, the overall level improvements reduced
of unreported expenditure is unreported expenditure
estimated to be 0.8 % of total from an estimated 4% in
expenditure for 2019/20. 2017 to 0.8% in 2019/20.
Most revenue collection Performance has
functions are centralised improved significantly
within TRA (see PI-19) and due to the effective
the non-tax revenues of capture of non-tax
MDAs are now controlled by revenues via the GePG,
being paid through the GePG. and the improved
(ii) Revenue outside Unreported disbursements by coverage of revenues
C A
financial reports grant-financed development from grant-financed
projects comprise the main projects, through the D-
source of unreported fund system.
revenues. These are Uncaptured revenues
estimated to comprise 0.87% fell from an estimated
of total revenue for 2019/20. 5.7% of total revenue in
2017.
All extra budgetary units
submit annual financial
reports to Government; not
(iii) Financial reports of all of these submit within No change in this
B B
extra-budgetary units three months of the end of dimension.
the fiscal year but most of
them do submit within 6
months.

85. In Tanzania, there are three main types of central Government operations, which are not fully executed
within the MUSE/ Epicor system and the corresponding framework of financial reporting. Below, we
review the available evidence on the coverage of these expenditures and revenues within the financial
reports of Central Government:
a) Expenditures by the extra-budgetary units of Central Government, in particular those

financed through internally generated revenues;
b) Expenditures by MDAs financed by Non-Tax Revenues (NTR); and
c) Development expenditures financed from external project grants, which do not use the
Single Treasury Account.
86. The consolidated financial statements for 2019/20 include a listing of 215 extra budgetary units of
Central Government. These comprise statutory bodies – such as Institutes, Boards, Commissions and
Tribunals – and organisations that operate as executive agencies, such as the universities and teaching
hospitals. All of these extra-budgetary units have operational autonomy and manage their expenditures
directly. Their operations are funded by their own internally generated funds (fees, charges, etc.) and/
or by transfers which they receive from their ‘parent ministries’ in the form of subventions.
87. Transfers and subventions to extra-budgetary units are budgeted within the relevant Votes and Sub-
Votes of the ‘parent ministry’, stating the beneficiaries and aggregate values of these transfers.
However, the intended use of these funds (in terms of the division between items of the expenditure
classification or across budget programmes) is not presented in the Budget. Similarly, the actual use of
funds is not reported in in-year budget execution reports, although the value of transfers made and the
beneficiary is presented.
88. On the other hand, all extra-budgetary units are required to submit consolidated financial statements
to the Accountant General and to the CAG within three months of the close of the fiscal year. In
interviews with the PEFA assessment team, both the ACGEN and CAG confirmed that the compliance
with this requirement is complete, although it was reported that some of these units submit their
financial statements later than the 3-month deadline, but always within 6 months. Our analysis of the
2019/20 consolidated financial statements confirmed that accounts for all 215 units were
included.
89. The reports of the CAG on the consolidated financial statements of the extra-budgetary units should
provide a reliable indicator of the extent of under-reporting10.Although there is a common perception
that these institutions under-report the revenues collected and the corresponding expenditures, there
is no evidence to support this. The CAG’s Annual General Report on Central Government included
audits of 92 extra budgetary units in 2018/19. Although some of these received qualified or adverse
10 The consolidated financial statements of the extra budgetary units should report on all revenues received and on
all expenditures undertaken, whether financed from own revenues or transfers.

opinions, none of these related to under-reporting of revenues or expenditures. In summary,

expenditure by the extra-budgetary units of Central Government appears to be comprehensively
reported.
90. A significant proportion of non-tax revenue (NTR) is collected directly by MDAs, and in the past NTR
collections constituted an important source of unreported revenues and expenditures. However, there
have been two important changes in systems and procedures over the past five years that have meant
this is no longer the case:
§ Firstly, the Minister of Finance in his Budget Speech for 2016/ 17 declared that the
retention scheme – through which MDAs were previously entitled to retain a proportion
of their NTR collections - would be suspended and that from July 2016 all revenues would
have to be submitted directly to the Consolidated Fund, with subsequent disbursements
to each Vote based on the approved budget. This new system has continued to be
implemented up to now.
§ Secondly, the establishment of the Government Electronic Payment Gateway (GePG) from
2018/19 onwards, backed by the legal requirement for all public monies to be collected
through this system11, has meant that the majority of payments for government services
of different kinds are now made electronically and are credited almost instantly to the
Consolidated Fund. As of July, 2020, the GePG system had been implemented in 660 public
institutions, integrated to the payment systems of 28 commercial banks and 6 mobile
money operators12.
91. As a result of these developments, the scope for retention of NTRs by MDAs, and therefore for using
these revenues for unreported expenditures, is now very limited. The assessment team were unable
to obtain precise figures on the proportion of NTRs still paid in cash but, with many public institutions
no longer accepting cash payments, it is clear that this proportion is very low.
92. Development projects financed by external grants are another potential source of unreported Central
Government revenues and expenditures. Many such projects are executed through commercial bank
accounts and not through the Single Treasury Account. Although GoT finance regulations require
expenditures of such projects made from commercial bank accounts to be regularised and reported
within the IFMIS system through the use of “dummy vouchers”, past PEFA assessments reported that
compliance with these finance regulations was less than satisfactory. However, staff of the External
Finance Department of MoFP and also a number of Development Partners advised the assessment
11 Section 6A of the Public Finance Act, 2001, as amended by Section 44 of the Finance Act, 2017 requires all public
monies to be collected through the GePG.
12 Mtebe J. & Sausi J., (June, 2021), Revolutionalisation of Revenue Collection with Government e-Payment Gateway System
in Tanzania: A Public Value creation perspective, East African Journal of Science Technology and Innovation.

team that this gap in reporting had been largely closed through the launch of the “D-Fund” system in
2020/21.
93. The D-Fund is a virtual account, in which all externally financed project disbursements are required to
be reported by project implementing agencies, following the instructions of an MoFP Circular and the
accompanying Business Process Manual. In line with these procedures, all requests for disbursement
are required to be approved by the MoFP before disbursements are then made from overseas bank
accounts (for most grant-financed projects) or from Bank of Tanzania Special Accounts (for
concessional loan financed projects) either to pay invoices for service suppliers or to replenish project
funds in commercial bank accounts, in which case an accompanying annual work plan and disbursement
schedule is required. Both the CAG and the Internal Auditor General monitor compliance with these
requirements and Development Partners are also supporting the use of the D-Fund system; hence
there are good reasons to believe that the level of unreported disbursements (revenues) and
expenditures from government-managed development projects would have fallen sharply13.
(i) Expenditure outside financial reports
94. In relation to the first dimension, which measures the extent of CG expenditure outside of financial
reports, we conclude as follows:
§ The coverage of reporting of extra-budgetary units within the Consolidated Financial Statements
is comprehensive and it therefore seems unlikely that these are a significant source of unreported
expenditure.
§ Expenditure from Non-tax Revenues collected by MDAs was historically under-reported but the
changes in procedures, in particular the requirement for all payments of fees and charges to be
made electronically through the GePG, mean that this loophole has been closed.
§ Expenditure from grant financed development projects was historically under-reported but the
introduction of the D-fund system is considered by the External Finance Department and by
Development Partners to have largely addressed this problem. Given its recent introduction – in
FY 2020/21, we would judge that some under-reporting of revenues and corresponding
expenditures is still likely. However, even if we were to assume a high estimate of 30% for
continued under-reporting from this source, with grant financed project expenditure comprising
0.6% of GDP in 2019/20, unreported expenditure on grant-financed projects would then comprise
approximately 0.8 % of total expenditure14.
13 It is important to draw a distinction here between externally financed projects managed by GoT institutions, and
externally financed projects managed directly by NGOs or private sector operators reporting to the external
funding agencies. The latter are not defined as government revenues or expenditures.
14 Total expenditure in 2019/ 20 is reported to have been 23.5 % of GDP (IMF, August 2021). Grant financed project
expenditure therefore comprises 2.6% of total expenditure and 30 % of that would be 0.78% of total expenditure.

§ Overall we therefore conclude that the level of unreported expenditure is less than 1 % of total
expenditure. This dimension therefore scores an “A”.
(ii) Revenue outside financial reports
95. The second dimension measures the extent of unreported Central Government revenue. Given that
most revenue collection functions are centralised within TRA (see PI-19), there are no evident sources
of unreported revenue outside of those reported above relating to unreported expenditures, namely
disbursements from development projects financed by external grants. The potential amounts
estimated above under dimension (i) – 0.6 % of GDP comprise 0.87% of the total revenue for 2019/20
(Table 3-9). Dimension (ii) therefore also scores an “A”.
(iii) Financial reports of extra-budgetary units
96. The third dimension assesses the comprehensiveness of financial reporting by the extra-budgetary units
of Central Government. All extra-budgetary units of Central Government are required to submit
consolidated financial statements to the Accountant General and to the CAG within three months of
the close of the fiscal year. Both the ACGEN and CAG confirmed that the compliance with this
requirement is complete, although it was reported that some of these units submit their financial
statements within 6 months but later than the 3-month deadline. Our analysis of the 2019/20
consolidated financial statements confirmed that accounts for all extra budgetary units were included.
However, not all of these submitted within three months of the end of the fiscal year although most of
them submitted within 6 months. This dimension therefore scores a “B”, giving an overall
score of “A” for the indicator.
97. There has been a continuous improvement in the reporting of off-budget CG revenues
and expenditures since the 2013 PEFA assessment. This was rated a “D+” in 2013, due to the
fact that the level of unreported extra-budgetary expenditure (other than donor-financed projects)
was estimated to be greater than 10% of total expenditure. Applying the 2011PEFA framework in 2017,
this indicator would have scored a “B”. Applying the 2016 PEFA Framework, we may see that
the score has improved further from a “B” in 2017 to an “A” in 2021.
98. This is a consequence of three parallel improvements: (i) better financial reporting by the
extra-budgetary units of Central Government, (ii) the adoption of electronic payments of
Non-Tax Revenues through the GePG, and (iii) introduction of the D-Fund system for
externally financed projects. The quality of reporting of disbursements and expenditures by grant
financed projects constitutes the “weakest link” in this area. Continued improvements in this should
therefore remain a priority for the External Finance Department of MoFP and for Development
Partners, working together on the consolidation and deepening of the D-Fund system.

PI-7 Transfers to subnational Governments

Indicator
Score Score Explanation of 2022 Score Change and
2022
PI-7 Transfers to
Scoring Method M2 (AV) No Change
subnational C+ C+
Governments
Horizontal allocations have been
transparent in the sense of being pre-
announced and publicly discussed with
(i) System for allocating the relevant stakeholders. However,
D D No Change
transfers they have been based not on formulae,
which are legally or constitutionally
defined, but on administratively
determined norms.
(ii) Timeliness of The process by which LGAs receive
information on information on their annual transfers
is managed through the regular budget
transfers
calendar, which is generally adhered to
A A and provides sufficiently detailed
No Change
information to allow at least 6 weeks
for the budget formulation process at
LGA level.
99. Indicator PI-7 assesses the transparency and timeliness of transfers from Central Government to
subnational Governments. It considers the basis for deciding on the value of inter-Governmental
transfers and their horizontal allocation between subnational Governments and whether subnational
Governments receive information on their allocations in time to facilitate good budget formulation and
planning.
100. There are 185 Local Government Authorities (LGAs) in Tanzania, comprising city councils,
municipalities, town councils and rural district councils. 80% or more of their funding derives from
transfers from Central Government, with the balance coming from own revenues, primarily property
tax15.
101. There is no clear legal or constitutional basis for the horizontal allocation of grants
between LGAs. Under the Local Government Finance Act, the Minister for Local Government is
entitled to establish individual ceilings for the transfers to each LGA based upon an aggregate ceiling
agreed with the Minister of Finance for all transfers to LGAs. However, there are no formulae nor
formally established rules defining how this should be done. In practise allocations have been decided
through a mixture of historical allocations for staff and salaries, and norm-based allocations for non-
salary recurrent allocations.
15 Although for reasons of administrative efficiency, local government property tax is collected centrally by the
Tanzania Revenue Authority, it is credited back to the accounts of the respective LGAs, as a source of finance for
their annual budgets.

102. On the other hand, ceilings for transfers to LGAs in the forthcoming fiscal year are transparent,
and communicated to the LGAs in December or January, well in advance of the period for budget
formulation. The team were advised of this by PO-RALG (President’s Office – Regional Administration
& Local Government), the entity responsible for local government, as well as by MoFP and the Finance
Director of Dodoma Municipality. The 2017 PEFA assessment indicated that the ceilings were detailed
in the PBG but this has not been the case currently. Neither the ceilings for the year of assessment
(2021/22) nor for forward years have been detailed in the PBG or other budget documents available.
(i) System for allocating transfers
103. The first dimension measures the extent to which the horizontal allocation of Central Government
grants between LGAs is transparent and rules-based. Horizontal allocations have been transparent in
the sense of being pre-announced and publicly discussed with the relevant stakeholders. However, they
have been based not on formulae, which are legally or constitutionally defined, but rather on
administratively determined norms. A “D” score is therefore assigned to this dimension.
(ii) Timeliness of information on transfers
104. The second dimension assesses the timeliness of information provided to subnational Governments on
their allocations from Central Government for the forthcoming year. In particular, it assesses the
extent to which subnational Governments receive reliable information on the CG grants for the
forthcoming year in advance of their own budget preparation processes, thus allowing for a meaningful
budget formulation process and advance planning of budget execution and the related processes, such
as recruitment and procurement.
105. In Tanzania, the ceilings for the transfers to LGAs are issued by MoFP after discussion with PO-RALG,
and based in turn on aggregate ceilings approved at Cabinet level. Discussions with the PO-RALG
indicated that the ceilings were communicated between December and January, providing well over 6
weeks for the formulation of their budgets during March and April. These ceilings were then confirmed
in the Budget approved by the National Parliament in June, prior to the start of the LGA’s fiscal year
(1st, July).
106. Thus, the process by which LGAs receive information on their annual transfers is managed through the
regular budget calendar, which is generally adhered to and provides sufficiently detailed information to
allow at least 6 weeks for the budget formulation process at LGA level. This dimension therefore
scores an “A”, giving a C+ overall for this indicator.
107. Performance against this indicator has remained the same as in the 2017 PEFA
assessment. There are no significant changes against this indicator.

108. The 2017 PEFA report anticipated that transfers would become rules-based. This has yet
to materialize. Nevertheless, PO-RALG are satisfied with the communications that they receive from
the Central Government concerning their ceilings, and feel that they and the LGAs have sufficient time
to develop their budgets.
PI-8 Performance information for service delivery
109. This indicator assesses the quality of information on service delivery incorporated in four different
aspects of the budgetary process: firstly, it measures the extent to which information on service
delivery targets is incorporated into the Budget documentation; secondly, it assesses whether
information on actual service delivery performance is presented in budget reports; thirdly, it considers
whether information on the resources received by service delivery units is readily available; and finally,
it assesses the extent to which service delivery performance is independently evaluated.
110. Promoting operational efficiency in delivery of public services is a core objective of the PFM system.
The inclusion of performance information within budgetary documentation, although not common in
‘traditional’ PFM systems, is now considered to be international good practice. It strengthens the
accountability of the Executive for the outputs and outcomes of budget programmes, and thus for
public service delivery as a whole. Increasingly, Legislatures demand to see such information as part of
their consideration of the Executive’s Budget Proposal, and also in their consideration of Government
accounts and the related external audit reports.
111. In Tanzania, it is the Five Year Development Plan that has historically been the key document in which
to present the strategic objectives and targets of the Government. Historically, this process has been
quite separate from the budget formulation process. Yet, with the development of an MTEF process
(which has been an ongoing process since 1998) and, more recently, with the introduction of a
programme classification within the chart of accounts and a related set of codes to present objectives,
targets and activities for each budget programme, there is now the potential for the processes of
planning, performance monitoring and budget formulation to be integrated more closely.


Indicator
2022
PI-8 Performance
information for C C Scoring Method M2 (AV) No Change
service delivery
All ministries publish annually, within the
MTEF, information on the activities to be
performed through their projects and
(i) Performance plans recurrent spending, the anticipated
B B No Change
for service delivery outputs and the objectives. However,
the MTEF does not include a clear
presentation of outcomes, nor is it
disaggregated by budget programme.
Information is published annually within
(ii) Performance the MTEF by all ministries on the outputs
achieved for service C C produced through the Development No Change
delivery budget but, for the Recurrent Budget,
reporting is at the level of activities.
Information on resources received by
front-line service delivery units is not
(iii) Resources received systematically collected and reported on
by service delivery D D an annual basis by any sector ministry. No Change
units There has been no survey in the last
three years estimating resources so
received.
Through the 39 performance audits of
NAOT and the Health Sector PER
(iv) Performance conducted with the World Bank in 2020,
evaluations of the efficiency or
evaluation for service C C No Change
effectiveness of service delivery have
delivery been carried out at least once within the
last three years in ministries comprising
more than 25% of public spending.
(i) Performance plans for service delivery
112. The key document, in which performance plans are presented, is the Medium Term Expenditure
Framework (MTEF), which has been produced by all the ministries of central Government (CG) for
over 15 years. Sectoral MTEF documents are produced annually by all CG ministries, as well as the
Regional Administrative Secretariats (which are also part of Central Government) and some Local
Government Agencies (not part of CG), and normally issued in February or March of each year as a
pre-cursor to the tabling of the Executive’s Budget Proposal (EBP). Although they do not formally
form part of the Budget documentation, sector MTEFs are generally made available, and sometimes
formally presented, to the sectoral committees of Parliament in advance of the submission of the EBP.
Many Ministries now make their MTEFs available on their respective websites, and they are also printed
in relatively large numbers. The assessment team was able to view 12 MTEFs, made available by sector
ministries and by the Budget Management Directorate of MoFP16.
16 The assessment team were able to analyse in detail the 2021/22 – 2023/24 MTEF documents of the Ministry of
Works, Transport & Communications (MWTC) and the Ministry of Education, Science, Technology & Vocational

113. The “Medium Term Strategic Planning & Budgeting Manual” (MTSPBM), issued by the Ministry of Finance
in 2005 and subsequently updated, provides the conceptual and procedural framework to link the
presentation of medium term (3-year) expenditure projections to strategic objectives, targets and
activities. At present, these objectives, targets and activities are presented in the sector MTEF for the
ministry or entity as a whole and are not as yet linked to specific budget programmes, although plans
are in place to move to a formal Programme Based Budget (PBB), in which this will be done. In principle
– and as described in the MTSPBM - activities produce outputs (‘targets’), which in turn lead to
outcomes (‘objectives’). In practice, the formulation of the MTEFs is undertaken at a very micro level,
meaning that there is a very large number of activities, many of which would be better described as
“tasks”, with many targets better described as sub-outputs. As a consequence, and in contradiction of
the guidance in the MTSPBM, the objectives presented do not in most cases represent outcomes – in
the sense of a targeted improvement for the beneficiaries or users of Government services – but,
rather, a presentation of the outputs to be produced by the ministry concerned.
114. Thus, all ministries of Central Government publish annually, within the MTEF, information on the
activities to be performed through their projects and their recurrent spending, the anticipated outputs
and the objectives, although this information is not organised in the form of budget programmes.
However, the MTEF does not, as yet, include a clear presentation of outcomes. Dimension (i)
therefore scores a “B”.
(ii) Performance achieved for service delivery
115. In addition to projected activities and outputs for the forthcoming medium term period, the sector
MTEF documents include summaries of achievements against planned targets for the previous fiscal
year, and a mid-term (6-month) report for the current fiscal year. They do not include any quantified
assessment of progress towards strategic objectives. The presentation of progress – in the same way
as the presentation of future objectives, targets and activities – is divided between activities supported
by the recurrent budget and those supported by the development budget, without integrating the two
into budget programmes. The reporting of achievement against targets in the Development Budget is
generally presented at the output level and is clearly quantified, whereas the progress report for the
Recurrent Budget is at the activity level and less clearly quantified.
116. Thus, information is published annually within the MTEF by all ministries on the outputs produced
through the Development budget but, in relation to the Recurrent Budget, reporting is at the level of
activities. Dimension (ii) therefore scores a “C”.
training (MESTVT), and to view 10 other MTEFs to confirm the similarity of their structures. By value, the 12
MTEFs which were examined constituted by value more than 90% of the expenditure of Central Government.

(iii) Resources received by service delivery units
117. The third dimension assesses the extent to which information is available on the sources and levels of
resources actually received by the service delivery units of large ministries, such as health or education.
Reporting systems in Tanzania go to sub-vote (departmental or divisional) level for CG ministries and
Regional Administrative Secretariats, and to the sector level for Local Government Authorities. This
allows for reports on sources and receipts of funds for higher level service delivery units, such as
district and regional hospitals, tertiary education institutions and district departments of agriculture,
roads, etc.
118. However, this dimension focuses in particular on “front-line” service delivery units, such as schools
and health centres. In Tanzania, it is LGAs who have the responsibility for delivering primary education,
secondary education and primary health services and they receive transfers from Central Government
to finance the bulk of the associated costs. However, there are a variety of reasons why it is not
possible to receive information on the resources received at this level:
§ Firstly, health centres and aid posts do not in most cases comprise a cost code within the
accounting system and in most cases only receive resources in kind (health staff, medicines,
etc.)
§ The majority of primary and secondary schools manage their own bank accounts and do,
as such, comprise cost codes but the resources they receive in these accounts are limited
almost exclusively to the capitation grants for Other Charges. The bulk of their budgets
are thus received in kind – teachers (whose salaries are managed at district HQ level),
text-books (purchased and distributed by the district) and examination costs (also
managed by the district). It is therefore difficult to report in a consolidated manner on
resources received, and primary and secondary schools do not do this.
§ An additional complication arises from the fact that resources from development projects
transferred to front-line service delivery units will tend to use a variety of funding channels,
such as transfers from commercial bank accounts run for externally financed projects,
resources in-kind, etc. They are therefore exceedingly difficult to integrate with reports
on GoT resources, and again no such consolidated report exists.
119. Public Expenditure Tracking Surveys (PETS) were undertaken in the past in order to analyse data on
the resources received by primary and secondary schools and health centres. However, the assessment
team were unable to identify any recently completed PETS and were informed that no such survey had
been undertaken since 2010.
120. Thus, information on resources received by front-line service delivery units is not systematically
collected and reported on an annual basis by any sector ministry. Moreover, there has been no survey
in the last three years estimating resources received by front-line service delivery units. This
dimension therefore scores a “D”.

(iv) Performance evaluation for service delivery
121. The fourth dimension considers the extent to which the design of public services and the
appropriateness, efficiency and effectiveness of those services is assessed in a systematic way through
independent programme or performance evaluations. In Tanzania, the conduct of such evaluations has
been managed through two main avenues: evaluations of the equity, efficiency and effectiveness of
public spending in specific sectors undertaken as part of Public Expenditure Review (PER) processes,
and performance audits undertaken by the National Audit Office of Tanzania (NAOT).
122. Up to December 2015, Tanzania had a formally structured Public Expenditure Review (PER) process
through which 3-4 sectoral expenditure analyses would be undertaken each year through a
collaborative process involving representatives from the Government, Development Partners,
academia, and civil society. The process went into abeyance after 2015 but in 2020, the World Bank in
collaboration with Government undertook a Public Expenditure Review in the Health sector17.
Table 3-6: Performance Audits published by NAOT in 2019/20

Performance report Ministry/ Agency
Prevention and Control Of Livestock The Ministry of Livestock & Fisheries and President’s Office -
Diseases Regional Administration & Local Government
Access To Quality Vocational Education And The Ministry of Education, Science & Technology and Vocational
Training Education & Training Authority (VETA)
Management of Immunization And Ministry of Health, Community Development, Gender, Elderly &
Vaccination Project Activities Children and President’s Office- Regional Administration And Local
Government
Monitoring & Enforcement of Public Ministry of Finance & Planning, and Public Procurement Regulatory
Procurement Activities Authority
Implementation of National Initiatives to Ministry of Finance & Planning through the National Multi-
Combat Money Laundering Disciplinary Committee On Anti-Money Laundering, and The
Financial Intelligence Unit
Quality of Executed Bitumen Surfaced Road Tanzania Rural & Urban Roads Agency (TARURA) under the
Works In Urban Areas President’s Office - Regional Administration and Local Government
Supervision of Construction of Warehouses The Ministry of Agriculture, and National Food Reserve Agency
And Storage Silo Complex (NFRA)
Management of the Provision of Capacity Ministry of Education, Science & Technology, and President’s Office
Building to In-Service Teachers – Regional Administration & Local Government
Revenue Collection from Own Sources In The President’s Office - Regional Administration & Local
Local Government Authorities Government
Management of Accessibility & Reliability of TANESCO, EWURA and The Ministry of Energy
Electricity Supply Services
Management of Revenue Collection From Tanzania Communication Regulatory Authority, Tanzania Revenue
Telecommunication Service Providers Authority, and Ministry of Works, Transport & Communications
Follow Up Report on Recommendations for Covers: Management of Environmental Impact Assessment Process
the Five Performance Audit Reports Issued in Development Projects; Construction Contract Management of
and Tabled Before Parliament In April 2016 Urban Water Projects; Hygiene Control in Meat Production;
Strategies for Managing Agricultural Crop Pests and Disease
Outbreaks; and System for Quality Control of Education
Programmes.
17 Piatti-Funfkirchen, M. & M. Ally, (April 2020), Tanzania Health Sector Public Expenditure Review, World Bank,
Washington D.C.

123. The NAOT has built up its capacity to undertake performance audits, publishing between 9 and 15
such audits every year since 2017. In 2018/19, 2019/20 and 2020/21, 39 performance audits were
undertaken by the NAOT (12, 12 and 15 respectively). The focus of these performance audits has been
on the efficiency and effectiveness of specific Government services and programmes, such as access to
quality vocational education and training, or prevention and control of livestock diseases. (See Table 3-
6).
124. The coverage of performance audits is broad, including services provided by local governments and
public sector corporations and also covers services of a cross-sectoral nature. It is not straightforward
to assess precisely what proportion of the services of ministries, departments and agencies of Central
Government is covered annually but the coverage is extensive and in a 3-year cycle would certainly
comprise a sample of expenditures equivalent to at least 25%. For example, the 12 performance audits
published in 2019-20 covered 11 sectors – agriculture, education, energy, environment, health,
livestock, local government, rural and urban roads, telecommunications, vocational training, and water,
and, in each of the last three years, coverage has been similarly broad.
125. 39 performance audits have been undertaken by the NAOT in the last three years and
one Health sector PER was conducted in 2019-20 in collaboration with the World Bank.
Through these mechanisms, independent evaluations of the efficiency and/ or effectiveness of service
delivery have been carried out at least once within the last three years in some ministries, comprising
over all at least 25% of public spending. This dimension therefore scores a “C”.
126. Just as in 2017, the Tanzania PFM system is rated a “C” against this indicator of
performance information for service delivery. There has been progress in increasing the
numbers of performance audits undertaken annually, and the assessment team were informed in
meetings with the CAG that there has been significant training in this area. However, there does not
appear to have been any change in the approach to the design and implementation of the MTEF, and
without certain conceptual and design changes, the MTEF will not fulfil the requirements to achieve
higher scores in dimensions (i) and (ii) of this indicator.
127. In particular, there continues to be a need to refine and develop the definition of
objectives, targets and activities within the MTEF, so as to focus at a higher, more
strategic level (less micro) and to move towards a more precise definition of outcomes.
Once the definition of outcomes is clarified and they come into regular use by MDAs, then it will
become easier to define indicators by which to measure and monitor progress towards the outcome
targets of the MDAs. At present, the information in the MTEF is too detailed and too disaggregated to
be easily utilised in decision-making: once there has been a shift towards a more strategic approach
based upon outcomes and key outputs, then this information will become more useful for decision-

making. This same comment was made in the 2017 PEFA and we would urge the authorities to make
provision for such work under Phase VI of the PFMRP.
128. A related question, also raised in the 2017 PEFA assessment, is the issue of how to incorporate the
findings of performance audits and sector PERs more systematically into the design of service delivery
and the formulation of the budget. Consideration should be given to finding ways of linking NAOT
performance audit results and PER findings (where available) to the annual MTEF and budget
formulation process, and subsequently to policy and procedural decisions on service delivery.
PI-9 Public access to fiscal information
129. This indicator assesses the scope and comprehensiveness of public access to fiscal information. Fiscal
transparency depends on the extent to which information on Government fiscal and budgetary strategy
and performance is available to the general public. The range of information available to the public
affects their ability to engage with Government and to understand how public resources are being used.

Indicator
2022
Only 3 of the 5 basic elements are
made available to the public on a
timely basis. Key budget
PI-9 Public documents and Quarterly Budget
Execution reports are not
access to D D No Change
published regularly and were not
information available for the year under review.
However, three of the four
‘additional elements’ were made
available on time.
130. This indicator is assessed through an evaluation of the public’s access to those items of information
which are considered critical to an effective understanding of the budget. Public access is defined as
availability without restriction, within defined time limits (consistent with international good practice),
without requirement to register, and free of charge. The assessment includes five basic elements of
fiscal information that are considered the most important to enable the public to understand the fiscal
position, and four additional elements that are considered good practice. Our assessment covered a
review of the most recent available information – 2021/22.
Table 3-7: PI-9: Assessment of Public Access to Fiscal Information
Key Elements of Available Notes

Fiscal information 2021/22
Basic Elements
1. Annual Executive No Volumes II, III and IV of the 21/22 budget as submitted to the
Budget Proposal Legislature are available on the website of the MoFP.
documentation However, Volume I is not published, and it is not clear if the

other Volumes were made available within 1 week of

submission to the Legislature as required.
2. Enacted Budget (as Yes The 21/22 enacted budget was made available on the MoFP
approved by website, within 2 weeks of the passing of the Budget Law.
Parliament) Printed copies of both 20/21 and 21/22 enacted budget
(Volumes I-IV) are available from the Government Printer for
a modest price.
3. In-year Budget No The latest Budget Execution Reports (BER) are available on
Execution Reports the website for 2020/21 but not for 2021/22. The last BER on
the website is from June 2021 and it is unclear when it was
uploaded. The BER for First Quarter 21/22 had not been
uploaded two months into Q2 (i.e. as of November, 2021)
indicating that the reports are not uploaded regularly within a
month of quarter end18.
4. Annual Budget Yes The 20/21 annual budget execution report is on the website
Execution Report and available for public consumption. The team were informed
that it was uploaded within 6 months of the fiscal year end, in
line with MoFP’s established practice.
5. Audited annual Yes The 2019/20 audited annual financial report is on the MoFP
financial statements website, but does not incorporate the external auditor's
with CAG report report, which is however available on the NAOT website.
These reports were made available on 26/05/21, eleven
months after the end of the fiscal year, thus within 12 months
as required by this criterion.
Additional Elements
6. Pre-Budget Yes The Planning & Budget Guidelines (PBG) - which contain the
Statement broad parameters of the executive budget proposal regarding
expenditure, planned revenue, and debt - are generally made
available in December/January - 6-7 months ahead of the start
of the fiscal year. They are also made available on the MoFP
website – sometimes in both Kiswahili and English. The PBGs
from 2018/19 to 2021/22 can be found on the website.
7. Other External Yes A comprehensive set of non-confidential central government
Audit Reports consolidated operations audit reports is made available on the
NAOT website within 6 months of their submission to
Parliament.
8. Summary of the No The Citizen's budget has been made available in the national
Budget Proposal languages - English and Kiswahili. Citizen’s budgets from
(“Citizens’ Budget”) 2011/12 to 2021/22 are on the website. However, for
2020/21, the Citizen’s budget was uploaded on 25/03/21, 9
months after budget approval, rather than within one month
as required by this criterion.
18 The BERs for Q1 and Q2 of 2021/22 have been uploaded to the MoFP website in early 2022, but at the time of
field work, the Q1 report was not available, thus falling short of the timeliness requirements for this indicator.

9. Macroeconomic Yes Macroeconomic forecasts are included in the PBG, which is

forecasts tabled in Parliament and made available on the MoFP website
within one week of their endorsement by Parliament.
131. 3 of the 5 basic elements are made available to the public regularly, and in line with the
time limits specified in the 2016 PEFA methodology. There are challenges with the consistency
and timeliness of the publication of the other two basic elements. In 2020/21 Volume I of the Budget
(the Revenue Estimates) was not made available. And while quarterly budget reports were made
available in 20/21, the 1st Quarter BER for 2021/22 had not been uploaded at the time of the PEFA
assessment mission, two months after the Quarter end. Three of the four additional elements are also
available. However, with less than 4 basic elements made available within the time limits
specified in the PEFA methodology, this indicator is scored a “D”.
132. This indicator scores poorly as a result of the failure to publish key documents which are
typically internally available on time and are within the scope of the MoFP to release to
the public. Volume I of the Budget, and the in-year Quarterly Budget Execution Reports are
documents that are generated and utilized within MoFP; uploading them would be relatively simple. If
these basic elements of information can be made available to the public and on time, then this indicator
would be scored an “A” in future PEFA assessments.
133. The score remains unchanged, in relation to the 2017 PEFA assessment where it also
scored a D. The last assessment also highlighted the challenges with the availability of the quarterly
budget reports, but this performance has further deteriorated as now only an incomplete set of budget
documents has been made available on the website and the Citizen’s Budget is uploaded well into its
implementation, undermining its effectiveness as a public engagement tool.
3.4 Pillar III – Management of Assets & Liabilities
134. Pillar III considers the effectiveness of the systems and procedures for managing Government assets
and liabilities. Their effective management ensures that public investments provide value for money,
assets are recorded and managed, fiscal risks are identified and debts and guarantees are prudently
planned, approved and monitored.
135. Indicator PI-10 measures the extent to which fiscal risks to Central Government are monitored and
reported. Fiscal risks arise when adverse circumstances – due to natural disasters, macroeconomic
crises, or other causes – create unforeseen liabilities for the Central Government. They may arise from
losses in other parts of the public sector - public corporations, social security funds or sub-national
Governments, where the Central Government may be compelled to accept responsibility for such
losses. They may also arise from unexpected losses or unplanned expenditures by the Central
Government itself, notably from the extra-budgetary units. These unexpected obligations can have a

significant impact on the Budget and thus on fiscal discipline and the allocation of resources. Hence,
fiscal risks need to be closely monitored, reported and where possible quantified, so that risk mitigation
measures may be taken and provision made where necessary.
PI-10 Fiscal risk reporting

2017 2022 rationale
PI-10 Fiscal risk Scoring Method M2 (AV) No Change
B B
reporting
For 2019/20, most of the Public The score on this
Corporations (76 out of 82) dimension has improved
submitted audited annual financial as a result of the
reports within 9 months of fiscal improved reporting by
year end. In addition, a the Public Corporations,
(i) Monitoring of
D C consolidated report on the with most now
public corporations financial performance of the public submitting audited annual
corporation sector is published statements within 9
annually by central government, months, as opposed to
specifically by the Office of the just over 50% in 2017.
Treasury Registrar (OTR).
Audited financial statements are
published for all LGAs within nine
months of the end of the fiscal
year. Moreover, consolidated
(ii) Monitoring of reports on the net fiscal position
of the majority of LGAs are No change: monitoring
sub-national A A
produced by PO-RALG on a of LGAs remains strong.
Government (SNG) quarterly basis, and the MoFP also
include a consolidated report on
the financial position of all LGAs in
the audited annual financial
statements.
Most significant contingent
liabilities of Central Government
are identified and quantified in the No change: while there
annual consolidated financial have been improvements
(iii) Contingent statements of the MoFP. Potential in the monitoring of
liabilities from loan guarantees are contingent liabilities, it is
liabilities and other B B
analysed in the annual financial not yet the case that all
fiscal risks reports of the ORT and in annual contingent liabilities are
Debt Sustainability Analyses. comprehensively and
However, potential contingent systematically reported.
liabilities from PPPs do not appear
to be comprehensively covered.
(i) Monitoring of Public corporations
136. The first dimension assesses the extent to which information on the financial performance and
associated fiscal risks of the Public Corporations is made available to the Central Government through
audited annual financial statements. It also assesses whether the Central Government publishes a
consolidated report on the financial performance of the public corporation sector.

137. Following the amendment in 2011 of the Treasury Registrar (Powers & Functions) Act of 2002, the
Office of the Treasury Registrar (OTR) was established as an autonomous entity, independent of the
Ministry of Finance, with powers and responsibilities conferred to oversee all GoT investments in public
enterprises and commercial entities, referred to in Tanzania as Public & Statutory Corporations (PSCs).
The OTR has the power to: (i) supervise the governance of PSCs and their compliance with laws and
regulations; (ii) supervise the remittance of own-source revenues of PSCs to GoT; and (iii) invest in,
and dispose of, assets of PSCs.
138. The OTR oversees the performance of 237 PSCs, including all of the 40 commercial Public
Corporations, as well as 197 non-commercial statutory bodies. It also oversees the 40 private
companies in which the state has a minority shareholding, and 10 off-shore investments. The OTR’s
Annual Operations Report for 2019/20 includes a list of the 237 PSCs, categorised according to their
status (public corporations, non-commercial statutory bodies, etc.). However, the definition of Public
& Statutory Corporations, as used by OTR, is broader than the definition of Public Corporations
provided for in GFS 2014, and further detailed in the PEFA Handbook Volume II. The audited
consolidated financial statements for 2019/20 submitted by the MoFP include a listing of all of the
entities falling within the categorisation of General Government, consistent with GFS 2014; within the
category of Public Corporations listed there are included 10 financial Public Corporations and 72 non-
financial, thus 82 in total.
139. The PSCs are required to report quarterly to OTR on financial and physical performance. In turn,
OTR produce annual statements for investment, revenue and status of loans guaranteed, reporting the
consolidated position of the PSCs in relation to each of these aspects. OTR’s annual statement for
2019/ 20 comprises a consolidated statement on government investments in PSCs, Minority Interest
holdings and off-shore holdings, reporting an aggregated valuation of Government investment, annual
receipts of non-tax revenue and status of loans guaranteed.
140. Under Section 31 of the Public Audit Act, all Public Authorities and Other Bodies (PA&OBs) are
required to produce annual financial statements within 3 months of the close of the financial year, and
to submit these to OTR and to the Controller & Auditor General (CAG), a minority of these are also
published and made publicly available. Under Article 143 of the Constitution and Section 34 of the
Public Audit Act (2008) the CAG is mandated to audit the annual financial statements within 6 months.
Thus, if compliance was 100%, all PA&OBs would submit audited financial statements within 9 months
of the close of the financial year.
141. The CAG submitted on 28th, March 2021 his Annual General Report on Public Authorities & Other
Bodies for 2019/ 20. This included coverage of 176 entities, of which 166 were audited (receiving
unqualified audits in 162 cases), with a further 10 which had not submitted financial statements by 1st,
March 2021. Six of the entities that did not submit financial statements by this date comprised Public

Corporations19 but the remaining 76 Public Corporations had submitted audited financial statements
within 9 months of the close of the financial year. This continues a positive trend in the expansion of
coverage of the CAG’s audit of Public Authorities & Other Bodies since 2016/17. (Table 3-8).
Table 3-8: Trend in Annual Audits of Public Authorities & Other Bodies, 2016/17 – 2019/20
Audit Results 2016/17 2017/18 2018/19 2019/20

Unqualified Opinion 101 121 147 162
Qualified Opinion 4 1 0 3
Adverse Opinion 0 0 0 1
Disclaimer 0 0 0 0
Total Audits: 105 122 148 166
Source: Controller & Auditor General, (March, 2021), Annual General Report on PA&OBs for 2019/20
142. Therefore, a consolidated report on the financial performance of the public corporation sector is
published annually by central government, specifically by the Office of the Treasury Registrar. In
addition, most of the 82 Public Corporations (76 out of 82) submit audited annual reports within 9
months of the close of the fiscal year. Dimension (i) therefore scores a “C”.
(ii) Monitoring of subnational Governments
143. In relation to the fiscal risk to Central Government arising from LGAs, it is notable that, although the
LGAs as legally autonomous entities are entitled to borrow under the Loans, Grants and Guarantees
Act of 2004, this may only be done with the permission of the MoFP, after consultation with PO-RALG.
Such permissions are rarely granted, meaning that fiscal risk from loan defaults is minimal. Moreover,
in contrast to regional and local Governments in some neighbouring countries, the scope for
establishing public enterprises owned by local authorities is also quite restricted, in practice being
limited almost exclusively to local water and sewerage boards, which are directly audited by the CAG
as part of the audit of PA&OBs (see above).
144. LGAs report quarterly on their budget execution to PO-RALG (President’s Office – Regional
Administration & Local Government), to whom they also submit annual financial statements. PO-RALG
produces consolidated quarterly reports from the data received and maintains a comprehensive data-
base for all LGAs. The coverage of the reporting is comprehensive as a result of the incorporation into
the IFMIS system of the majority of LGAs. PO-RALG reported to the assessment team that the shift
19 The six in question were the Tanzania Electricity Supply Company (TANESCO), the Tanzania Fertilizer Company,
the Tanzania Posts Corporation, Tanzania Railways Corporation, Tanzania Standard Newspapers and Tanzania
Telecommunication Company Ltd (TTCL). OTR report that these Public Corporations did, however, submit
audited financial statements within 12 months.

from Epicor to the MUSE system had not disrupted reporting to any significant extent, and that in
2020/21 they continued to receive quarterly financial reports from the majority of LGAs.
145. The annual financial statements of the LGAs are audited annually by the CAG, in line with Article 143
of the Constitution and Section 34 of the Public Audit Act (2008). For 2019/20, the CAG submitted
his Annual General Report on LGAs on 28th, March 2021. This covered all 185 LGAs, which were in
existence in 2019/2020 , of which 124 (67%) received unqualified audit opinions, 53 (29%) received
qualified audit opinions and 8 (4%) received an adverse opinion. As may be seen from Table 3-9 below,
the CAG’s annual report on LGAs, published in March of each year, has included coverage of all 185
LGAs since 2016/17.
Table 3-9: Annual Audits of Local Government Authorities, 2016/17 – 2019/20
Audit Results 2016/17 2017/18 2018/19 2019/20

Unqualified Opinion 166 176 176 124
Qualified Opinion 16 7 9 53
Adverse Opinion 3 1 0 8
Disclaimer 0 1 0 0
Total Audits: 185 185 185 185
Source: Controller & Auditor General, (March, 2021), Annual General Report on LGAs for 2019/20
146. Therefore, audited financial statements are published for all LGAs within nine months of the end of the
fiscal year. Moreover, consolidated reports on the net fiscal position of the majority of LGAs are
produced by PO-RALG on a quarterly basis, and the MoFP also include a consolidated report on the
financial position of all LGAs in the audited annual financial statements. This dimension therefore
scores an “A”.
(iii) Monitoring of Contingent liabilities and other fiscal risks
147. The annual consolidated financial statements, issued by MoFP, present an extensive
analysis and quantification of contingent liabilities and other fiscal risks. With the move to
accrual accounting and the full adoption of IPSAS standards, the coverage of these issues has improved
substantially since the 2017 PEFA assessment. In the consolidated financial statements for 2019/20,
published in March 2021, contingent liabilities and fiscal risks are addressed in the Notes to the Financial
Statements, notably Notes 104 to 122, as presented below in Table 3-10. However, one gap in the
coverage relates to Private-Public Partnerships (PPPs), which fall under Note 122, Commitments, but
are not covered in comprehensive detail.
148. In addition to the presentation in the financial statements, the OTR produces an annual statement on
the performance of PA&OBs in relation to loans guaranteed by Central Government. The potential
20 16 additional LGAs came into existence in FY 2016/17, since when the total number (185) has remained unchanged.

liabilities from guaranteed loans are also analysed as part of the Debt Sustainability Analysis conducted
annually by the Policy Analysis Division of MoFP, the most recent of which was completed in November
2021.
Table 3-10: Reporting of Contingent Liabilities and Other Fiscal Risks in Annual
Consolidated Financial Statements for 2019/20
Note Issues Addressed

Number
104 Other Financial Liabilities
(Items in course of settlement, and other financial liabilities)
105 Pension Funds’ Actuarial Liabilities
106 Employee’s Benefit Liabilities
(Accrued pay, annual leave, etc.)
107 Retirement Benefit Obligations
108 Statement of Provisions
111 Statement of Guarantees
112 Funds operated by MDAs
(National Relief Fund, Women’s Development Fund, Youth Development Fund, etc)
113 Contingent Liabilities and Assets
(including those related to civil and judicial cases)
114 Statement of Losses
115 Credit Risk
116 Liquidity Risk
119 Tax Commitments and Contingencies
(including Contingent Assets arising from court cases, goods held in Customs warehouses, etc.)
120 Tax Exemption and Relief
122 Commitments
(Capital commitments, non-cancellable operating leases and other non-cancellable commitments)
149. Thus, most significant contingent liabilities and other fiscal risks of Central Government are identified
and quantified in the annual consolidated financial statements of the ACGEN. Potential liabilities arising
from loan guarantees are further analysed in the annual financial reports of the ORT and in the annual
Debt Sustainability Analyses conducted by the Policy Analysis Division. However, it is not clear that all
significant contingent liabilities are covered. These are defined in the 2016 PEFA methodology as
contingent liabilities with a potential cost in excess of 0.5% of Central Government expenditure; Public-
Private Partnerships (PPPs) are a particular source of contingent liabilities of this scale, which do not
appear to be comprehensively covered in the existing reporting framework. This dimension
therefore scores a “B”, giving an overall score for the indicator of “B”.
150. Improvements have been made since the 2017 PEFA assessment, building on the progress
achieved since the 2013 PEFA assessment. This has been driven in particular by improvements
in the accounting and financial reporting of the Government due to the adoption of IPSAS standards
and accrual accounting, as well as by continued expansion of the audit coverage achieved by the NAOT
regarding the Public Authorities & Other Bodies. These improvements have resulted in a better score
against Dimension (i), which has improved from a “D” to a “C” but the improvements in the monitoring

of contingent liabilities are not yet considered sufficient to qualify for an “A”, and as such the overall
score for this indicator remains a “B”.
151. Financial reporting by Public Authorities & Other Bodies remains weak, which hampers
the work both of the NAOT and of the Office of the Treasury Registrar (OTR). Although
there is a clear and improving trend, in relation to the accounts for 2019/20 there were 11 PA&OBs
which failed to publish their audited financial statements within 9 months of the close of the fiscal year,
including a number of large Public Corporations, such as TANESCO and TTCL. Moreover, amongst
the 165 that did submit their annual financial statements to CAG within the 3-month limit, the CAG
reported that there were 44 miss-stated financial statements, where PA&OBs only submitted on time
at the expense of correctness and completeness, requiring significant rectifications by the NAOT.
Continued support is therefore needed to improve financial reporting by PA&OBs.
152. The OTR has strengthened its capabilities since 2017, and this is notable both in the
expanded scope of its work and the improved analytical quality of its annual reports; yet
further improvements would still be desirable. The OTR’s consolidated annual statement on
the public corporation sector covers revenues, investments and performance of guaranteed loans but
these reports fall short of presenting a comprehensive assessment of key fiscal risks. One potential way
to strengthen this focus would be to take advantage of the extensive observations included in the
CAG’s report on PA&OBs, which relate to sources of fiscal risk. For example, the CAG’s report for
the 2019/ 20 fiscal year identifies 28 entities reporting losses, 7 with more debt than equity and 9 with
negative working capital, and also makes note of the entities facing pending public litigations. The OTR
could analyse in more depth the scope and significance of these shortcomings, as potential sources of
fiscal risk to the Central Government. This might be done either by delaying the issue of the OTR’s
annual report so as to draw on this information – given that both reports are currently issued
simultaneously in March of each year – or alternatively, it might produce an “addendum” to its annual
report at a later stage.
153. Through the PFMRP, there have been significant efforts to strengthen the OTR through capacity
building and training, and through support to the computerisation of their information system via the
creation of the TRIMS (Treasury Registrar Information Management System.) These efforts have had a
noticeable impact and yet there continues to be a question mark over the adequacy of OTR’s
operational capacity in relation to its extensive and challenging mandate. Further capacity building may
help to address this but, arguably, there is an imbalance between the responsibilities of OTR and its
supervisory and operational capacity. One potential way forward might be to reduce its responsibilities
in relation to statutory institutions and agencies – most of which are not financially significant - so as
to focus OTR work more closely (or even exclusively), on public corporations and on Government
holdings in private sector commercial enterprises, while leaving statutory institutions and agencies to
report to their parent ministries and to the CAG.

PI-11 Public investment management
154. Public investments can serve as a key driver of economic growth and have been given enhanced
attention and financing under the fifth phase government. However, the effectiveness and efficiency of
public investments can vary enormously and have a major influence on the level and sustainability of
social and economic returns. Efficient management of the resources budgeted for public investment
requires careful analysis to prioritise investments within sustainable fiscal limits and to ensure that
approved projects are implemented as planned. This can be achieved through rigorous economic
analysis, judicious selection of projects, effective management of investment expenditure, and
monitoring of timely execution and completion. These are the issues measured by this indicator.
155. Following the merger in 2015/16 of the Planning Commission with the Ministry of Finance, it is the
Directorate of National Planning (DNP) in MoFP which has responsibility for the overall management
of Public Investment. The procedures for selecting, financing, implementing and evaluating Government
projects are laid down in the Public Investment Management – Operational Manual (PIM-OM),
published in February 2015 and formally launched by the Minister of Finance & Planning in April 2016.
The PIM-OM presents a coherent and clear framework for the management of public investments,
inspired by models and ideas drawn from the best international practice – the National System of
Investments of Chile, the Canadian approach to infrastructure development, and the Economic and
Social Research Institute of Ireland, amongst others. It presents an updated institutional and procedural
framework for public investment management (PIM), as well as an accompanying set of analytical
techniques and decision-making tools.
156. The PIM-OM introduced three defined project ‘types’: Type I – projects with total estimated costs
greater than Tsh 50 billion; Type II – Tsh. 5-50 billion; and Type III – Less than Tsh. 5 billion21. The
Directorate of National Planning (DNP) has responsibility for appraising all projects of Type I and II,
submitting them for approval by the Joint Public Investment Management Committee (JPIMC),
coordinating their financing and implementation and undertaking monitoring and evaluation. Type III
projects are managed in a decentralised manner by MDAs, in line with the guidance provided by the
DNP and the ceilings for Development spending established in the Plan & Budget Guidelines. (PBG).
21 Tsh 5 billion is approximately USD 2.16 million, and Tsh 50 billion is approximately USD 21.6 million.


2017 2022 rationale
PI-11 Public
investment D+ D+
management
(i) Economic analysis of Economic analyses are
investment proposals conducted for some major
investment projects (more than
25% of the total number). Some
C C of these analyses were No Change
published but they were not
reviewed on a systematic basis
by any central entity other than
the sponsoring MDA.
(ii) Investment project Through the process of budget
selection scrutiny, some, indeed a
majority, of the major
investment projects were
prioritised by the NDP and
C C No Change
BMD prior to inclusion in the
Budget. The criteria for this
process were stated in the Plan
and Budget Guidelines, which
were publicly available.
(iii) Investment project The Budget documentation
costing does not include a presentation
of the total cost of major
investment projects nor of their
D D No Change
anticipated recurrent costs, in
addition to the presentation of
capital costs for the coming
budget year.
(iv) Investment project Major projects are monitored
monitoring by the implementing MDA;
some of this information is
reported in the sector MTEF.
Cumulative information on
D D No Change
total cost to date, projected
costs to completion, and total
progress against completion
targets is not publicly reported
for all major projects.
(i) Economic analysis of investment proposals
157. The first dimension assesses the extent to which robust appraisal methods, based on economic analysis,
are used to conduct feasibility or pre-feasibility studies for major investment projects. It also assesses
whether the results are reviewed by a Government entity other than the sponsoring agency and
whether the results of analyses are published.
158. The PIM-OM requires firstly that all Type I and Type II projects, i.e. projects with a total cost in excess
of Tsh. 5 billion, should be subject to detailed feasibility studies and secondly that those studies ‘should
include satisfactory cost-benefit or cost-effectiveness analysis’ (PIM-OM, p.31). In addition, the PIM-OM

requires that all Type I and II projects with their feasibility studies should be evaluated by an
independent evaluator ‘from an independent expert team/ organisation or from academia.’
159. The definition of Type I projects applied in the PIM-OM, (projects with a total lifetime cost greater
than Tsh. 50 billion) comprises the government definition of “major investment projects” and is, in
turn, consistent with the definition in the PEFA 2016 methodology. The PEFA assessment team were
unable to obtain a comprehensive listing of approved and/or ongoing Type I projects, with information
on the extent of application of CBA analysis to these projects. Nor was the team able to see a sample
of examples of Type I projects with completed CBA analysis. However, staff from the DNP and from
TANROADS (as the implementer of Type I road projects) were able to confirm that the primary
method for evaluating major investment proposals up to and including FY 2020/21 has been under the
auspices of externally financed project formulation processes, where the completion of feasibility and
(depending on project scale) pre-feasibility studies applying cost benefit analysis (CBA) is a standard
requirement. In Tanzania, all projects above $10 million financed by the African Development Bank,
the European Investment Bank or the World Bank are subject to cost-benefit analysis. Interviewees
from NPD and from TANROADS agreed - independently - that those projects subject to cost-benefit
analysis by external agencies would have comprised at least 25% of all Type I projects; indeed, DNP
staff were of the opinion that they would have comprised substantially more than this.
160. The DNP advised that as of 2021/22 all new Type I and Type II projects would be required to be
screened by DNP. However, in earlier years the screening process was less clear and would
consequently be shared between DNP or the former Planning Commission and the relevant sponsoring
MDA. Thus, some of the CBA analyses undertaken by external financing agencies would have been
reviewed by DNP or the Planning Commission but it did not until 2021/22 have a formal responsibility
for screening all CBA analyses of Type I and Type II projects. In many cases, this would therefore have
remained the responsibility of the sponsoring MDA only.
161. Thus, in the absence of a comprehensive listing of Type I projects and their appraisal status but with
the benefit of the verbal evidence obtained independently from DNP and from TANROADs, we
conclude that, in relation to the Type I projects either approved or ongoing in 2020/21, economic
analysis was conducted through external financing for some of the major investment projects (more
than 25% of the total number). Some of these analyses were published but they were not reviewed on
a systematic basis by any central entity other than the sponsoring MDA. Dimension (i) therefore
scores a “C”.
(ii) Investment project selection
162. The second dimension measures the extent to which the project selection process prioritises
investment projects against clearly defined – and publicly available - criteria to ensure that selected
projects are aligned with Government priorities. The dimension requires that institutions are in place

to guide the project selection process, including a centralised review of major project proposals before
projects are included in budget submissions to the Legislature.
163. There is a detailed set of project selection criteria presented in the PIM-OM, which makes provision
for a two-phased process of selection: firstly, ‘absolute assessment’ through which the inherent viability
and desirability of projects is assessed, and secondly, ‘comparative assessment’ in which the viable
projects are compared to assess which should be prioritised and therefore included in the forthcoming
budget. However, the assessment team was advised that this selection process was only expected to
be fully functional from 2021/22.
164. Up to the close of FY 2020/21, all projects submitted by MDAs for inclusion in the budget have been
jointly reviewed by the DNP and the Budget Management Directorate (BMD) of MoFP prior to their
consolidation and presentation to the Inter-Ministerial Technical Committee (of Permanent
Secretaries) and then to Cabinet for the finalisation of the Executive’s Budget Proposal. In each year,
the Plan & Budget Guidelines (PBG) present a set of standard criteria for all MDAs to follow in the
submission of Development projects, and also draw attention to the strategic priorities in the National
Five Year Development Plan which guide the process of project selection.22
165. There is a question mark over how effective this process is as a method of prioritisation across MDAs
and not purely within MDAs. This is because the process of budget scrutiny is undertaken on a ministry
by ministry basis, taking account of their respective ceilings, as well as their adherence to the stated
project selection criteria. Thus, the framework makes it difficult for one ministry’s project to be
prioritised over that of a different ministry. The project data-base, which it is proposed to establish as
part of the implementation of the PIM-OM - the National Project Management Information System
(NPMIS) - would allow for projects to be compared across ministries and sectors prior to their
inclusion in the data-base, with the data-base then being used as the starting point for the inclusion of
investment projects in the budget submissions of MDAs. However, up to FY 2020 /21, neither the
NPMIS nor the proposed new selection process specified in the PIM-OM were fully functional and
therefore the project selection process happened exclusively through the budget scrutiny process.
166. Some projects would also have escaped this prioritisation process by virtue of having already obtained
external financing. The PBG make clear that for ‘Donor-funded programmes and projects, MDAs are
required to prepare their development budget based on confirmed foreign resources, and ensure that
counterpart funds for new and ongoing projects are available and all donor projects are reflected in
the budget estimates’. (PBG, December 2018.) Externally financed projects have consistently
represented more than 25% of the Development Budget over the last three years.
22 In the PBG issued in December 2018 for the 2019/20 Budget, these criteria were presented in section 3.4 of the
document. The reference document at that time was FYDP II (2016/17 – 2022/21). A new FYDP was issued in
June 2021 to cover the period 2021/22 – 2025/26.

167. Thus, we conclude that, through the process of budget scrutiny, some – indeed a majority, but not as
much as 75% - of the major investment projects were prioritised by the DNP and the BMD prior to
their inclusion in the Budget. The criteria for this process were stated in the Plan and Budget Guidelines,
which were publicly available. Dimension (ii) therefore scores a “C”.
(iii) Investment project costing
168. The third dimension evaluates whether the budget documentation includes medium-term projections
of investment projects on a full cost basis and whether the budget process for capital and recurrent
spending is fully integrated. Ideally, the Legislature should be made aware both of the total cost of a
project over the period of implementation, as well as the ongoing recurrent costs to which it will give
rise. If this information is not included in the budget presentation adopted for investment projects, the
basis for budgetary approval may be incomplete. In addition, it may prove difficult to plan for future
recurrent costs adequately and incorporate them into forward budgets.
169. The MTEF for each MDA includes a presentation of the anticipated costs over the medium term (5
years) for each Development project. However, the total estimated cost of project implementation is
not explicitly presented (and cannot be ascertained if the project implementation period is longer than
the MTEF period). Nor is there any presentation of the anticipated future recurrent costs of projects.
170. The Budget documentation does not include a presentation of the total cost of major investment
projects nor of their anticipated recurrent costs, in addition to the presentation of capital costs for the
forthcoming budget year. This dimension therefore scores a “D”.
(iv) Investment project monitoring
171. The final dimension assesses the extent to which prudent project monitoring and reporting
arrangements are in place to ensure value for money. The monitoring system should maintain records
on both physical and financial progress, and should produce periodic project monitoring reports, in
particular for major products. The system should also identify deviations from plans and allow for
identification of appropriate actions in response.
172. Project monitoring in Tanzania is the responsibility of the sponsoring MDAs, who are required to
report quarterly to the DNP and to the BMD on the physical and financial progress of projects.
However, the assessment team were unable to access any quarterly project monitoring reports and it
is not clear that these requirements are currently being fulfilled.
173. In addition, the sector MTEF documents – normally submitted to MoFP in March of each year, prior
to the finalisation of the Executive’s Budget Proposal - include summaries of achievements against
planned targets for the previous fiscal year, and a mid-term (6-month) report for the current fiscal
year. Within these MTEF documents, achievement against targets in the Development Budget is
reported on a project by project basis at the output level, alongside information on expenditure to
date. These MTEF documents are made public, and a number of them were reviewed by the assessment

team. However, reports are presented on a year by year basis: thus, cumulative progress against the
total estimated cost of major projects and against overall targets for project completion are not
presented. Moreover, the information on major projects (e.g., Type I and Type II projects) is not
separated out and presented in a clear report.
174. Thus, major projects are monitored by the implementing MDA and some of this information is reported
in the sector MTEF submissions. However cumulative information on total cost to date, on projected
costs to completion (taking account of cost escalations) and on total progress against completion
targets is not publicly reported. This dimension therefore scores a “D”, giving a “D+” for the
indicator as a whole.
175. There remain significant weaknesses in the process of public investment management
and the assessment shows an unchanged score of “D+” between 2017 and 2022. There are
important reforms being put in place through the introduction of the PIM-OM and the related
structures and procedures, including the development of the NPMIS. However, the roll-out of this
process has been slower than planned. This is not surprising – the development of a modern,
comprehensive Public Investment Management (PIM) system is a major undertaking for any country.
However, it will be important for the Government to re-energise the process so as to avoid stagnation.
It may be that a more phased approach would facilitate greater progress. Such a process might, for
example, focus initially on creating strong systems for Type I projects, and then building a wider
coverage over time.
PI-12 Public asset management
176. This indicator assesses the management and monitoring of Government assets and the transparency
of asset disposal. It is also a new indicator within the 2016 PEFA framework.


Indicator
2022
PI-12 Public asset Scoring Method M2 (AV) Improvement
B B+
management
Government maintains a record of Score improved from
its holdings in all categories of “B” to “A” because of
financial assets, recognised at fair or the introduction of an
market value in line with annually published
international accounting standards. report (by ORT)
Information on performance of the comprising a
(i) Financial asset
B A financial assets is presented within consolidated report on
monitoring the consolidated financial the overall performance
statements and in the OTR’s annual of the portfolio of
report which includes a financial assets.
consolidated report on the
performance of the portfolio of
financial assets.
Within GAMIS, the Government
maintains a register of its holdings
of non-financial assets, including
(ii) Nonfinancial asset
C C information on their usage, and No change
monitoring remaining economic life. However,
GAMIS does not yet include a
register of sub-soil assets.
Clear procedures & rules for the Score improved from
transfer/ disposal of non-financial “B” to “A” due to the
and financial assets are established improved reporting on
in legislation and regulations. the transfer/ disposal of
Comprehensive information on financial assets through
transfers/ disposals of non-financial the ORT in the form of
assets is presented in the GAMD its annual report. The
(iii) Transparency of
B A annual report, and for financial level of detail on asset
asset disposal assets in the ORT Annual Report. acquisition/disposal and
Summary information on both is transfer in the ACGEN
presented in the annual consolidated annual
consolidated financial statements, statements has also
which are tabled before Parliament improved.
and the Public Accounts
Committee.
(i) Financial asset monitoring
177. The first dimension assesses the nature of financial asset monitoring. As noted above (under PI-10),
the OTR oversees the performance of 237 PSCs, including all of the 40 commercial Public
Corporations, as well as 197 non-commercial statutory bodies. It also oversees the 40 private
companies in which the state has a minority shareholding, and 10 off-shore investments. These entities
are required to report at least annually to OTR (joint ventures/ associate companies report annually;
PSCs quarterly), and on this basis OTR produces an annual report on investment, revenue and status
of loans guaranteed, reporting the consolidated position of the PSCs in relation to each of these
aspects23. OTR’s annual statement for 2019/ 20 comprises a consolidated statement on government
23 The assessment team received and studied the OTR’s Annual Operations Report for 2019/20.

investments in PSCs, Minority Interest holdings and off-shore holdings, reporting an aggregated
valuation of Government investment. The OTR’s annual report thus comprises a report on the
performance of the financial assets as a portfolio.
178. The Accountant General consolidates the information received from OTR with other data in order to
produce detailed information on all financial assets within the consolidated statement on the financial
position, following international accounting standards. The assessment team examined the consolidated
statements for 2019/20, which included details of GoT holdings in all categories of financial assets.
Some of these, such as investment properties, are recognised at fair value and others, such as
investments in associates and joint ventures, at equity (market) value, in line with international
accounting standards.
179. Thus, the Government maintains a record of its holdings in all categories of financial assets, recognised
at fair or market value in line with international accounting standards. Information on the performance
of the financial assets is included both within the GoT consolidated financial statements and in the
annual report of the OTR, which presents, amongst other things, a consolidated report on the overall
performance of the portfolio of financial assets. Dimension (i) therefore scores an “A”.
(ii) Nonfinancial asset monitoring
180. The second dimension examines the processes and procedures for non-financial asset monitoring for
the Budgetary Central Government (BCG). The Government Asset Management Division (GAMD) of
MoFP has the responsibility to manage the non-financial assets of Government through monitoring the
way they are acquired and maintained up to disposal, in a way that maximises the value of the assets.
The “Public Assets Management Guideline” (Revised edition, 2019) provides the basis for acquisition,
allocation, maintenance, disposal and accounting for GoT’s non-financial assets, the aim being to ensure
that assets are systematically administered through documented management systems in order to
control and safeguard their use in an efficient and effective manner. The centralised Government Assets
Management Information System (GAMIS), which is managed by GAMD provides the basis for
consolidating and managing asset registries. GAMD has offices in all the regional headquarters, from
which it undertakes monitoring, inspection and training services.
181. Prior to 2008/09, the Government did not have an integrated, consolidated asset register: different
MDAs kept their own registers of assets, which were not regularly monitored. Under the PFMRP,
continuous efforts have been made to update and integrate asset registers within the centralised GAMIS
system. At the end of FY 2020/21, 426 out of 495 public sector entities had completed their asset
registers and uploaded them within the GAMIS system. This includes the registration of 32 classes of
assets, following IPSAS classifications, covering in particular(i) vehicles & plant, (ii) office equipment &
machinery, (iii) buildings and (iv) land. The incorporation of these registers has included a process of
codification, assessment of the condition of assets, and valuation, which has been supervised by GAMD.
The responsibility for annual updating rests with MDAs, under the guidance of GAMD. As a result, the

Central Government has a register of its holdings of fixed assets, which covers most MDAs and is
updated annually, with information on the usage, age and remaining economic life of assets. The register,
itself, is not published, although it is easily accessible to all authorised users through the GAMIS portal24.
The register includes land but it does not yet include sub-soil assets, which are relevant in Tanzania,
given its mineral resources.
182. Thus, the Government maintains a register of its holdings of non-financial assets, including
comprehensive information on their usage, age and remaining economic life. However, the register
itself is not published and it does not yet include a register of sub-soil assets. This dimension
therefore scores a “C”.
(iii) Transparency of asset disposal
183. The third dimension assesses whether the procedures for transfer and disposal of financial and non-
financial assets are established through legislation, regulation, or approved procedures. It examines
whether information is provided to the Legislature or the public on transfers and disposals.
184. The disposal of assets is governed by the Public Finance Act and the related Regulations (254-257),
with disposal by tender also subject to the Public Procurement Act. There are also specific regulations
and legislation relevant in particular cases, notably Police General Order 304 in relation to the disposal
of unclaimed or confiscated assets, TFDA (Tanzania Food & Drugs Agency) guidelines with regard to
the disposal of unwanted food or drugs, and the Wildlife Conservation Act in relation to the disposal
of wildlife. The “Public Assets Management Guideline” (Revised edition, 2019) also provides operational
guidance on the procedures for financial and non-financial asset disposal.
185. GAMD has responsibility for undertaking disposal or sale of assets for all CG institutions, including
extra-budgetary institutions (but not for LGAs or Public Corporations). The GAMD Annual Report
summarises the details of all transfers and disposals. This is a public document, available from the MoF
website, but it is not formally tabled with the Legislature. Summary information on the transfer and
disposal of assets is included in the audited consolidated financial statements, which are tabled annually
to Parliament and reviewed by the Public Accounts Committee (PAC). The consolidated financial
statements include the details required under IPSAS standards, including information on inventories,
gains and losses on disposal of financial and non-financial assets and non-current assets held for sale.
186. Clear procedures and rules for the transfer or disposal of financial and non-financial assets are
established in legislation and regulations. Comprehensive information on transfers and disposals is
presented in the GAMD annual report and summary information is presented in the consolidated
financial statements, tabled before Parliament and reviewed by the Public Accounts Committee. This
dimension therefore scores an “A”, giving a “B+” for the indicator as a whole.
24 The assessment team were allowed to view the GAMIS portal together with staff of GAMD.

187. Tanzania’s systems for the management of financial and non-financial assets have shown
continuous improvement, raising the score for this indicator from “B” in 2017 to “B+” in
2022. Through the PFMRP, significant efforts have been made to strengthen the functions of OTR and
GAMD – notably through the establishment and continuous updating and expansion of GAMIS. Further
improvements in the scope of reporting of non-financial assets as well as in the public access to the
GAMIS asset register would help to consolidate the gains made to date. In particular, it would be
desirable to include a register of sub-soil assets and to provide an appropriate mechanism for public
access to GAMIS.
PI-13 Debt management

Indicator
and dimensions
2017 2022 rationale
PI-13 Debt Scoring Method M2 (AV) No Change
B B
management
Records on domestic and foreign
debt and guaranteed debt are
(i) Recording and complete, accurate and updated
quarterly. Most information is
reporting of debt B B No Change
reconciled quarterly.
and guarantees Comprehensive management and
statistical reports are produced
annually.
The GLGGA grants the Minister of
Finance exclusive responsibility to
borrow, issue new debt and issue
loan guarantees on behalf of the CG.
GLGGA regulations provide
guidance for undertaking borrowing,
issuance of loan guarantees and for
other debt-related transactions. All
(ii) Approval of debt
B B such transactions are reported by No Change
and guarantees the ACGEN and monitored on a
quarterly basis by the NDMC. The
annual borrowing plan is approved
by Cabinet. However, establishment
of the Debt Management
Directorate (DMD) as the single
debt management entity is not yet
complete.
The MTDS is publicly available and
comprises a 5-year strategy for
existing and projected Government
debt. It indicates the preferred
(iii) Debt evolution of interest rate, refinancing
management C C and foreign currency risks but it does No Change
strategy not explicitly lay down target ranges
for these indicators. The annual
borrowing plan is broadly consistent
with the strategy but it is difficult to
compare directly.

188. This indicator assesses the management of domestic and foreign debt and guarantees. It seeks to
identify whether satisfactory management practices, records and controls are in place to ensure
efficient and effective debt management.
189. The Government Loans, Guarantees and Grants Act (GLGGA) Cap 134 of 1974 (revised 2004) and its
regulations provide the legal basis for public debt management in Tanzania. The Act empowers the
Accountant General (ACGEN) to compile and issue statements of amounts outstanding each year and
empowers the Minister of Finance to raise foreign and local loans respectively on behalf of GoT. A
National Debt Management Committee (article 16 of GLGGA) advises the Minister of Finance on the
contracting of external and domestic debt based on an evaluation against set criteria, including viability
and sustainability. It also advises on the issuance of Government guarantees for loans by Public
Corporations and LGAs and on the acceptance of grants on behalf of Government.
190. The overall debt strategy is laid down in the 2019/20 – 2023/24 Medium Term Debt Strategy (MTDS),
published in March 2019. This is in turn supported by Debt Sustainability Analyses (DSAs), undertaken
every two years, the most recent having been issued in September 2021. Within this framework, and
taking account of the cash flow projections consolidated by MoFP, annual borrowing plans are issued
each year. The implementation of these, and of the underlying debt strategy, are monitored on a
quarterly basis by the National Debt Management Committee (NDMC).
(i) Recording and reporting
191. The first dimension assesses the integrity and comprehensiveness of the recording and reporting of
domestic, foreign and guaranteed debt. In Tanzania, these processes fall under the responsibility of the
recently established Debt Management Directorate (DMD) of the MoFP. As of 2021/22, the DMD is
in process of establishment; it is intended that it should centralise all “front”, “middle” and “back” office
management functions for public debt but, during 2020/21 the “back office” functions remained with
the ACGEN. Thus, DMD has responsibility for coordinating all the debt service obligations of the
Central Government concerning external and domestic debt but not for the “back office” functions of
executing and reconciling payments. It has taken on board all “middle office” functions, including
responsibility for recording and reporting of debt and also for policy and strategy, as well as chairing
the Technical Debt Management Committee, which reports quarterly to the NDMC. In addition, it
shares the “front office” functions with the External Finance Department of MoFP, which continues to
take lead responsibility for negotiations with creditors (as stipulated in the GLGGA regulations.)
192. The CS-DRMS – Commonwealth Secretariat Debt Recording and Management System – has been
utilised for many years in Tanzania to record all debt transactions (payments, drawdowns, rescheduling,
revaluations, etc.), and the DMD was continuing to use CS-DRMS version 2.2 during fiscal year 2020/21.
In 2019, the Commonwealth Secretariat released the Meridian debt management system, which

constitutes a major upgrade on the CS-DRMS system25. The Secretariat is providing support to all CS-
DRMS users to manage the migration to Meridian. For Tanzania, this will mean first a migration to CS-
DRMS version 2.3 during 2021/22, and then a migration to Meridian probably in the subsequent fiscal
year.
193. The public debt section of ACGEN produces quarterly debt reports (for the NDMC), which provide
a comprehensive up-date of records of domestic and foreign debt and guaranteed loans. Reconciliation
with creditor records takes place at least quarterly but it is not undertaken as a single exercise but
rather as a set of separate processes with each creditor. For all loans and debts with the World Bank,
reconciliation is undertaken through the ACGEN’s online access to the World Bank’s debt
management system; with other creditors it is undertaken either upon receipt of Demand Notes or
through explicit requests for creditor records. The ACGEN produces a comprehensive Annual Public
Debt Bulletin, covering debt servicing, stock and operations.
194. Thus, records on domestic and foreign debt and guaranteed debt are complete, accurate and updated
quarterly. Most information is reconciled quarterly. Comprehensive management and statistical reports
are produced annually. Dimension (i) therefore scores a “B”.
(ii) Approval of debt and guarantees
195. The second dimension assesses the arrangements for the approval and control of the Government’s
contracting of loans and issuance of guarantees. The GLGGA grants the Minister of Finance exclusive
responsibility to borrow, issue new debt and issue loan guarantees on behalf of the Central
Government, after due consultation with the NDMC. The annual borrowing plan – prepared in the
light of the MTDS, the fiscal frame and the annual cash-flow projections – is approved by the Cabinet,
along with the annual cash-flow projections.
196. The GLGGA regulations provide guidance for undertaking borrowing, issuance of loan guarantees and
for other debt-related transactions. All such transactions are reported by the public debt section of
the ACGEN and monitored on a quarterly basis by the NDMC.
197. Thus, the GLGGA grants the Minister of Finance exclusive responsibility to borrow, issue new debt
and issue loan guarantees on behalf of the Central Government. GLGGA regulations provide guidance
for undertaking borrowing, issuance of loan guarantees and for other debt-related transactions. All
such transactions are reported by the public debt section of the ACGEN and monitored on a quarterly
25 The Meridian system is based on the latest technology, is fully web-based and runs in a browser. In addition, it has
the following advantages over CS-DRMS: (i) it is based on the IMF/ World Bank Public Sector Debt Guide, ensuring
that debt instruments are captured and reported in line with recommended statistical methods; (ii) it caters for a
wider range of debt instruments, including those creating contingent liabilities (e.g., loan guarantees); and (iii) it is
data flow driven, and can thus be customized to match the institutional set-up of debt management offices.
(https://www.development-finance.org/en/topics-of-work/debt-recording-and-management/faq-cs-drms-and-
meridian)

basis by the NDMC. The annual borrowing plan is approved by the Cabinet. However, pending the full
establishment of the Debt Management Directorate (DMD), not all debt-related transactions are
centralised within a single debt management agency. Therefore, dimension (ii) scores a “B”.
(iii) Debt management strategy
198. The third dimension assesses the existence and quality of the Government’s debt management strategy.
The MTDS presents GoT’s debt strategy for the 5-year period 2019/20 – 2023/24, covering existing
and projected debt. This is a public report, as are the annual debt reports produced by MoFP, reporting
against the strategy.
199. The MTDS presents a detailed description of the composition of the debt portfolio and its evolution
over time. It assesses the future risks to debt management, given the market conditions and the
Government’s fiscal strategy. It “stress-tests” four proposed strategies in relation to four scenarios,
with different levels of risk in relation to interest rate and foreign currency fluctuations. (All four
scenarios assume a high risk from increased costs of re-financing domestic debt based on current short-
term maturities.) The analysis concludes that the higher risks derive from exchange rate fluctuations
due to the large foreign currency debt exposure, the high costs of non-concessional financing, and the
relatively under-developed domestic borrowing market. In the light of this, the MTDS adopts a strategy
involving increased foreign borrowing from semi-concessional sources (such as AfDB loans) and Export
Credit Agencies (ECAs, such as China Exim and India Exim), combined with steps to lengthen domestic
debt maturities.
200. Thus, the MTDS is publicly available and comprises a 5-year strategy for existing and projected
Government debt. It indicates the preferred evolution of interest rate, refinancing and foreign currency
risks but it does not explicitly lay down target ranges for these indicators. The annual borrowing plan
is broadly consistent with the strategy, in following the same limits on Net Domestic Financing (NDF),
but it does not specify sources of borrowing at the same level of detail, so it is difficult to compare
directly. This dimension therefore scores a “C”, giving a “B” score overall for the indicator.
201. The Tanzania debt management system is robust and largely consistent with
international good practice, and has thus again scored a “B” just as it did in 2017. The
reforms currently being implemented should further strengthen debt management capacity. In
particular, the establishment of the DMD as the single debt management entity of Government, bringing
together “front”, “middle” and “back” office functions should serve to strengthen control over debt
and guarantees (potentially raising the score on dimension (ii) of this indicator to an “A”.) In addition,
the migration to the Commonwealth Secretariat’s Meridian system should facilitate further
improvements in the recording and reporting of debt and guarantees, including the systematisation of
monthly reconciliations (potentially also raising the score on dimension (i) to an “A”.)

202. The regular development and updating of a Medium Term Debt Strategy (MTDS) has been an important
step forward in laying out a clear debt strategy for the medium term. The next step in its development
should be to include in the strategy explicit target ranges for risk indicators relating to refinancing,
interest rates and foreign exchange rates. Measures should also be taken to refine the presentation of
the annual borrowing plan so as to simplify its direct comparison with the MTDS. These measures
would help to strengthen the effectiveness of the national debt management strategy, potentially
improving the score under dimension (iii) of this indicator.
3.5 Pillar IV – Policy-based Fiscal Strategy and Budgeting
203. Pillar IV assesses the mechanisms of formulation and approval of the fiscal strategy and the budget. In
particular, it considers whether they are prepared with due regard to Government strategic plans and
fiscal strategies over the medium term and on the basis of adequate macroeconomic and fiscal
projections. The pillar also assesses the process of Legislative scrutiny and approval of the budget.
PI-14 Macroeconomic and fiscal forecasting

Indicator
and dimensions
2017 2022 rationale
PI-14
Macroeconomic and C+ C+
fiscal forecasting
Macroeconomic forecasts are prepared
annually for the budget year and the
subsequent 4 years.. They are presented in
the Plan & Budget Guidelines (PBG).
Forecasts include estimates of GDP growth,
(i) Macroeconomic inflation, interest rates and the exchange rate.
A A No Change
forecasts A narrative explanation of the underlying
assumptions is included in the PBG and also
presented in summary form within the Budget
Speech. Forecasts incorporated are reviewed
and approved by a committee including BoT,
TRA and NBS in addition to MoFP.
The Government prepares forecasts of
revenue, expenditure and the budget balance
for the budget year and the two following
fiscal years. However, the documentation on
these forecasts presented to the Legislature,
(ii) Fiscal forecasts C C through the PBG and the Budget Speech, No Change
lacks a presentation of the revenue
breakdown for the 2 years consecutive to
the budget year and also lacks explanation of
the differences from the forecasts made in the
previous year’s budget.
The macro-fiscal forecasts prepared by the
Government do not include a qualitative
(iii) Macro-fiscal assessment of the impact of alternative
D D No Change
sensitivity analysis macroeconomic assumptions. Budget
documentation does not include any
discussion of forecast sensitivities.

204. This indicator measures the ability to create robust macroeconomic and fiscal forecasts. These are
crucial to developing a sustainable and realistic fiscal strategy and thus to ensuring predictability of
budget allocations. The indicator also assesses the Government’s capability with regard to the
estimation of the fiscal impact of potential changes in economic circumstances.
205. The first dimension assesses the extent to which comprehensive medium term macroeconomic
forecasts, and underlying assumptions, are prepared in order to inform the fiscal and budget planning
process, and whether they are submitted to the Legislature as part of the annual budget process. The
second dimension examines whether fiscal forecasts are prepared for the budget year and the two
following years. The third dimension examines the capacity of Government to develop and publish
alternative fiscal scenarios based on plausible changes in macroeconomic conditions.
(i) Macroeconomic forecasts
206. The Policy Analysis Division (PAD) of the Ministry of Finance has the responsibility for preparing
macroeconomic forecasts for the Government. These are prepared for the budget year and the
subsequent 4 years, based on the use of the MACMOD forecasting model. They are updated annually
and presented as part of the Plan & Budget Guidelines (PBG)26
207. These forecasts include estimates of GDP growth, inflation, interest rates and the exchange rate. A
narrative explanation of the underlying assumptions for these estimates is included in the PBG and also
presented in summary form within the Budget Speech. The lead entity managing the preparation
process is PAD but the MACMOD forecasts incorporated in the budget and the fiscal strategy are
reviewed and approved by a committee including the Bank of Tanzania (BoT), the Tanzania Revenue
Authority (TRA) and the National Bureau of Statistics (NBS) in addition to MoFP. On this basis,
dimension (i) scores an “A”.
(ii) Fiscal forecasts
208. On the basis of the macroeconomic forecasts generated by MACMOD and the Government’s adopted
fiscal strategy, the PAD develop forecasts for revenue, expenditure and the budget balance for the
budget year and the two following fiscal years. These are prepared in some detail within internal
documentation and also in the documentation which is shared with the IMF programme monitoring
missions and Article IV teams.
26 The forecasts and related fiscal ceilings are first presented to Cabinet for approval in November of each year.
They are then revised and updated for inclusion in the Planning & Budget Guidelines (PBG), which are tabled
before Parliament in January or February.

209. However, the documentation submitted to the Legislature as the ‘budget frame’ for the 2021/22 budget
incorporated within the PBG of February 2021 and also summarised in the Budget Speech of 10th, June
2021 is more limited in its scope and in its degree of detail27:
§ The Budget Speech presents the projected revenues, expenditures and the budget balance
for the budget year only, not for the subsequent two fiscal years. Moreover, although the
anticipated budget deficit is presented as a percentage of GDP, its derivation is not
presented because the budget frame is structured in line with an “accounting format”, in
which all sources of financing are grouped - including loans - and all expenditures are
grouped including loan amortisation (Table No.2, p.111). In other words, a GFS-consistent
table showing the derivation of the fiscal deficit is not included in the Budget Speech. The
Budget Speech does include a detailed breakdown of the projected domestic revenue for
the budget year, and of the past trends in revenues broken down by tax/ revenue type
(Annex 1, p.129.) but this detailed revenue analysis is not included for the two forward
years.
§ The PBG shows the estimated revenues, expenditures and budget balance for the budget
year and the two subsequent fiscal years and this is presented in a GFS-consistent set of
tables (Tables 3.1 & 3.2). The PBG also include a presentation of the assumptions
underlying the budget forecasts. On the other hand, revenues are presented in an
aggregated way, showing domestic revenue, LGA’s own sources, external loans and grants,
and domestic and external non-concessional borrowing. For domestic revenue, the only
distinction is between tax and non-tax, with no breakdown into major tax types (income
tax, VAT, customs duties, etc.)
210. Thus, the Government prepares forecasts of revenue, expenditure and the budget balance for the
budget year and the two following fiscal years. Internal documentation on these matters is
comprehensive. However, the forecasts presented to the Legislature through the PBG and the Budget
Speech lack a detailed presentation of the revenue forecasts, broken down by revenue type. This
documentation also lacks an analysis and explanation of the main differences from the forecasts made
in the previous year’s budget. Due to the shortcomings in the quality and content of the fiscal
forecasts presented to the Legislature, dimension (ii) scores a “C”.
(iii) Macro-fiscal sensitivity analysis
211. Ideally, the presentation of forecasts to Cabinet, as well as the Legislature and the public, should include
a presentation of alternative fiscal scenarios based on plausible changes in macro-economic conditions
which might have a potential impact on revenue, expenditure and debt. There should also be an analysis
27 The assessment team also examined the equivalent documentation for the 2020/21 budget and found that the
presentation format was exactly the same.

and a discussion of the sensitivity of the adopted projections to different outcomes with respect to key
macroeconomic variables. A presentation of different scenarios and of the sensitivities to different
outcomes allows decision-makers to have a sense of the degree of risk implicit in the adopted fiscal
strategy. If economic growth was one percentage point slower would this imply a large and potentially
unsustainable rise in the fiscal deficit? Or conversely, if growth was one percentage point higher, would
that open up significant space for greater capital investment? By addressing such questions, it becomes
possible to fine-tune the fiscal strategy so as to optimise the use of the available fiscal space, while
avoiding excessive risks.
212. However, although documentation does include a discussion of fiscal risks, the macro-fiscal forecasts
prepared by the Government do not include a qualitative assessment of the impact of alternative
macroeconomic assumptions. Budget documentation does not include any discussion of forecast
sensitivities. Dimension (iii) therefore scores a “D”, giving a “C+” for the indicator as a
whole.
213. There has been no change in the scoring of this indicator, being accorded a “C+” score
both in 2017 and 2022. On the other hand, in the judgement of the assessment team, there has been
an improvement since 2017 in the quality of the internal documentation and analysis produced from
macroeconomic and fiscal forecasting work. The PAD team also spoke of the improved training and
the build-up of capabilities since 2017. It therefore seems reasonable to consider that there is the
internal capability to address the shortcomings identified by this indicator through a structured effort:
a) to improve the coverage, cohesiveness and “user-friendliness” of the presentation to the Legislature
of the macroeconomic and fiscal framework, as incorporated in the PBG and the Budget Speech, and
b) to incorporate sensitivity analysis into the forecasting process.
PI-15 Fiscal strategy
214. This indicator provides an analysis of the capacity to develop and implement a clear fiscal strategy. It
also measures the ability to develop and assess the fiscal impact of revenue and expenditure policy
proposals that support the achievement of the Government’s fiscal goals.
215. A fiscal strategy enables Government to articulate to the institutions of central Government, to the
Legislature and to the public its fiscal policy objectives. It provides the benchmarks against which the
fiscal impact of revenue and expenditure proposals can be assessed during the budget preparation
process. In this way, it is the fiscal strategy and the related targets that drive the budget, rather than
the fiscal outcomes being the unplanned consequence of poor budgetary decisions.


Indicator
Score Score Explanation for 2022 score Change and
and dimensions
2017 2022 rationale
PI-15 Fiscal Significant
D+ B Scoring Method M2 (AV)
strategy Improvement
Government prepares and presents in Improved score, due
the Budget Speech and Budget to the inclusion in the
Documents estimates of the fiscal Budget Speech and
impact in the budget year of all Budget documents of
proposed changes in revenue and the fiscal impact of
(i) Fiscal impact of expenditure policies. Estimates of expenditure measures.
D C anticipated fiscal impacts for the (Previously such
policy proposals subsequent two fiscal years are estimates covered
included only in the Planning and revenue policies only.)
Budget Guidelines (PBG): these are at
a highly aggregate level which cannot
be related to specific tax or spending
measures.
Within the PBG, the Government has Improved score, due
adopted, submitted to the Legislature to the inclusion in the
and published a current fiscal strategy PBG of explicit, time-
that includes explicit, time based based quantitative
quantitative fiscal targets, together fiscal targets, including
(ii) Fiscal strategy with qualitative fiscal objectives for the for the fiscal deficit.
C A
adoption budget year and the following two
years. The FYDP III extends these
projections for a further two years,
based on macroeconomic and fiscal
projections consistent with those in
the PBG and the 2021/22 Budget.
The Budget Speech and the PBG, both Improved score due to
of which are submitted to the inclusion in the budget
Legislature each year, include reviews documentation of a
(iii) Reporting on of performance against the fiscal more comprehensive
C B targets for the previous FY. However, explanation of the
fiscal outcomes the explanation of the reasons for the divergences from
main deviations from the targets is previous fiscal targets.
only occasionally accompanied by
discussion of corrective actions.
(i) Fiscal Impact of Policy Proposals
216. The first dimension assesses the capacity of the Government to estimate the fiscal impact of the
revenue and expenditure proposals developed during budget preparation. Such an assessment is critical
to ensure that new policies and expenditure programmes are affordable and sustainable. This dimension
specifically assesses the extent to which details of the costs and assumptions of revenue and
expenditure policies are incorporated in the budget documentation which is submitted to the
Legislature.
217. In Tanzania, such assessments are undertaken by MoFP and by the larger sector ministries, these issues
are debated during the process of budget scrutiny by MoFP and incorporated in two sets of documents
which are submitted to the Legislature. These are the Planning & Budget Guidelines (PBG), approved
by Cabinet normally in November of each year, and tabled before the Legislature in December or

January, and the Budget documents themselves, including the Minister of Finance’s Budget Speech. It is
noteworthy that the Medium Term Expenditure Framework documents produced by each MDA,
covering a 5-year period, including the budget year, are not tabled before the Legislature. Thus,
although they do present multi-year estimates of the fiscal impact of expenditure programmes and
policies, the MTEF documents do not fulfil the requirements assessed through this dimension of
indicator PI-15.
218. The fiscal impact of revenue and expenditure proposals are captured in the PBG and the Budget Speech
and related Budget documents as follows:
a) The Budget Speech presents in detail the anticipated impacts – positive and negative - of new
tax measures, providing precise quantitative estimates of these impacts. These estimates are
for the budget year only, and no estimates are presented for subsequent fiscal years.
b) The Budget Speech also includes a presentation of all new major expenditure initiatives,
including both high profile projects, such as the Mwalimu Nyerere Hydropower Plant and the
Standard Gauge Railway (SGR), as well as broader expenditure initiatives such as the
introduction of universal health care insurance coverage, or increased spending on rural roads
by the Tanzania Rural Roads Agency (TARURA) funded through increased fuel levies (Budget
Speech of June 2021 for FY 2021/22). The Speech itself does not present detailed expenditure
estimates for all of these policies but they can be found in the relevant volumes of the Budget
documents themselves. As is the case for revenue policies, the details of the impact of
expenditure policies cover the budget year only.
c) The PBG does present medium term (3 year) estimates of the impacts of revenue and
expenditure measures but these are presented at an aggregate level showing tax and non-tax
revenue, grants and loans on the revenue side and spending by high level economic and
functional classification on the expenditure side. These medium term estimates cannot
therefore be related to specific revenue or expenditure policy measures.
219. Thus, Government prepares and presents estimates of the fiscal impact in the budget year of all
proposed changes in revenue and expenditure policies. However, the presentation of the anticipated
fiscal impacts for the subsequent two fiscal years of revenue and expenditure policy measures are at a
highly aggregate level and cannot be related to specific tax or spending measures. Dimension (i)
therefore scores a “C”.
(ii) Fiscal strategy adoption
220. The second dimension assesses the extent to which Government prepares a fiscal strategy that sets
out fiscal objectives for at least the budget year and the two following fiscal years. A well-formulated
fiscal strategy includes numerical targets for the key policy parameters, such as the fiscal balance and
the level of revenues and of capital and recurrent expenditures, as well as projections of changes in the
stock of financial assets and liabilities – particularly debt. Such a strategy may be presented as a formal

statement or plan, as a set of targets in the annual budget documentation, or potentially as fiscal rules
established through legislation.
221. The Tanzania Budget Act of 2015 lays out in its Article 4 a series of principles of fiscal responsibility.
These include, for example, ‘a borrowing policy that ensures that public debt is sustainable’, ‘prioritisation of
productive expenditures rather than expenditures geared towards present consumption’, and other such
principles geared towards a sustainable, effective and efficient fiscal strategy. In addition, Tanzania has
stated its commitment to the macroeconomic convergence criteria of the East African Community
(EAC), which include a commitment to maintain the fiscal deficit after grants at a level no more than
3% of GDP28.
222. FYDP III, the third national 5-year development plan covering 2021/22 – 2025/26 includes quantitative
targets for its financing, clearly separating between public and private resources. A target of 36.6 % of
the annual budget is projected to be allocated through the Development Budget to investment projects
within FYDP III. The financing chapter of the Plan29 includes a projection of the anticipated aggregate
volume of budget spending and of the anticipated financing sources (domestic revenue, ODA flows,
borrowing) over the FYDP III period. The projection is linked to the macroeconomic projections
presented in the Plan, relating to GDP growth and inflation. The FYDP III thus fulfils many of the
requirements of a medium term fiscal strategy, as specified above. It does not include an explicit
presentation of the anticipated evolution of the fiscal deficit over the FYDP III period, although this can
be calculated from the presentation of the resource envelope (Table No.3), which reveals a targeted
fiscal deficit after grants of 1.83% GDP in 2021/22, falling to 0.96% GDP in 2025/26.
223. The Government’s Fiscal Strategy is presented in the Planning & Budget Guidelines
(PBG) and in the Budget Speech of the Minister of Finance. The latter re-iterates the
Government’s commitment to the EAC convergence criteria on the fiscal deficit after grants and
presents the target fiscal deficit for 2021/22 as 1.8% GDP, consistent with the projections in the FYDP
III. The PBG presents the medium term fiscal strategy, including 3-year targets for the key components
of revenue, expenditure and financing as well as the fiscal deficit before and after grants. These targets
are again consistent with FYDP III and with the EAC convergence targets 30 . In addition to these
28 This is one of the EAC’s macroeconomic convergence criteria for entry into monetary union. The other three key
convergence criteria are: (i) Headline inflation of no more than 8%; (ii) Gross public debt of no more than 50% of
GDP in net present value terms; and (iii) Maintenance of official foreign reserves of at least 4.5 months of imports.
Tanzania committed to meet these criteria over the second phase of convergence over 2013 – 2020, and was
successful in this endeavour. The Coronavirus pandemic and the related effects have since thrown performance
off track but negotiations have been held within EAC to adopt temporary revisions to these criteria.
29 United Republic of Tanzania, (June, 2021), National Five Year Development Plan 2021/22 – 2025/26, Financing Strategy,
Ministry of Finance & Planning, Dodoma.
30 The assessment team received the PBG for the 2021/22 Budget, issued in February 2021 in Ki-Swahili. These show
targets for the fiscal deficit after grants of 1.8 %, 1.7% and 1.3% of GDP for 2021/22, 2022/23 and 2023/24
respectively. (Table 3.2.)

quantitative targets, the PBG also presents qualitative targets, relating amongst other things to the
control of the accumulation of arrears and the accelerated use of ICT systems in government
operations.
224. Thus, within the Planning & Budget Guidelines, the Government has adopted, submitted to the
Legislature and published a current fiscal strategy that includes explicit, time based quantitative fiscal
targets, together with qualitative fiscal objectives for the budget year and the following two years. The
FYDP III extends these projections for a further two years (to 2025/26), based on macroeconomic and
fiscal projections consistent with those in the PBG and the 2021/22 Budget. Dimension (ii) therefore
scores an “A”.
(iii) Reporting on fiscal outcomes
225. The third dimension assesses the extent to which the Government – as part of the annual
documentation submitted to the Legislature – makes available an assessment of its achievements against
its stated fiscal objectives and targets. This Government assessment should include an explanation of
any deviations from the approved targets and a statement of the corrective actions taken.
226. In each fiscal year, one of the first pieces of analytical work coordinated by the PAD (Policy Analysis
Directorate of the MoFP) is the preparation of a review of macroeconomic and fiscal developments
and an update of macro and fiscal projections for the current budget year and the subsequent three
fiscal years. This is undertaken by the Financial Programming Working Group, which includes staff from
MoFP, BoT, TRA and the National Bureau of Statistics (NBS). The document includes an assessment
of progress made against the fiscal strategy, during the recently completed fiscal year31. This document
is not submitted to the Legislature but it forms the basis of the initial chapter of the Planning & Budget
Guidelines (PBG), which, as previously noted, are approved by Cabinet, submitted to the Legislature
and subsequently published.
227. Both the Budget Speech and the Plan and Budget Guidelines (PBG), submitted to the Legislature in
advance of the budget documentation, include reviews of performance against the fiscal targets
established for the previous FY. There is also some explanation of the reasons for the main deviations
from the targets set. However, the presentation of the reasons for deviations is not comprehensive
and only a small number of the deviations identified include discussion of corrective actions.
228. Thus, the Government prepares an internal report on the progress made against its fiscal strategy. In
addition, the Budget Speech and the PBG, both of which are submitted to the Legislature, include
reviews of performance against the fiscal targets for the previous FY. However, the explanation of the
31 United Republic of Tanzania, (August. 2021), Report on Macroeconomic Developments and Projections, Financial
Programming Working Group, MoFP.

reasons for the main deviations is only occasionally accompanied by discussion of corrective actions.
This dimension therefore scores a “B”, giving a “B” for the indicator as a whole.
229. There has been a significant improvement in the scoring of this indicator from a “D+” in
2017 to a “B” in 2022. This has been the result of building on existing practices and procedures, and
formalising the processes of fiscal strategy formulation and reporting to the Legislature. Many of the
underlying processes examined by this indicator have been in place for many years in Tanzania. In
particular, the definition of a fiscal strategy has been the habitual starting point in the budget formulation
process. Similarly, the practice of reporting on performance against the fiscal targets of the previous
year is a well-established aspect of the Minister of Finance’s annual Budget Speech. Progress has been
made by giving more attention to the content and the formats used for presentation of information in
the PBG. Specifically, the presentation of 3-year fiscal strategy targets has been made more explicit and
the process of reporting performance against fiscal targets has been improved.
230. Further progress could be made by introducing in the PBG more detailed multi-year
estimates of the impacts of new revenue and expenditure policies, as well as a more
comprehensive discussion of the reasons for past deviations from targets and the
proposed corrective actions. What would be required would be a careful assessment of existing
documents against the criteria for this indicator and the previous one (PI-14), so as to develop a
structured plan for their improvement.
231. The Government might also give consideration to the idea of separating the presentation of the Fiscal
Strategy in the PBG from the guidelines for the preparation of Plans and Budgets. The former, which
is Part One of the PBG, is of major significance to all Tanzanian citizens, investors, and Development
Partners. The latter, Part Two, comprises internal guidelines to orient the process of formulation of
plans and budgets, and is of primary interest to MDA staff. It is prudent to ensure both are approved
by Cabinet and tabled before the Legislature, but their wider audiences are quite different. Whereas a
“glossy” version in English of Part One would be a useful asset in negotiations with financing institutions
and discussions with the private sector, the latter could follow a simpler format and need not
necessarily be presented in English.

PI-16 Medium term perspective in expenditure budgeting

Indicator
2022
PI-16 Medium term
perspective in D D
expenditure budgeting
Each MDA produces a detailed 3-
year MTEF as part of the budget
formulation process but the MTEF
is not included in the annual budget
documentation, which is limited to
estimates of the budget year itself.
(i) Medium-term This may be attributable to the
D D No Change
expenditure estimates activity-based costing approach
used to develop the sector MTEFs,
which results in voluminous
documents and worksheets that
are exceedingly difficult to adapt
and refine in the time available.
The aggregate “budget frame”
included in the Plan & Budget
Guidelines, includes indicative
three-year targets for the overall
(ii) Medium-term
D D fiscal strategy. However, the No Change
expenditure ceilings ceilings issued to MDAs are limited
to the budget year only and do not
include the subsequent two fiscal
years.
Medium-term strategic plans are
prepared for the major sector
(iii) Alignment of ministries, which together
comprise more than 25% by value
strategic plans and C C No Change
of CG expenditure. Some
medium-term budgets expenditure proposals in the
annual budget estimates align with
these strategic plans.
Budget documents do not provide
(iv) Consistency of an explanation of the changes to
budgets with previous aggregate expenditure estimates
D D between the second year of the
No Change
year’s medium term
estimates most recent MTEF and the first
year of the new MTEF.
232. This indicator examines the extent to which expenditure budgets are prepared for the medium term
within explicit medium-term budget ceilings. It also examines the extent to which annual budgets are
based upon medium term budget estimates and the extent to which those medium term estimates are
in turn derived from strategic plans.
(i) Medium-term expenditure estimates
233. The first dimension assesses the extent to which medium term estimates are prepared and updated as
part of the annual budget process. In Tanzania, each of the major MDAs produces a Medium Term

Expenditure Framework (MTEF), as part of the budget preparation process. For the 2021/22 budget
formulation process, draft MTEFs have been submitted by the MDAs in March 2021 for consideration
by the MoFP32.
234. The presentation of the MTEF for each MDA includes a projected breakdown by sub-vote of revenue,
recurrent expenditure and development expenditure. The projections of revenue as well as the overall
summary tables have a three-year perspective, covering the budget year and the two subsequent fiscal
years. For expenditure, projections are also presented for a three-year time frame (2021/22 – 2023/24
in the MTEF documents tabled in March 2021). The expenditure projections are derived from an
activity-based costing framework, based upon the identification, within each sub-vote, of a series of
target objectives. For each target objective, activities are then identified to be undertaken over the 3-
year period in pursuit of the stated objective and costings are developed for each of these activities,
using the 5-digit GFS codes for the economic classification.
235. The resulting worksheets are voluminous and highly detailed, making their assessment and review by
MoFP in the budget scrutiny process a very challenging task. In practice, it seems that the feedback
provided by MoFP to MDAs is limited to general comments on the overall MTEF, with detailed
comments and changes being focused on the proposals for the budget year. In the next stage of the
budget formulation process, documentation covers the budget year only. There is no further updating
of the MTEF or any attempt to produce a version approved by the Executive or the Legislature. The
budget documentation submitted to the Legislature for consideration of the Executive’s Budget
Proposal does not include the MTEF and presents estimates only for the budget year itself.
236. Thus, although each MDA produces a detailed 3-year MTEF as part of the budget formulation process,
the MTEF is not included in the annual budget documentation, which is limited to estimates of the
budget year itself. In part, this may be attributable to the activity-based costing approach used by the
MDAs to develop their MTEFs, which generates very detailed costings by sub-vote, resulting in
voluminous documents and worksheets that are exceedingly difficult to adapt and refine in the time
available. This dimension therefore scores a “D”.
(ii) Medium-term expenditure ceilings
237. The second dimension assesses whether medium term expenditure ceilings are issued to MDAs in
order to guide the preparation of the sector MTEFs and ensure that they are consistent with
Government fiscal policy and budgetary objectives. The aggregate “budget frame” included in the Plan
& Budget Guidelines, issued by MoFP to initiate the process of budget formulation, includes three-year
targets for the overall fiscal strategy. However, the ceilings issued to MDAs are limited to the budget
32 The assessment team were able to analyse in detail the 2021/22 – 2023/24 MTEF documents of the Ministry of
Works, Transport & Communications (MWTC) and the Ministry of Education, Science, Technology & Vocational
training (MESTVT), and to view various other MTEFs to confirm the similarity of their structures.

year only and do not include the subsequent two fiscal years. This dimension therefore scores a
“D”.
(iii) Alignment of strategic plans and medium-term budgets
238. The third dimension assesses the extent to which the expenditure proposals approved in the budget
are aligned with costed ministry strategic plans or sector strategies. The guiding framework for planning
and strategic budgeting in Tanzania is provided by the Third Five Year Development Plan (FYDP III),
covering the period 2021/22 – 2025/26, which amongst other things includes indicative costings for the
Government’s priority projects. These priority projects are then reflected in the sector strategies of
the major ministries, notably for Works, Energy, Transport, Education, Health and Water, which
together comprise substantially more than 25% of CG expenditure by value. The costings in these
sector strategies are focused on development projects. However, some sector strategies – notably for
education - do also include projections of recurrent expenditure. Foe these major ministries, which
comprise more than 25% by value of CG expenditure, there is an alignment with the allocations
foreseen in the annual budget.
239. Thus, medium-term strategic plans are prepared for the major sector ministries, which together
comprise more than 25% by value of CG expenditure. Some expenditure proposals in the annual budget
estimates align with these strategic plans. Dimension (iii) therefore scores a “C”.
(iv) Consistency of budgets with previous year’s medium term estimates
240. The final dimension considers whether the expenditure estimates in the last MTEF provide the basis
for the preparation of the current MTEF. In other words, do the projected estimates for years “t+1”
and “t+2” in the last MTEF provide the basis for years “t” and “t+1” in the new MTEF? And where
there are changes are these clearly explained?
241. As we have noted, in Tanzania the MTEF is not formally approved as a unified document or a unified
set of sector MTEFs, which reflect the fiscal strategy and the strategic objectives of Government.
Rather, it comprises a number of budgetary proposals by MDAs which take a medium term format and
which loosely follow the budget frame laid down in the Plan & Budget Guidelines. It is therefore not
surprising that there are significant differences in the future years’ estimates presented in one MTEF
and the updated estimates for the same years produced in the next MTEF. Moreover, there is no
attempt to explain these changes or to justify them by reference to specific changes in macroeconomic
circumstances or in Government policy.
242. Budget documents do not provide an explanation of the changes to aggregate expenditure estimates
between the second year of the most recent MTEF and the first year of the new MTEF. This
dimension therefore scores a “D”, yielding also a “D” score for the indicator as a whole.

243. The scoring of this indicator has remained unchanged, scoring a “D” in 2017 and in 2022.
Many of the same problems identified in 2017 continue to be present. In particular, the processes of
elaboration and revision of the MTEFs for each MDA continue to suffer from the peculiarly detailed
format that has been chosen, based upon the formulation of medium term projections on the basis of
micro-level activity-based costing. Apart from the heavy burden of work that the preparation of such
formats must represent, their length and complexity make them very difficult to adapt and change in
the light of the budget scrutiny process. Successful international examples of effective MTEFs are
normally structured to focus on high-level programmes and strategic policies and would not seek to
build up expenditure estimates from the activity level.
244. A review of the approach to the MTEF would appear to be overdue, with the objective of
developing a framework for medium term budgeting that is simple and fit for purpose. In
particular, it is important to consider what is the principal objective of the MTEF in Tanzania and to
adapt the design to a set of processes that can deliver that objective, given the institutional and political
context, as well as the prevailing human resource and other constraints.
PI-17 Budget preparation process

2017 2022 rationale
PI-17 Budget Scoring Method M2 (AV) No Change
A A
preparation process
A clear budget calendar exists,
supported by the Budget Act
(2015) and Regulations. It is
(i) Budget calendar A A adhered to and allows MDAs over No Change
6 weeks from receipt of the
Budget Circular to complete their
estimates on time.
A comprehensive budget circular –
the PBG - has been issued annually
to MDAs covering total budget
expenditure for the full fiscal year.
This circular, and its accompanying
(ii) Guidance on budget aggregate, sectoral and, for
A A 2022/23 ministerial ceilings, has
No Change
preparation
been approved by Cabinet in
advance of its circulation to
MDAs. These ceilings have been
reflected in the subsequently
approved budgets.
The Executive’s Budget Proposal
(EBP) has been submitted to
(iii) Budget submission to Parliament in April in each of the
A A No Change
the legislature last three fiscal years, in slightly
more than two months before the
end of the fiscal year on 30th, June.

245. This indicator considers the effectiveness of participation in the budget formulation process by relevant
stakeholders, including political leadership, also assessing whether participation is orderly and timely.
(i) Budget calendar
246. A new budget calendar was introduced for the formulation of the 2013/14 Budget aimed at bringing
forward to June the date of approval of the Budget by the Legislature so as to ensure that the fiscal
year would start with an approved budget. It also aimed to incorporate a formal place in the calendar
for long and medium term planning and the definition of a medium term economic and financial plan.
The revised calendar was subsequently confirmed in Part IV of the Budget Act (2015) and Regulations.
The key elements are as follows:
§ September: MoFP Review of fiscal performance of past FY & updating of fiscal strategy
§ November: Approval of Plan & Budget Guidelines (PBG) & ceilings by Cabinet
§ Dec. – Feb: Preparation of Budget/ MTEF estimates by MDAs
§ February: Submission of PBG to Parliament with updated budget frame
§ March: MDAs submit MTEF/ Budget estimates for MoFP scrutiny
§ April: Approval by Cabinet of Executive’s Budget Proposal & submission to Parliament
§ May: EBP considered by Parliament, through scrutiny by specialised committees
§ June: Budget Speech, plenary Budget debate and approval.
Source: Budget Management Directorate, Ministry of Finance and Planning
247. For the 2021/22 budget formulation process, the Budget Management Directorate (BMD) of MoFP
issued a slightly revised budget formulation calendar (Table 3-11). This followed the key dates
established in the Budget Act (2015) but introduced an enhanced role for the Sectoral Parliamentary
Standing Committees, specifically allowing them to review and comment upon sectoral plans and
budgets during April, prior to their approval by Cabinet and formal submission to Parliament. The
budget formulation calendar allows the MDAs substantially over 6 weeks (between November and
March) to develop and submit their updated MTEFs and annual budget proposals to the MoFP.
248. Thus, as supported by Part IV of the Budget Act (2015) and Regulations, a clear budget calendar exists
and is respected. Interviews with the BMD, Bunge, PO-RALG, as well as TANROADS and the
Municipality of Dodoma confirmed that the calendar had been adhered to and that it allowed MDAs
more than 6 weeks from receipt of the Budget Circular to complete their estimates on time. The first
dimension therefore scores an “A”.

Table 3-11: New Budget Formulation Calendar for 2021/22 Annual Budget
Figure 1:SUMMARY OF MAJOR EVENTS FOR NEW BUDGET CYCLE
DATE MAIN ACTIVITIES
AUG-OCT Starting of Plan and Budget Guidelines Preparation and Finalization
NOV Approval of Plan and Budget Guidelines by Cabinet
Circulation of Plan and Budget Guidelines to MDAs, RSs, LGAs and Public
Institutions
NOV-FEB Preparation of Plans and Budget by MDAs, RSs, LGAs and Public
Institutions
MARCH Detailed Scrutiny of Sectoral Plans and Budget Proposals by MOF & POPC
together with MDAs, RSs, LGAs and Public Institutions and entering Budget
Data into IFMS
APRIL Detailed scrutiny and approval of Sectoral Plans and Budget Proposals by
Sectoral Parliamentary Standing Committees
MAY Approval of final Plans and Budget Estimates adjustments by Cabinet

before preparation of Budget Books
MAY Printing of Budget Books and submitting to Parliament for Debate
JUNE Budget Authorization by Parliament
JULY Presentation of Ministerial Policy Statements by Ministries to Parliament
1JULY- JUNE Plans and Budget Execution
(ii) Guidance on Budget preparation
249. The Plan & Budget Guidelines (PBG) were established within the Budget Act of 2015. They provide a
comprehensive framework for the preparation of budget and MTEF estimates, covering all budget
expenditure (Development & Recurrent) for the budget year, and providing detailed formats and
instructions. In the fiscal years here assessed, 2019/20 – 2021/22, the PBG have included a medium-
term fiscal strategy and a related set of aggregate and sectoral ceilings for the budget year. These
ceilings have been approved with the PBG by Cabinet prior to their distribution to MDAs, in November
or December of each year. In February of each year, more detailed one-year ceilings have been
approved by Cabinet and issued for each MDA divided between Development – internally funded and
externally funded, Recurrent PE (Personal Emoluments) and Recurrent OC (Other Charges). These
ceilings have been reflected in the subsequently approved budgets. The PBG of November 2021, guiding
the formulation of the 2022/ 2023 budget provided both aggregate and ministerial ceilings, again
approved by Cabinet prior to their circulation to MDAs.
250. Thus, a comprehensive budget circular – the PBG- has been issued annually to MDAs covering total
budget expenditure for the full fiscal year. This circular, and its accompanying aggregate, sectoral and,
most recently ministerial ceilings, has been approved by Cabinet in advance of its circulation to MDAs.
Dimension (ii) therefore scores an “A”.

(iii) Budget submission to the Legislature
251. According to information provided by the Clerk to the Parliament, and confirmed by the Budget
Management Directorate of MoFP, the Executive’s Budget Proposal (EBP) has been submitted to
Parliament in April in each of the last three fiscal years, in other words slightly more than two months
before the end of the fiscal year on 30th, June. Dimension (iii) therefore scores an “A”, thus
giving an “A” score for the indicator as a whole.
252. The Budget Preparation process scored an “A” both in 2017 and 2022. The process of budget
formulation in Tanzania has always been orderly and well managed and the quality of the budget
calendar and guidance on budget preparation has remained good. The key change registered is a further
improvement in the timing of the submission of the Budget Proposal to the Legislature, which has been
more than two months before the end of the fiscal year in each of the 3 most recent fiscal years, as
compared with 2 of the 3 most recent fiscal years in 2017. The only point of concern, going forward,
is to ensure that the process for communication of budget ceilings to MDAs is standardized and linked
in an appropriate way to the budget formulation calendar.
PI-18 Legislative scrutiny of budgets
253. This indicator assesses the nature and extent of legislative scrutiny of the annual budget proposals. It
considers the methods by which the Legislature scrutinises, debates and approves the annual budget,
including the extent to which the procedures for Legislative scrutiny are well established and respected.
The indicator also assesses the existence of rules for in-year amendments to the budget, without ex-
ante approval by the Parliament.


Indicator and
dimensions
2017 2022 rationale
PI-18 Legislative Scoring Method M1 (WL) Improvement
B+ A
scrutiny of budgets
Parliament reviews fiscal policies as Score has improved
contained in the PBG, as well as the due to the
details of planned revenue and improvement in the
expenditures presented in the Budget information
Documents. The PBG include medium presented to the
(i) Scope of budget term forecasts and priorities, and an Legislature in the
B A aggregate budget frame, with details of PBG, specifically
scrutiny
the anticipated fiscal deficit and its through the
planned financing. This process has been inclusion of greater
followed for the last three completed information on
fiscal years and also for the approval of medium term
the 2022/23 Budget priorities.
The Legislature’s procedures for scrutiny
of budget proposals include specialised
committees, public consultations and
(ii) Legislative agreed negotiation processes. Procedures
are approved in advance by the
procedures for A A Legislature and respected. The
No Change
budget scrutiny Parliamentary Budget Committee
coordinates the process with technical
support from the Parliamentary Budget
Office.
The Legislature approved the annual Improvement in
(iii) Timing of budget
B A budget in advance of the fiscal year in timing of Budget
approval 2018, 2019 and 2020. approval
(iv) Rules for budget Clear rules exist in the Budget Act
(2015) and Regulations for in-year budget
adjustments by the A A No Change
amendments by the Executive. These are
Executive always adhered to.
(i) Scope of Budget scrutiny
254. The Parliament – guided by the Parliamentary Budget Committee - reviews fiscal policies as contained
in the PBG, and the details of planned revenue and expenditures presented in the Budget Documents.
The PBG present medium term macroeconomic and fiscal forecasts as well as medium-term priorities,
and aggregate budget data in the form of a budget frame divided by revenues and expenditures, with
details of the anticipated fiscal deficit and its planned financing. This process has been followed for the
last three completed fiscal years and also for the approval of the 2022/23 Budget. Dimension (i)
therefore scores an “A”.
(ii) Legislative procedures for Budget scrutiny
255. The main coordinating committee for the review of the Executive’s Budget Proposal (EBP) is the
Parliamentary Budget Committee which has technical support from the Parliamentary Budget Office.
The procedures for budget scrutiny are laid down in Parliamentary standing orders which are approved
by the Legislature in advance of the budget hearings, and subsequently respected. They involve public
participation structures and specialized committees, including sectoral committees. The Legislature’s

procedures for scrutiny of budget proposals also include agreed negotiation processes. These have
been followed for the last three completed fiscal years and also for the approval of the 2022/23 Budget.
Dimension (ii) therefore scores an “A”.
(iii) Timing of Budget approval
256. The Legislature approved the annual budget in advance of the 1st, July start of the new fiscal year in the
three assessment years – 2018, 2019 and 2020. The Office of the Clerk to the Parliament report that
the budget approval dates were as follows:
§ 2018/19: 26th, June, 2018

§ 2019/20: 25th, June, 2019
§ 2020/21: 15th, June 2020.
257. The assessment team were also advised that the 2021/22 budget was approved on 24th, June 2021.
Dimension (iii) therefore scores a “A”.
(iv) Rules for Budget adjustments by the Executive
258. Section 41 of the Budget Act Cap 439 and Sections 26-28 of the Regulations describe clear rules for
budget reallocation. An Accounting Officer may reallocate funds within a vote up to 7% of the total
budget allocation for the respective vote, so long as these reallocations do not involve ring-fenced
expenditures, or transfers from capital investment or from wages. Reallocations in excess of 7% require
the approval of the Minister of Finance and reallocations within a vote may never exceed 10% of the
total expenditure approved for the Vote. All reallocations between Votes must be approved by the
Minister of Finance and may not exceed 5% of the total Government budget. These rules have been
consistently respected, as confirmed by the CAG’s reports for the last three completed fiscal years.
Dimension (iv) therefore scores an “A”.
259. In general, the legislative processes around budget review and approval have proven to
be robust and have continued to improve, with the score increasing from “B+” in 2017 to
“A” in 2022. The 2015 Budget Act and the related regulations have served to strengthen the process
of Legislative scrutiny of the Budget. The procedures and expectations therein are well known within
Parliament and among all relevant stakeholders. This allows sufficient time to apply clear systems and
processes for budget review and approval.
3.6 Pillar V – Predictability and Control in Budget Execution
260. The indicators covered by Pillar V focus on the mechanisms and processes of budget execution.
Specifically, they assess the extent to which the budget is implemented within a system of effective
standards, processes and internal controls, ensuring that resources are mobilised and used as intended.

PI-19 Revenue administration
261. This indicator assesses the procedures used to collect and monitor Central Government revenues. It
addresses four dimensions relating to the clarity of the rights and obligations of the payers of taxes and
other revenues, the effectiveness of risk management by revenue agencies, the coverage and quality of
revenue audit and investigation, and the effectiveness of the monitoring of revenue arrears. It covers
the entities that administer the revenues of central Government, which include tax administration and
customs and excise administration, as well as non-tax revenues from royalties, fees and fines. It excludes
the revenues of Local Government Authorities (LGAs) and also the revenues of the public sector
pension funds, which form part of General Government but operate as autonomous funds.

Indicator Explanation of 2022
2017 2022 rationale
PI-19 Revenue Scoring Method M2 Improvement
C+ B
administration (Av)
TRA, which is responsible The score has
for most Government improved significantly,
revenue collection (88%), due to the
(i) Rights and uses multiple channels to improvement in the
provide tax-payers with easy quality of information
obligations for C A access to comprehensive provided, especially
revenue measures information on main through advance
revenue obligations and notice of tax changes.
rights, including redress
procedures.
TRA uses approaches that Score has improved
are well structured and due to the
systematic for assessing and introduction of a
(ii) Revenue risk
C A prioritising compliance risks structured and
management for all revenue streams, systematic process
including large, medium and for assessing
small taxpayers. compliance risk.
TRA, which is responsible
for collecting most
revenues, undertakes audits
and fraud investigations as
(iii) Revenue audit
C C part of a compliance No Change.
and investigation improvement plan and
completes a majority (but
not all) of its planned audit
and fraud investigations.
Based on data received from Score has declined
TRA the stock of arrears at due to the expansion
end 2020/21 is 37.4% of the in the stock of
(iv) Revenue arrears total revenue collections for arrears, which in 2017
B C the year, with the revenue comprised less than
monitoring
arrears older than 12 20% of total revenue
months comprising less than collection, and 37.4%
75% of total arrears. in 2022.
262. The Tanzania Revenue Authority (TRA) was established through the Tanzania Revenue Authority Act,
Cap. 399, as a semi-autonomous body, reporting to the Minister of Finance & Planning. It is charged
with the responsibility of managing the assessment, collection and accounting of all Central

Government revenue. According to TRA documents submitted to the assessment team, 88% of Central
Government revenue in 2020/21was collected by TRA. (See table 3-12).
Table 3-12: PI-19: Domestic revenue collections by TRA, by type (Tsh. billions), 2020/21
DEPARTMENT TOTAL
Domestic Revenue 36,309
Customs and Excise 73,292
Large Taxpayers 68,798
TRA Non Tax 2,797
Total TRA collections 181,197
Total CG Revenue 205,620
% collections by TRA 88%
Source: Tanzania Revenue Authority.
263. Contributions to public sector pension and social security funds are collected by six autonomous public
funds: the financial statements of these are included in the Consolidated General Government report
amongst financial institutions. As these funds are administered independently and do not form part of
the Central Government33 they do not form part of the PEFA assessment for indicators 19 and 20.
(i) Rights and obligations for revenue measures
264. TRA has an established Taxpayer Charter which supports taxpayers’ rights. The Charter is available
on the website and on hardcopy distributed to taxpayers. TRA employs a multi-pronged approach to
taxpayer education including seminars and programmes on television and radio. They also provide
information through various media channels and prepare publications related to taxation which they
disseminate on their website. There is an independent Tax Appeal Tribunal where taxpayers can seek
redress over tax related grievances.
265. TRA maintains a website (www.tra.gov.tz) with comprehensive and up-to-date information on issues
relating to personal and corporate income taxes, VAT, and customs and excise duties. TRA also
regularly advertises tax information in newspapers and TV and distributes leaflets and brochures with
tax information in Kiswahili and English.
266. It has a call centre providing tax information by use of telephone, e-mail and social media. Direct
information is also provided through seminars and presentations as well as through TRA’s offices, which
are situated in all 26 regions of the country. Thus, information on taxes and changes in taxes is
comprehensive and provided through a variety of sources.
267. In summary, TRA, which is responsible for most Government revenue collection (88%), uses multiple
channels to provide tax-payers with easy access to comprehensive and up-to-date information on main
33 Within the annual consolidated financial statements, they are classified as part of General Government.

revenue obligations and rights including redress procedures. The team’s interview with the Tanzania
Chamber of Commerce (TCCCIA) confirmed that tax-payer information was considered useful,
comprehensive and up to date34. The rating for dimension (i) is therefore an “A”.
(ii) Revenue risk management
268. TRA has a 3-year compliance risk strategy policy and framework which includes domestic trade risk
and international trade risk. The pillars of this strategy include registration, filing, payment, reporting,
revenue, and trade facilitation. They also have an annual compliance risk management plan for 2021/22.
As an output of this plan, they have developed registers for all tax regions including departments, from
which they receive information on a quarterly basis from their agents on the ground. Reports are
submitted to a compliance council for review at the headquarters, headed by the Commissioner for
Domestic Revenue. At the regional level they discuss the reports on a quarterly basis where they also
discuss compliance. For domestic taxes they have segmented their taxpayers into large (dealt with by
the Large Taxpayers Department), and medium and small taxpayers (dealt with by the Domestic
Revenue Department) with risk categorized accordingly. For 20/21 they were able to cover 82% of the
cases. Dimension (ii) is therefore also rated an “A”.
(iii) Revenue audit and investigation
269. The Large Taxpayers Department (LTD) prepares their audit plans based on risk. Risk criteria for
selection of cases for inclusion in the plan are reviewed annually, and once the plan is approved it is
implemented. LTD administers 520 entities. In 21/22 they planned to audit 324 cases out of these 520
(62%). In 2020/21 the total number of LTD audit cases completed were 174. This number was low
(about half of what they planned to do in 2021/22) because the number of audit teams in 202/21 was
low - about 11 teams, in part due to staff shortages arising from the coronavirus pandemic. In 2021/22,
they increased them to 18 with about 3-5 members depending on the complexity of the cases. The
percentage completion rate for 20/21 was at 96% of the plan.
270. In the Domestic Revenue Department (DRD) - which deals with small and medium taxpayers - they
have a national audit business plan which is approved at the national level for all regions based on set
risk criteria, and implemented annually. Where there are no local offices, plan implementation is
coordinated at the head office based on the approved plan. Medium taxpayers have an annual audit
business plan which is risk based and implemented at regional levels, and cases are selected according
to risk assessment. For small taxpayers they conduct desk audits, and which are selected according to
risk. Of the medium taxpayers for 20/21, DRD planned to undertake 4188 cases; they achieved 82% of
34 The assessment team did not attempt to analyse survey data on taxpayers. This might be considered a useful
source of evidence in future assessments.

this target (3426 cases). The reason they did not achieve the full target was because of shortage of
personnel and, in some cases, deviation from the plan due to emerging issues in key cases.
271. For fraud, in 2020/21 they planned to address 167 civil cases and 26 criminal cases for a total of 183
cases. TRA were able to identify taxes amounting to Tsh 82 billion for the 167 cases and Tsh 23 billion
for the 26 criminal cases. The completion rate for criminal cases was higher than target at 188% which
included the accumulated cases from 2019/20 for a total of 49 criminal cases. For the 167 administrative
cases they completed 118 cases (70% of target).
272. On this basis, we conclude that the TRA, which is responsible for collecting most revenues, undertakes
audits and fraud investigations as part of a compliance improvement plan and completes a majority (but
not all) of its planned audit and fraud investigations. Therefore, dimension (iii) is rated a “C”.
(iv) Revenue arrears monitoring
273. At the end of June 20/21 the stock of tax arrears was Tsh 7.4 trillion. Out of these, Tsh 3.3 trillion
(45% of total arrears) are more than one year old. LTD had a total amount of Tsh 743 billion that was
more than one year old, and Tsh 790 billion less than one year - for a total of Tsh 1.5 trillion. For the
first 4 months of 2021/22, LTD have collected Tsh 700 billion and they have an outstanding balance of
arrears of up to Tsh 820 billion. TRA have collected Tsh 17.8 trillion in form of actual collections in
2020/21 out of total central government collections of Tsh19.8 trillion. As such, the total stock of
arrears is 37.4% based on actual collections. Arrears that are older than one year amount to 16.7% of
total revenue in 2020/21. On this basis, dimension (iv) is rated a “C”, thus giving a “B” for
the indicator as a whole.
274. Performance on Revenue Administration has improved from a “C+” score in 2017 to “B”
in 2022. The key improvements have been in relation to tax-payer information and revenue risk
management. Regarding the former, there has been an expansion in the range of channels and media
used for tax-payer education, as well as an improvement in the timeliness of information, specifically in
the timeliness of information updates so that advance notice is now provided to tax-payers regarding
key legal or administrative changes. Regarding risk management, the process has become both more
comprehensive and more systematic since 2017, although relatively strong systems were already in
place in 2017.
275. The TRA has prepared a good basis for an efficient tax administration but has some key
areas on which to improve. TRA has provided a sound base for revenue mobilization. In addition,
taxpayers have access to information and are given clear advice on their rights, including the rights to
redress. TRA has a sound, comprehensive and regularly updated revenue risk and compliance
management framework. The two areas for further improvement relate to (i) improving its
performance in terms of achieving its audit and fraud investigation targets, and (ii) increasing its rate of

recovery with regards to tax arrears. On the latter issue, there has been an increase in the relative
level of arrears since 2017. While this is in part attributable to the effects of the coronavirus pandemic
(both on businesses and on collection processes), it is a development that risks undermining confidence
in the efficiency and fairness of revenue administration, whilst also complicating the achievement of a
reliable and credible budget. It is therefore of fundamental importance to improve the rate
of recovery of revenue arrears.
PI-20 Accounting for revenues

Indicator and Explanation of 2022
dimensions Score
2017 2022 rationale
PI-20 Accounting for Improvement
B+ A Scoring method: M1 (WL)
revenues
PAD obtains revenue data monthly
(i) Information on from entities collecting all central
revenue A A Government revenue. The
No Change
collections information is broken down by
revenue type and consolidated into
a monthly report.
(ii) Transfer of Through the GePG system, transfers Improvement, due
revenue B A to the BoT revenue account are to introduction of
made daily for most Government GePG.
collections
revenue.
TRA, representing most central
Government revenue, undertakes a
(iii) Revenue complete reconciliation of its
accounts A A assessments, collections, arrears and No Change
reconciliation transfers to BoT as frequently as
needed, including daily, using the
GePG.
276. Indicator PI-20 assesses procedures for recording and reporting revenue collections, consolidating
revenues collected, and reconciling tax revenue accounts. It covers both tax and nontax revenues
collected by Central Government. It excludes the revenues collected by Local Government Authorities
(LGAs) and the contributions made to the social security funds, each of which comprise part of General
Government but not Central Government.
(i) Information on revenue collections
277. The assessment team were advised that the Policy Analysis Division (PAD) of MoFP receive data on a
monthly basis from TRA on tax collections and the other revenues for which it is responsible, and from
the Accountant General in respect of non-tax revenue. The PAD utilises this data as the basis of their
monthly reports to the Resource & Expenditure Ceiling Committee, for the purposes of cash
management and in-year control of expenditure authorisation. These monthly reports consolidate
data on all central Government revenue, broken down by revenue type. With virtually all revenue
collections now being made through the Government electronic Payment Gateway (GePG), there are
now a number of in-built functionalities to undertake test checks and data reconciliations. (Box 3.1).

278. Thus, TRA, as a central agency responsible for revenue, produces monthly internal reports for the 88%
of central Government revenue, for which it is responsible. At PAD, further data from non-tax revenue
is added and a consolidated report is produced on a monthly basis, covering all central Government
revenue broken down by revenue type. The rating for this dimension is therefore an “A”.
Box 3-1: Introduction to the Government Electronic Payment Gateway (GEPG)
The Tanzania Government electronic Payment Gateway (GePG)
Tanzania’s Government Electronic Payment Gateway (GePG) is an e-payment gateway platform

that allows for on-line payment of all government revenues. The development of the system was
driven by the Public Finance Act 2001 statutory requirements, and analysis that highlighted
weaknesses in revenue collection systems. The amendment of the Financial Act 2017 directs
accounting officers to ensure that all public funds are collected through the GePG system.
Previous practice had different institutions collecting revenues independently with no standard
procedures. As a result there were challenges such as high costs, complicated procedures, limited
payment options, lack of real-time visibility of the revenue, difficulty in performing
reconciliations, poor record keeping, and low quality of reports.
Over 660 government institutions are now using the GePG system. It has centralized payment
of government dues by using a control number that is centrally generated. The control number
is issued to a payer of government dues who needs to make payment to the government. The
GePG system takes advantage of the existing integrated system of bank payments managed by
the Bank of Tanzania, which includes the Central bank itself, the commercial banks, aggregators,
and mobile money operators. This enables GePG control numbers to be settled in a wide range
of payment outlets. Once the payment transaction is completed, the GePG system generates an
electronic receipt sent to the taxpayer via Short Message Service (SMS).
To ensure an easy collection of revenue by government institutions, the system has been
integrated with the institutions’ billing systems. The exchange of information is done in real-
time to increase control, monitoring, and revenue flow visibility. The system also makes
provision for other important use cases, such as generating revenue reports, performing
reconciliation, and the timely transfer of collections to the Central Government collection
accounts at the Bank of Tanzania.
Source: Author interviews; and “Revolutionization of Revenue Collection with Government E-Payment Gateway System in
Tanzania: A Public Value Creation Perspective” (Mtebe and Sausi 2021)
(ii) Transfer of revenue collections
279. Transfers are done on a daily basis using the Government electronic Payment Gateway (GePG). There
are two principal modes of collection i) payments to commercial banks ii) at certain higher thresholds
payments are to be made at the Central Bank. Payments made at commercial banks are mapped and
monitored, and on a daily basis transfers are made from the TRA central bank account to the Paymaster

General (PMG) account at the Consolidated Fund. This is done on a daily basis for all levels of
government.
280. The GePG has realised tremendous gains for Tanzania under this dimension. (See Box 3.1.)Transfers
are registered instantaneously and are effected on a daily basis. The rating for this dimension is
therefore an “A”.
(iii) Revenue accounts reconciliation
281. For reconciliation, the process starts with the tax assessment, which is recorded instantaneously once
determined within the GePG. Once the payment is made, the revenue collected is reconciled against
the assessment made. Unpaid assessments can be identified from a report which can be run at any time
through the GePG system. Where payments do not include the reference number, payments can be
matched at the reconciliation point of a particular taxpayer, through their unique tax number.
282. In summary, entities collecting most central Government revenue undertake a complete reconciliation
of assessments, collections, arrears, and transfers to BoT as frequently as needed, including daily, using
the GePG system. The dimension is therefore rated an “A”, giving an “A” score for the
283. The procedures for accounting for revenue were already strong in 2017, and have
improved since, with the score improving from a “B+” to an “A”. The key driver of this
change has been the introduction of the GePG system which is a world class system allowing for
collections and transfers in real time, as well as integrated reporting and reconciliation processes.
PI-21 Predictability of in-year resource allocation
284. This indicator assesses the extent to which the Ministry of Finance & Planning is able to forecast cash
commitments and requirements and to provide reliable information on the availability of funds to the
budgetary units responsible for service delivery. The assessment of this indicator has been based on
the accounting procedure manual 2021, interviews with the Accountant General (ACGEN), the
Financial Information Systems Management Division (FISM) of MoFP and selected MDAs.


Indicator
and dimensions
2017 2022 rationale
PI-21: Predictability
of in-year resource D+ C Scoring Method M2 (Av) Improvement
allocation
GoT operates a single treasury Score has improved
account (STA). Most bank accounts due to the
(i) Consolidation of are connected to the STA. Cash expansion of the
D C balances are consolidated on a STA, which now
cash balances
monthly basis. accounts for over
75% of cash
balances.
Annual cash forecasts are prepared;
monthly forecasts are produced
(ii) Cash forecasting based upon updated projections of
C C No Change
and monitoring cash outflows and inflows, but do not
successively update the forecast for
the remaining part of the year.
For salaries and recurring payments
predictable monthly releases take
place in accordance with the budget.
For other recurrent items and
domestic development projects,
exchequer releases are made each
month subject to requests from
(iii) Information on budget entities and a negotiation
commitment D D procedure with MoFP. MDAs only No Change
ceilings receive final information on the
releases for these items during the
month of payment. Adjustments
relative to the budget for these items
have been significant, meaning that
MDAs cannot be provided reliable
information on spending limits one
month in advance.
(iv) Significance of in- Significant in-year budget
year budget C C adjustments took place and were
No Change
partially transparent.
adjustments
(i) Consolidation of cash balances
285. Government operates a Single Treasury Account (STA) at the Bank of Tanzania for the expenditure of
most government entities. The total number of bank accounts in operation linked to the Treasury
Single Account (TSA) is 528 and these accounts are named as Sub TSA Accounts. 6 independent entities
have their own bank accounts, which are also connected to the STA (The President's Office, CAG,
The National Assembly, Judiciary, the Military and the Police force).
286. Foreign source revenues comprise Basket funds and General Budget Support – both of which are
channelled through the Exchequer system and thus into the STA – as well as project funds which may
be channelled through the Exchequer system or directly to beneficiaries (D-funds). The D-funds are
held in separate bank accounts, managed directly by the relevant project managers or administrators,
some of these are in commercial banks and some in BoT Special Accounts linked to the STA. Local

government entities sometimes keep own-source revenue in separate commercial bank accounts from
which expenses are also paid directly.
287. For revenue payments the GePG system (Government Electronic Payment Gateway System) is used
for payment of taxes and other revenues into BoT and commercial banks. For revenues, these
commercial bank accounts are linked to the central holding account held at BOT, from which revenues
are transferred to the STA as the need arises.
288. In accordance with the accounting procedure, manual reconciliation should be undertaken as a daily
process and accounting officers should provide reconciliation of cash books against the central Payment
Office's cash book on a monthly basis. The Accountant General’s consolidation unit receives the
various bank statements directly from banks and reconciles these statements with the cash book
reports received from the MDAs and MUSE, and provides information to MDAs for clearance of
discrepancies. The Accountant General's department is responsible for preparing the consolidated bank
reconciliation statement to the CAG by the end of the financial year
289.As most cash balances are consolidated on a monthly basis the resulting score for this
dimension is a “C”.
(ii) Cash forecasting and monitoring
290. Cash flow forecasts for the year are prepared for all votes and submitted to MoFP by the MDAs when
the budget is approved. They are updated monthly, but only for the up-coming month and not for the
remaining months of the year. These updates are based on new data on payment and exchequer needs
and availability of revenue.
291. The Resource and Expenditure Ceiling Committee (RECC) meets monthly to monitor and analyse cash
availability and determine payment ceilings for each vote. The committee is chaired by the Paymaster
General (PS MoFP) and includes members from BoT, TRA, MoFP, and, where relevant MoF Zanzibar.
292. The dimension is rated a “C” as an annual cash forecast is prepared and monthly forecasts
are produced based upon updated projections of cash outflows and inflows. However, this
monthly process does not involve successive updating of the forecast for the remaining part of the
year. As such, the annual cash flow forecast for the fiscal year is not effectively updated.
(iii) Information on commitment ceilings
293. For salaries (Personal Emoluments) and other recurring payments under Other Charges (OC)
predictable monthly releases take place in accordance with the budget. For “lumpy” recurrent OC
items and domestic development projects the Resource and Expenditure Ceiling Committee (RECC)
determines budget exchequer releases on a monthly basis. Exchequer requests are prepared 2 weeks
in advance. The exchequer notifications are not communicated in advance but are based on the
requests from budget entities and a subsequent negotiation procedure/dialogue between budget
entities and the committee (RECC). The key requirement in this respect is that MDAs should

demonstrate that they have the necessary documentation and procedures in place to complete the
requested payments within the month. In particular, Interim Payment Certificates (IPCs) must already
have been submitted by contractors and approved by the receiving MDAs for any payments due for
public works or supply of equipment or materials. MDAs receive final information on releases on the
15th of each month, with payments made by the end of the month through an Exchequer Notification.
294. The staff interviewed by the assessment team in the Ministry of Works, the Ministry of Education and
TANROADS all concurred in stating that procedures for the payment of salaries and recurring OC
payments made these processes predictable. In respect of development expenditures and “lumpy”
Other Charges, the resources available for payment could not be known in advance - this did not
prevent commitments being made in line with budgets but payments for completed work or completed
deliveries could sometimes be delayed, although this had not been the case during FY 2021/22.
Moreover, they considered the process for releasing payments for such expenditures to be transparent.
There is therefore good evidence that the monthly process for issuing commitment and payment
ceilings has become more predictable and more transparent in the most recent fiscal year.
295. Nevertheless, MDAs only receive final information about the releases for development expenditures
and “lumpy” Other Charges during the month of payment. Moreover, the adjustments relative to the
budget for these items have been significant, meaning that MDAs cannot be provided reliable
information on spending limits one month in advance. This dimension is therefore rated a “D”.
(iv) Significance of in-year budget adjustments
296. Budget adjustments are frequent and significant, primarily due to the need to adapt the
composition of expenditure to the limits imposed by the monthly exchequer releases. As
noted in indicator PI-1, actual expenditure has differed consistently from the approved budget in each
of the last three completed fiscal years (14 % higher in 2020/21,15,9 % lower in 2019/20 and 21 %
lower in 2018/19). However, at the level of institutions, the compositional variance has been still higher,
as shown in indicator PI-2 (i), which shows compositional variance of 48,8 % in 2020/21, 33,1 % in
2019/20 and 25,3 % in 2018/19. These high variances between approved and actual budgets at the
institutional level are found also with respect to budget items (i.e. the economic classification). To a
degree, they reflect the Government’s efforts to protect certain expenditures, such as salaries, debt
servicing and certain capital investments, but they also suggest that many programmes and projects are
delayed in their implementation as compared to the budget estimates approved by the Parliament.
297. These budget adjustments are made on a monthly basis. Evidence suggests that the correct procedures
for virements and budget reallocations are followed in making the adjustments, with all such changes
being duly communicated and recorded in the IFMIS system. There is therefore a degree of
transparency but with in-year Budget Execution Reports not containing detailed comparisons with the
budget, the scope of such re-allocations may not become clear to the Parliament or to other interested
parties until the time of the publication of the annual financial statements. It is the distribution of

exchequer releases which is the factor driving the monthly budget adjustments. These may or may not
differ from the original budget. As we have explained above, the final distribution of monthly exchequer
releases is decided by the Resource and Expenditure Ceiling Committee after a dialogue with the
relevant MDAs. We conclude that in-year adjustments to budget allocations are frequent and partially
transparent.
298. Significant in-year budget adjustments took place during the last completed fiscal year (2020/21) and
were partly transparent. The rating is hence a “C” for this dimension, giving a “C” for the
299. Performance under this indicator has improved from a “D+” in 2017 to a “C” in 2022.
Several reforms have been implemented leading to improvements in performance in predictability of
in-year resource allocations as well as reduced borrowing costs and better liquidity. The introduction
and use of the single treasury account has improved liquidity control and fund availability. Also the
predictable monthly releases/warrants to cover salaries and regular office expenses is an important
improvement. As the migration to accrual accounting has been finalized it should also be expected that
data related to arrears and accounts payable might be integrated and be managed better and more
timely. Among the planned reforms are the further integration and/or interfacing of the different
financial management systems in operation which would further improve availability of data and thus
the quality of cash forecasting.
300. Nevertheless, monthly “cash rationing” continues to be practiced in relation to

development expenditures and “lumpy” Other Charges within the recurrent budget. The
very constrained liquidity position which the Government has to manage demands such measures, and
it is clear that the process for deciding upon and managing monthly releases has become both more
transparent and more predictable. However, there is a need for steady progress towards a situation
where commitments and payments can be made in line with a predictable schedule consistent with the
approved budget. This will require greater precision in the formulation of the annual budget so as to
ensure firstly that, as far as possible, all planned expenditures are captured in the original budget, and
secondly that available resources are accurately projected and budgeted. Improvements in Public
Investment Management (PIM) should have a significant impact on these processes, as indeed would
improvements in the design and development of the Medium Term Expenditure Framework (MTEF).

PI-22 Expenditure arrears

2017 2022 rationale
PI-22 Expenditure Scoring Method M1 (WL) No Change
D D
arrears
The stock of expenditure
(i) Stock of expenditure arrears has exceeded 10 % in
D D at least two of the last three
No Change
arrears
completed fiscal years
Given that there is no regular
in-year reporting of
expenditure arrears and that
they are not reconciled with
accounts payable and accruals
in MUSE, nor with the
(ii) Expenditure arrears
D D consolidated annual financial No Change
monitoring statements, systematic
reporting of arrears cannot be
said to take place currently in
Government’s consolidated
financial reporting. Dimension
(ii) is therefore rated a “D”.
301. This indicator measures the extent to which there is a stock of expenditure arrears, and the extent to
which a systemic problem in this regard is being addressed and brought under control. The assessment
is based on information provided in CAG’s annual reports for audit of financial statements of Central
Government for 2017/18, 2018/19, and 2019/20 and the audited consolidated financial statements for
the same years, as well as the Minister’s Budget speech of June 2021 (for the 2021/22 Budget), and on
information from interviews with CAG and selected MDAs.
(i) Stock of expenditure arrears
302. An expenditure arrear is an obligation that has been incurred by the government for which payment is
overdue. For the majority of payments, an obligation unpaid after 30 days is considered overdue,
although certain supply contracts may specify a 60 day period for payment. Arrears from MDAs are
reported in their annual financial statements. A system for recording of arrears to suppliers - GAMIS
– (Government Arrears Management Information System) has been introduced where CG entities
record their arrears. The system can provide an age profile. It is however not connected to MUSE and
the accounts payable module within MUSE, although clearly the entries that remain in the accounts
payable by year’s end should be captured within GAMIS. However, the figures are not reconciled
systematically and there are substantial discrepancies.

303. In his annual reports the CAG has estimated the total arrears to suppliers. They constitute 11.2 % of
the total expenditure for 2019/20 and 10.5 % for 2018/19, and 11.3 % for 2017/1835. (See table 3-13.)
The arrears for 2019/20 were attributed to the Ministry of Defence and National Service (34%),
Tanzania Police Force (20%), Tanzania Roads Agency (2 %), Ministry of Health (8%), and Other
Government Entities (18%). Within the arrears total, there should also be considered arrears of
interest payments, reported in the consolidated financial statements, as well as salary arrears and social
benefit arrears, for which the assessment team were unable to obtain estimates, although they have
been reported in CAG reports. Even without making provision for potential arrears in these items,
data suggest that the stock of arrears has been above 10% in each of the last three fiscal years.
Table 3-13: Estimated Stock of Central Govt. Arrears, 2017/18 – 2019/20 (Tsh. Bn.)
TShs. billions 2017/18 2018/19 2019/20

Arrears to suppliers (CAG report) 3,109 2,687 3,126
Interest arrears 18 16 n.a.
Salary and personal emolument arrears n.a. n.a. n.a.
Social benefit arrears n.a. n.a. n.a.
Total suppliers and interest arrears 3,127 2,703 3,126
Total expenditure 27,695 25,700 27,874
Arrears as % of Total expenditure 11.3% 10.5% 11.2%
Source: Stock of arrears to suppliers as reported by CAG; interest arrears in Consolidated Financial Statements.
304. The composition of arrears in terms of detailed items has not been obtained. For the total consolidated
financial statement for the year ended 30th June 2020 an age profile is provided for the TShs. 12 trillion
“accounts payable and accruals”. A segmented presentation is given showing that 3.6 out of the 12
trillion refers to Budgetary Central Government. However, the difference with regard to the Tsh. 3,1
trillion of arrears reported in the CAG report for 2019/20 has not been possible to explain. The age
profile for the whole of “accounts payable and accruals” is illustrated in Table 3-14.
Table 3-14:Age profile of accounts payable and accruals at 30th June 2020
Bn TShs %
Over 5 years 62.8 1%
3-5 years 399.1 3%
1-3 years 4,340.0 35%
3-12 months 3,080.0 25%
1-3 months 2,023.9 16%
Up to 1 month 2,558.7 21%
Total end of 2019/20 12,464.5 100%
Source: The consolidated financial statements for the year ended 30th June
2020, for all central government, note 116 on liquidity risk.
35 The assessment team were advised that the level of arrears had fallen in 2020/21 but no formal report on the
outturn of arrears had been made available as of April 2022.

305. The table illustrates that 39 % of the accounts payable and accruals are 12 months old or older, whereas
61 % have been accumulated over 2019/ 2020. (However, excluding the 21 % that are up to 1 month
old, which should not be defined as arrears, those 12 months or older comprise 49% and those
accumulated over 2019/20 comprise 51%.)
306. Payment of arrears is made only after individual scrutiny by the Internal Auditor General and a central
approval process. A central allocation for payment of arrears is since 2020/21 budgeted under Vote
021 “The Treasury”, where sub-vote 2001 “Government Budget Division” has two items that include
arrears; reallocations are made from here to the appropriate votes when a payment of arrears has
been approved. The first item reflects salary arrears; “21111 Basic Salaries – Pensionable posts” with
an allocation in the approved budget for 2020/21 of Tsh. 246,8 bn. The second is “22032 “Other
operating expenses” with an allocation of Tsh. 421,6 bn. For 2021/22, allocations of Tsh. 211,0 and Tsh.
411,7 bn respectively were estimated in the budget36.
307. The total stock of expenditure arrears has exceeded 10 % in at least two of the last three completed
fiscal years. Therefore, the rating for dimension (i) is “D”.
(ii) Expenditure arrears monitoring
308. Dimension (ii) focuses on the extent to which the financial reporting system of the Central Government
identifies and monitors expenditure arrears. At present, the module for accounts payable in the MUSE
system can automatically generate reports of payables to suppliers. In addition, the Payroll system
tracks arrears of salary-related payments. Interest arrears need to be monitored in other systems, but
entered into the accounts payables in MUSE.
309. The GAMIS database is maintained and reports on the totality of earlier arrears to suppliers. It is also
used to register new arrears that remain to be settled by the end of the year. It would however seem
more feasible to develop and use the Accounts payable module in MUSE for the monitoring of arrears.
310. In the consolidated annual financial statements for Government, arrears feature as a portion of
“accounts payable and accruals”. Staff of ACGEN informed the assessment team that all invoices that
have been registered in the MUSE system in the accounts payable module would be cleared before the
end of the financial year. The remaining arrears in the MUSE system would then refer to unpaid invoices
from earlier years, as well as accrued expenditure, i.e. orders placed and services and goods received,
but not yet invoiced and paid. Such orders appear to be entered also into the GAMIS system and into
the MUSE as accruals at the end of the year, thereby not being rejected due to the year’s commitment
control ceilings. As a result, the figures in the MUSE and GAMIS system ought to correspond, but there
36 The Minister for Finance and Planning in his budget speech in June 2021 announced that TShs. 965,1 billion had
been set aside for payment of arrears for public servants, suppliers, contractors and consultants. This would
indicate that, in addition to the Vote 21 allocations, a further Tsh. 342.4 billion was appropriated in other ways for
this purpose.

is currently a gap between the figures of some 16 %, and there is no central reconciliation between the
two systems.
311. The assessment team were advised that currently data on the stock of arrears (and the corresponding
debtors’ lists) are submitted at the end of the fiscal year by MDAs to the Accountant General, for
verification by the Internal Auditor General, and inclusion in the subsequent year’s budget for payment.
However, these reports have not been made available to the assessment team. On the other hand,
some ministries provide a full presentation of their arrears according to type and age composition in
their annual consolidated accounts. This source of information on arrears is maintained and monitored
at MDA level and in the GAMIS system, which provides the basis for consolidated monitoring of arrears
at the central level.
312. Notwithstanding the existing sources of information on arrears, the assessment team did not receive
evidence of regular in-year reporting of expenditure arrears, nor of reconciliation of GAMIS data with
accounts payable and accruals in MUSE and with the consolidated annual financial statements.
Systematic reporting of arrears cannot therefore be said to take place currently in Government’s
financial reporting. Dimension (ii) is therefore rated a “D”, giving a “D” for the indicator.
313. There has been no change in the scoring of this indicator between 2017 and 2022. High
levels of expenditure arrears and weaknesses in the identification and monitoring of arrears have been
persistent problems in Tanzania, reported in the 2010, 2013 and 2017 PEFA assessments. The 2017
assessment pointed to a further deterioration in this area since 2013, with the stock of arrears hovering
at around 10% of total expenditure. This level of 10-11% appears to continue, although data on arrears
for 2020/21 has not been obtained and is said to be more favourable.
314. The primary obstacle to prudent arrears and accounts payable monitoring is the cash rationing system
and the way EPICOR and MUSE are set up to restrict payments, as the system rejects any expenditure
entries – including entries for commitments - that go above the monthly payment ceilings and
exchequer releases. As a result, the commitment function in the systems is rendered effectively useless
because it is only possible to make commitments for payments which will be paid in the same month,
and which fall within the available payment ceiling/exchequer authorisation37.
315. The assessment team were advised that in practice, many “informal” expenditure commitments are
made outside of the IFMIS. When goods or services are delivered, an Interim Payment Certificate (IPC)
is issued but no payment is made until resources are made available through the monthly expenditure
ceilings/exchequer releases. At payment point, it seems that MDAs make the corresponding
37 Such a commitment would be rare: in principle, an expenditure commitment should be made at the point where
goods or services are ordered, with the commitment reflecting a payment due at the time of delivery or completion
of services, which for most Government operations would be more than 4 weeks in the future.

commitment, the entry in accounts payable and the payment authorisation simultaneously or, at least,
in quick succession. If there are insufficient resources within the monthly ceiling to complete this
process, the outstanding obligation remains unrecorded until the end of the year. For the obligations
which cannot be paid during the year, entries for accounts payable are made at year’s end but not
comprehensively, and not in concurrence with the budget.
316. These factors impede the proper functioning of the budget and expenditure control
system and make expenditure arrears an endemic problem. A major revision of the cash
ceiling and commitment control process and the related functions of MUSE would be necessary in
order to tackle this problem in an effective and lasting manner.
317. A process of checking and authorising payment of old arrears has been introduced combined with a
separate central budget line at MoFP to clear old arrears. The assessment team were informed that a
number of old arrears have been found invalid and written off, whereas others have been cleared in
the past year. This process is of course very useful but does not seem to have curbed the accumulation
of new arrears.
318. Another improvement is the current plan to ease the restrictions on payments at year’s end and to
allow payments to be made until the 30th of June instead of the current deadline of 15th June.
PI-23 Payroll controls
319. This indicator is concerned with the payroll for public servants: how it is managed, how changes are
handled, and how consistency with personnel records management is achieved. Wages for casual labour
and discretionary allowances that do not form part of the payroll system are included in the assessment
of non-salary internal controls, PI-25.


Indicator
and dimensions
2017 2022 rationale
PI-23 Payroll controls Scoring Method M1 (WL) No Change
B+ B+
The approved staff list, personnel
database and payroll for CG and
LGAs are all integrated in the new
(i) Integration of HCMIS system and have an
payroll and A A electronic interface with the MUSE No Change
personnel records system for processing of salary
payments to ensure budget
control, data consistency, and
monthly reconciliation.
Changes to the personnel and
payroll system are updated
monthly through the new HCMIS
Deterioration in
system, generally in time for the
score, due to an
(ii) Management of following month’s payments.
A B increase in the
payroll changes However, the number of
number of
retroactive adjustments as
retroactive salary
demonstrated by the figures for
adjustments.
salary-related arrears is likely to
have exceeded the 3 % needed for
an A rating.
Authority to change personnel and
payroll records is restricted and
(iii) Internal control of results in an audit trail. Although it
B B No Change
payroll has not yet been possible to ensure
full integrity of data, evidence
suggests that data integrity is high.
Payroll audits are undertaken by
Internal audit and CAG. Also PO-
PSM checks on integrity of data and
(iv) Payroll audit B B carries out site visits. Between
No Change
these 3 entities, payroll audits
covering all CG entities would have
been conducted at least once in the
last three completed fiscal years.
320. The overall civil service is estimated at 550, 000 staff comprising all MDAs, Autonomous Agencies,
Local Government Authorities (LGAs) – including teachers, but excluding the Police Force, the Armed
Forces, State House and the staff of Public Corporations. Out of the 550 000, 60 % or 330 000 are
teachers working in Local Government.
321. The Public Service Act makes all public sector employers (i.e. MDAs, and LGAs) responsible for the
management of their payroll under the overall oversight of the Public Service Management Division of
the Office of the President (PO-PSM). The payroll for Central Government and for the LGAs is
controlled through a computerised database known as the new Human Capital Management
Information System (HCMIS) managed by PO-PSM in collaboration with the financial management

systems division in MoFP38. The new HCMIS includes all staff names and associated relevant data, both
related to recruitment and retirement and payroll management (e.g. dates of birth, professional
qualifications, positions held, salaries, and changes in employee circumstance, such as salary changes,
promotions.) The system handles statutory deductions, taxes, insurance and pension payments as well
as deductions for loans, but not travel allowances.
322. The payment of salaries for CG and the LGAs is now processed in the MUSE system, allowing
monitoring of payments to the individual bank accounts of each employee. Data from HCMIS is
captured into MUSE through an interface.
323. Payroll management was decentralised to the MDAs of Central Government and to the LGAs during
2011-12; MDAs and LGAs now access and enter changes in personnel records into HCMIS directly,
after which the PO-PSM controls and authorizes the changes. There are currently 1, 560 users across
409 MDAs (including sub-branches and zonal offices) and 185 LGAs that can access the system, but
with varying degree of user authority. Salary payments cannot take place outside the system. However,
the Police and the Armed Forces have their own payroll systems which are confidential.
324. The Chief Secretary, as head of PO-PSM controls the establishment list in terms of the numbers and
definitions of positions in the schemes of service. Any request by an MDA to fill a vacant position,
terminate a staff member’s employment, increase/decrease the number of positions or to make
promotions and transfers, is validated and checked against the establishment list by PO-PSM and against
the approved budget by the Budget Division and approved by the Chief Secretary.
325. The new HCMIS integrates the staff list and the establishment list, and generates the monthly payroll
based on its data, including reported changes and exceptions. The staff list contains data related to each
employee’s ID and bank A/C number. The system generates a monthly payroll report that is scrutinized
by the HR manager in each MDA and authorized by the accounting officer in the MDA for payment.
This is then controlled against budget and processed by the Central Payments Office in the Accountant
General’s office in MoFP. The Budget Department has read-only access to HCMIS, so that it can know
the amount of payroll to be paid in future months.
326. Audit of the payroll is carried out by Internal and External Audit. The PO-PSM also has a unit and
Director responsible for the integrity of the payroll. The unit carries out electronic controls and
follows up in the field.
327. Ineligible salary payments have been a considerable problem in the past, but payroll cleansing exercises
have resulted in a reduction. The annual report of the CAG for the year ended 30 June 2020 noted
some anomalies related to HR management; notably delays in remittance of statutory deductions for
social security funds (TSh 1,6 bn.), and unpaid staff claims consisting of salary and other allowance
38 The previous personnel and payroll system was called Lawson and was originally introduced in 2001, and replaced
by the new HCMIS in 2019.

arrears from 80 government institutions (TSh. 331,5 bn), The main claims emanated from the Defence
Force (Tsh.174 bn), the Police force (Tsh.72 bn) and the Prison service (Tsh.26 bn).
328. The report from the Internal Auditor General for 2019/20 also noted anomalies related to salaries paid
to non-qualified employees (TShs 139 m), arrears of annual leave (Tsh.31m), staff loans and salary
advances not deducted (Tsh.253 m) and staff removed from loan list before completing repayment of
loans (Tsh.64 m).
329. The existence of so called ghost workers has diminished. The CAG in the 2020 report had identified
22 employees who were paid despite no longer being in public service. At the time of the previous
PEFA assessment (2017), payments to non-existing staff were identified for 260 persons.
(i) Integration of payroll and personnel records
330. The establishment list and the staff list are now integrated in HCMIS, and changes inputted by MDAs
into HCMIS are checked and authorized by PO-PSM. The system generates the monthly payroll, which
is checked at the MDA and against the budget in accordance with a Government circular.
331. The dimension is rated an “A” as the approved staff list, personnel database and payroll are all
integrated in the new HCMIS system and have an electronic interface with the IFMIS system for
processing of salary payments to ensure budget control, data consistency, and monthly reconciliation.
(ii) Management of payroll changes
332. The authority to change records and payroll is restricted and results in an audit trail. Access to HCMIS
is restricted and passwords are linked to individuals and authority.
333. Changes to the payroll are processed on-line and are checked on a monthly basis. The approval process
by PO-PSM normally allows such changes to be incorporated in the same month. The exception is in
respect of approval of new recruits and promotions, where delays can reach 2 or 3 months as the
process includes several approval steps, including by the employee himself/ herself. However, for
Central Government ministries, the approval of new recruits and their entry onto the payroll can
usually be processed within one month, so long as there is a budget provision and a vacancy within the
establishment list. All changes to the payroll are processed through the HCMIS system and thus
generate an audit trail, including all relevant approvals.
334. Retroactive changes to the payroll are occasionally necessary because confirmation of new
employment, and of promotions takes longer than one month.
335. The consolidated audited financial statements for the year ended 30th June 2020 includes arrears and
accounts payables and accruals, as GoT now uses accrual accounting. The Liabilities lists Tsh.9,2 trillion
as Accounts Payables and accruals, whereof Tsh.600 bn relates to “Wages, salaries and employee
benefits” mainly in the general government segment. Further down in the listing of liabilities is also an
item labelled “Employee benefits liabilities” of which Tsh.309 bn corresponds to the general

government segment. In the PEFA methodology, neither wages for labour (which is not in the payroll
system), nor local government employees are included in the assessment of payroll efficiency for central
government. However, as the sum of around Tsh. 900 bn payables is a considerable proportion of the
total salaries and wages for general government of Tsh. 10,4 trillion, we conclude that salary arrears
exceed the threshold of 3 % retroactive adjustments needed for an “A” rating.
336. In summary, we note that changes to the personnel and payroll system are updated monthly through
the new HCMIS system, generally in time for the following month’s payments. However, the number
of retroactive adjustments as demonstrated by the figures for salary-related arrears is likely to have
exceeded the 3 % needed for an A rating. This dimension is therefore rated “B”.
(iii) Internal control of payroll
337. The CAG annual report for 2019/2020 pointed to some problems with delays in remittance of statutory
deductions for social security funds and unpaid staff claims consisting of salary and other allowance
arrears.
338. PO-PSM have taken steps to improve control over “ghosts” both by increasing the number of their
own audits and taking steps to remind Accounting Officers and HROs of the regulations of the Public
Service Act, which place final responsibility on Accounting Officers.
339. Authority to change personnel and payroll records is restricted and results in an audit trail. The
prevailing problems related to arrears for staff claims for salaries and allowances is substantial and
points towards some remaining problems for data integrity and accuracy. A “B” score is therefore
accorded to this dimension.
(iv) Payroll audit
340. Two entities conduct payroll audit – CAG and Internal audit. In addition, the Integrity Directorate at
PO-PSM carries out controls through HCMIS, at times followed by field visits, For IAG and CAG, all
payroll audits undertaken have included both system checks and physical checks/ site visits. In addition
to verifying that payees exist and are receiving the correct pay, these audits have also examined the
correctness of documentation of payees and, in particular, the correctness of their qualification
certificates. The CAG has explained that payroll audits are consistently undertaken and are based on
study of payment data from HCMIS and a risk assessment. An identified risk would be followed up in
all entities.
341. The assessment team have not been able to access data on the precise institutional coverage over the
last three fiscal years of the payroll audits undertaken by Internal Audit and CAG. However, we have
reviewed the annual reports of IAG, which provide a partial but substantial sample of IA work
undertaken each year. In addition, the team has studied the reports on payroll included in the CAG’s
annual reports for the last three completed fiscal years. Based on this documentation and interviews
with these three parties and with MDAs, we conclude that payroll audits covering all CG entities would

have been conducted at least once in the last three completed fiscal years. On this basis, dimension
(iv) is rated a “B”, giving a “B+” for the indicator as a whole.
342. The overall score for this indicator score has remained unchanged since the 2017
assessment, being a “B+”. This was an improvement over earlier assessments and, overall the
quality of payroll controls has remained strong. Since 2017, the problem with ghost workers has almost
been eliminated. The interface with the MUSE system is also an important improvement.
343. The key remaining problem is related to arrears for staff claims for salaries and
allowances. There has been an increase in such arrears since 2017, and a careful investigation of the
reasons for the increase in arrears would be advisable in order to put in place corrective measures to
address this problem.
344. Steps to further integrate the Payroll, MUSE and other systems are being discussed. Such integration
can improve control, accounting and reporting quality. However, this type of integration is technically
complicated and the selection of systems and the degree of integration needs to be reviewed carefully.
PI-24 Procurement
345. This indicator examines key aspects of procurement management. It focuses on transparency of
arrangements, the degree of emphasis on open and competitive procedures, the monitoring of
procurement results and the quality of access to appeal and redress arrangements.

Indicator Previous New Performance

and Score Score Explanation for 2022 Score Change and
dimensions 2017 2022 rationale
PI-24 Scoring Method M2 (AV) Improvement
C B
Procurement
Records are maintained in TANePS for the The score has
whole public sector on what has been improved due to the
procured, the value of procurement and introduction of
who has been awarded contracts. A TANePS and the
majority (73%) of public sector success achieved in
procurements were managed and registering all 718
(i) Procurement published through TANePS in 2020/21. Procuring Entities (PE)
D C The institutions of Budgetary Central of the public sector,
monitoring
Government in turn comprised a majority and in ensuring that a
(54%) of the Procuring Entities publishing majority of the
awards through TANePS. We thus procurements of BCG
estimate that a majority of BCG institutions were
procurements were managed and managed through the
published through TANePS. system.
Proposed procurement methods must be The score has
stated in General Procurement Notices improved significantly
(GPNs) and methods cannot later be because there now
changed without a valid justification and exists comprehensive
formal approval by PPRA. The statement data on the planned
(ii) Procurement
D A of planned procurement methods in GPNs procurement methods
methods is therefore a very good guide to the of the whole public
methods actually used. 93.5 % of sector, through the
procurements by value for the public GPNs published in
sector were planned to be undertaken by TANePS and reported
competitive methods in 2020/21. by PPRA annually.
Four of the six key procurement
(iii) Public access information elements (1,2,3 & 5) are
complete and accurate for BCG entities
to procurement C C representing a majority of BCG
No Change
information procurement operations, and are made
available to the public on a timely basis.
In 2020/21, the procurement complaints
(iv) Procurement system met all six PEFA criteria for the
complaints A A effectiveness of an independent No Change
management procurement complaint resolution
mechanism.
346. Public procurement for the whole of the public sector is governed by the Public Procurement Act
(PPA, No. 7 of 2011) as amended in July 2016. Public Procurement Regulations for the Act have been
issued (No. 446 of December 2013) and these are in force. Amongst other things, the regulations
require Procuring Entities to utilise the TANePS (Tanzania National electronic Procurement System)
for the whole public procurement process, including the registration of Annual Procurement Plans
(APPs), announcement and management of tender processes, and publication of tender awards. The
Paymaster General’s Circular No. 4 of 2019 further reiterates this legal requirement.
347. The Public Procurement Regulatory Authority (PPRA) is charged with regulatory functions and vested
with oversight powers and responsibilities on all public procurement activities carried out by all public
bodies in Mainland Tanzania, including public sector corporations, LGAs and Central Government. The
objectives of PPRA are to:

a. Ensure the application of fair, competitive, transparent, non-discriminatory and value for money
procurement standards and practices;
b. Set standards for the public procurement system;
c. Monitor compliance of procuring entities; and
d. Build procurement capacity, in collaboration with the Public Procurement Policy Division in
MoFP and other relevant professional bodies.
348. PPRA produces an annual performance evaluation report (APER), the production of which started in
2005. The latest report - the 15th APER - covers the financial year 2020/21 and was produced in
September 2021. These reports cover performance reviews and statistics for both the PPRA and the
Procuring Entities (PEs) of Government, including MDAs, Local Government Authorities, parastatal
organisations, autonomous Government agencies, and water authorities, as well as Regional
Secretariats (in total 718 entities for 2020/21, of which 568 PEs and 150 delegated PEs).
349. PPRA operates the TANePS system, which is accessible on-line. The system had registered all 718
designated Procuring Entities in 2020/21, as well as 21,194 registered economic operators (up from
509 and 17,270 respectively in 2019/20). A tender portal is used to publish data from the system, as
well as legislation, guidelines, forms, supplier training videos, contact data, etc. (www.taneps.go.tz ).
Public Procurement Regulations require Procuring Entities to utilise TANePS for their procurement
processes, and the system therefore records and publishes General Procurement Notices, current
tenders, awarded contracts and opened bid details. Although all Procuring Entities are registered in the
system, compliance with the use of the system is not yet 100% but it has been expanding rapidly and is
coming close to that level.
(i) Procurement monitoring
350. The procurement process in Tanzania is decentralised, and hence MDAs – as well as Parastatal
Enterprises and Local Government Authorities - are designated as Procuring Entities and have the
responsibility for planning and managing their procurement processes in line with the Public
Procurement Act and related Regulations. In line with this responsibility, they maintain their own data
records on procurement, and also publish details of tenders and contract awards on their respective
websites. Nevertheless, given that the Public Procurement Regulations of 2013 and the Paymaster
General’s Circular No. 4 of 2019 require Procuring Entities (PEs) to utilise TANePS, the assessment
team have chosen to use TANePS data as the basis for assessing the quality of procurement monitoring.
351. All Procurement Entities (PE) were registered in TANePS in 2020/21: of these 718 PEs, 588 submitted
Annual Procurement Plans; 574 of these were approved by PPRA and published with corresponding
General Procurement Notices (GPNs), summarising the planned scope and nature of services to be
procured as well as the procurement methods. In 2020/21, these comprised 47,637 planned tenders
with an estimated value of Tsh 25.82 trillion, of which 58.6% corresponded to Budgetary Central
Government, 37.3% to Public Corporations and 4.1% to Local Government Authorities. 64% of the

PEs with approved APPs/ GPNs undertook procurement through TANePS and 34% published their
tender awards on TANePS.
Table 3-15: Summary of Public Sector Procurement data reported in TANePS, 2020/21
Procurement Entities, Annual Number % Total PEs % PEs with

Procurement Plans/ General of registered approved
Procurement Notices, Tender Awards PEs APPs
Procurement Entities (PEs) registered in 718 100% -
TANePS
PEs with approved APPs and GPNs 574 80% 100%
Entities undertaking procurement through 366 51% 64%
TANePS
Entities publishing Tender Awards on 194 27% 34%
TANePS
NB. 47,637 tenders were planned, of which 4, 327 were cancelled and 31,423 tenders were
processed through TANePS - 73% of the planned tenders actually undertaken.
Source: PPRA, Annual Performance Evaluation Report, 2020/21.
352. Notwithstanding the significant improvement in coverage of TANePS achieved from 2019/20 to
2020/21 – with all PEs now registered in the system, it is clear that the level of compliance in using the
system for managing procurement and publishing tender awards is less than complete. In particular,
less than half of PEs with approved GPNs publish their tender awards on TANePS. (See Table 3-15).
However, in terms of actual numbers of tenders processed through the system, rather than number
of PEs, performance is better with 73% of the tenders undertaken being managed through the system.
Moreover, the institutions of Budgetary Central Government show a greater use of the system,
comprising 54% of the 194 entities publishing tender awards through TANePS in 2020/21.
353. Records are maintained in TANePS on what has been procured, the value of procurement and who
has been awarded contracts. The system falls short of providing accurate and complete consolidated
data for the procurements of the public sector as a whole. However, a majority (73%) of public sector
tenders were managed and published through TANePS in 2020/21 The institutions of Budgetary
Central Government in turn comprised a majority (54%) of the Procuring Entities publishing tender
awards through TANePS, and we thus estimate that a majority of BCG procurements were managed
and published through TANePS in 2020/21. Dimension (i) is therefore rated a “C”.
(ii) Procurement methods
354. In accordance with section 64 of the PPA (2011), a procuring entity engaging in the procurement of
goods, works, services, non-consultancy services or disposal by tender shall apply competitive
tendering. Section 149 of the Public Procurement Regulations also specifies that ‘international competitive
bidding and national competitive tendering shall be considered before other methods of tendering’. Legislation
thus gives clear preference to competitive processes, although there are provisions for urgent
procurement and for single source procurement under specific conditions. Specific rules also apply for
procurement under Public-Private-Partnerships.

355. The Annual Performance Evaluation Report (APER) for 2020/21 summarises the procurement methods
planned to be utilised in that year in line with the General Procurement Notices issued by PEs and
approved by the PPRA. As may be seen from Table 3-16, 93.5 % of tenders by value were planned to
be undertaken by competitive methods, specifically through International Competitive Bidding (ICB),
National Competitive Tendering (NCT) and competitive tendering for framework contracts for the
provision of Common Use Items and Services (CUIS).
Table 3-16: Planned Procurement Methods for 2020/21 as reported in TANePS
Procurement Methods Number of Value of % of total by

Tenders Tenders value
(Tsh. Bn)
International Competitive Bidding (ICB) 635 16,628.3 64.4%
National Competitive Tendering (NCT) 13,321 5443.3 21.1%
Framework Agreements for Common Use 19,017 2,069.0 8.0%
Items & Services (CUIS)
Sub-total Competitive Methods 24,140.6 93.5%
Competitive Quotation (CQ) 11,235 562.7 2.2%
Single Source (SS) 2,944 1,088.4 4.2%
Individual Selection (IS) 458 23.4 0.1%
Total 25, 815.1 100%
Source: PPRA, Annual Performance Evaluation Report, 2020/21.
356. There is no formal report from PPRA on numbers of procurements actually awarded by type and value
for past years. However, it is required that proposed tender methods should be stated in advance in
General Procurement Notices and these methods cannot later be changed without a valid justification
and formal approval by PPRA. The statement of planned procurement methods in General
Procurement Notices is therefore a very good guide to the procurement methods actually used. With
93.5 % of procurements by value for the public sector planned to be undertaken by
competitive methods in 2020/21 dimension (ii) is rated an “A”.
(iii) Public access to procurement information
357. Procurement legislation and regulations are presented and available on PPRA’s website. Government
procurement plans, as well bidding opportunities and contract awards are easily accessible on the
TANePS website but only for those Procuring Entities that utilise TANePS for undertaking
procurement and publishing tender awards. As illustrated in Table 3-15 above, the use of the system,
in particular for the publication of tender awards falls short of 100%. However, we note that the data
relate to all public sector Procuring Entities, and that the PEs that comprise Budgetary Central
Government, which this PEFA indicator covers, comprise the majority of the users of TANePS. Hence,
the evidence suggests that a majority of BCG entities present annual procurement plans and bidding
opportunities on TANePS and that a majority (more than 50%) also publish their contract awards on
TANePS. The information available is comprehensive – including details on the purpose, contractor
and value of awards - and timely.

Table 3-17: PI-24 - Public Access to Procurement information
Information Element Information Availability Completeness & Timeliness

Required
1) Legal & Regulatory Framework Yes on PPRA website Complete and timely
for Procurement
2) Government Procurement Yes, on TANePS site 80% of registered PEs; timely (See
Plans table 3-15)
3)Bidding Opportunities Yes, on TANePS site For 73% of all procurements,

greater than 50% for BCG
procurements; timely
4)Contract Awards (purpose, Yes, on TANePS site For some 30% of all tenders, but
contractor and value) more than 50% BCG tenders;
timely
5)Data on resolution of Not published by first level Complete for all cases going to
procurement complaints complaints to MDAs or PPRA, but PPAA; timely
by PPAA for all cases.
6)Annual Procurement Statistics APER and TANePS provide data Available data is not complete and
but neither cumulative statistics not structured to facilitate analysis
nor trend data over time
Source: Websites of PPRA, TANePS and PPAA.
358. The individual cases as well as complaints mechanisms are presented on the PPAA website:
www.ppaa.go.tz. Information on resolution of complaints is presented for each case on the PPAA
website, but not for the first level of complaints made to the procuring entity.
359. Some annual procurement data are presented in the APER, which is available both in print and on the
PPRA website. However, the data are not presented in a cumulative form, thus it is not possible to
analyse trends over time nor to compare the planned procurement activities and methods (as
presented in Table 3-16) with the procurement activities actually undertaken, i.e., the procurement
“out-turn”. Within the TANePS web-site there is comprehensive information on contract awards,
which can be sorted out by supplier name for example, but the statistics tab of the website is empty
and there are no summary statistical tables from which to analyse historical trends. Hence, complete,
comprehensive annual procurement statistics are not currently available to the public.
360. Four of the six key procurement information elements (1,2,3 & 5) are complete and reliable for Central
Government entities representing a majority of the procurement operations of the BCG, and are made
available to the public on a timely basis. (See Table 3-17). Dimension (iii) therefore scores a “C”.
(iv) Procurement complaints management
361. Sections 96 and 97 of the Public Procurement Act (PPA) describe the mechanisms for complaints and
appeals over procurement decisions for the whole public sector. Any complaints or disputes are in the
first instance to be reviewed and decided by the Accounting Officer in the Procuring Entity. A tenderer

who is aggrieved by the decision of the Accounting Officer may refer the matter to the Public
Procurement Appeals Authority (PPAA) for review and administrative decision. The fee charged for an
appeal by the PPAA is Tsh.200,000 (US $ 86). The resolution and complaints process is clearly
described in the PPAA website.
Table 3-18: PI-24 Assessment of Procurement complaints mechanism, 2020/21
Criteria: Complaints are reviewed by a Criterion fulfilled? (yes/no) and

body which: Justification
(1) Is not involved in any capacity in Yes: although the Accounting Officer of the
procurement transactions or in the process procuring entity is the first authority for review of a
leading to contract ward decisions. complaint, the matter can then be referred to the
PPAA which is independent of the procurement
transaction and process.
(2) Does not charge fees that prohibit access by Yes: The PPAA charges a fee of 200,000 TZS
concerned parties. (approx. US$ 86), which is not prohibitively high.
(3) Follows processes for submission and Yes: the PPAA is clear on the processes for resolution
resolution of complaints that are clearly defined and complaints and the rules and procedures are
and publicly available described on the PPAA and PPRA websites and in
brochures available to the public.
(4) Exercises the authority to suspend the Yes: both the Accounting Officer and the PPAA can
procurement process; suspend the procurement process (art 100 in Public
Procurement Act).
(5) Issues decisions within the timeframe Yes: all cases are presented on PPAA’s website, and
specified in the rules/regulations; the sample of cases analysed were all resolved within
the timeframe.
(6) Issues decisions that are binding on all parties Yes: in accordance with section 97 of Public
(without precluding subsequent access to an Procurement Act.
external higher authority).
Number of criteria met: 6 out of 6 (for whole public sector)
362. Table 3-18 summarises the different rating criteria for this dimension, and to which extent they are
met. Six out of six criteria for the quality of the mechanism for review of procurement complaints for
the public sector as a whole were fulfilled in 2020/21. The rating of this dimension is therefore
an “A”, giving a “B” score for the indicator as a whole.
363. There has been significant improvement in procurement practices, which is reflected in
the indicator score rising from a “C” in 2017 to a “B” in 2021. Annual Procurement Plans are
now submitted by nearly all entities and checked by PPRA. The development of TANePS and the
requirement for its compulsory use have been important advances. Its utilisation is not comprehensive
but it is increasing fast; with the combination of training and facilitation to encourage its use and

disciplinary measures to correct Accounting Officers authorising procurements outside of the system,
compliance with TANePS is steadily increasing. Efforts should be made to improve the procurement
statistics presented in Annual Performance Evaluation Reports (APERs) but the TANePS system is
generating an increasingly comprehensive set of data for such analysis.
364. Within Procuring Entities, there remain important challenges to be met in order for
Tanzania’s decentralised model of procurement to reach standards consistent with the
best international practice. Challenges noted by PPRA include: weak contract management by
Procuring Entities (PEs), inadequate procurement staffing in PEs and inadequate capacity to apply
procurement regulations. In addition, the quarterly monitoring and reporting on procurement practices
by the Internal Auditors of MDAs, as required by procurement regulations, is not yet an established
practice. Improvements in each of these areas fall under the responsibility of the Accounting Officers
of MDAs but continued monitoring and support from PPRA is needed, backed up by increased audit
work on procurement by Internal and External Audit.
PI-25 Internal controls on non-salary expenditure
365. This indicator measures the effectiveness of general internal controls for non-salary expenditures.
Internal controls provide assurance that transactions are performed as intended and resources are
used only where appropriate authority has been verified. This process ensures that fiscal discipline is
maintained at the micro- as well as the macro- level. It also ensures that resources are allocated as
intended and properly authorized and that service delivery agencies receive and use the resources
provided under legal and regulatory authority and use them only for those purposes.


Indicator
Score Score Explanation for 2022 Score change and
and dimensions
2017 2022 Rationale
PI-25 Internal
controls on non- D+ C+ M2 Scoring Method (Av) Improvement
salary expenditure
Segregation of duties is prescribed
throughout the expenditure process
Score has improved
and responsibilities are clearly laid
due to the more
down for all key steps. However, the
extensive process of
operationalisation of the segregation
segregation of duties
of duties relies critically on the
incorporated in the
(i) Segregation of controls established within the MUSE
C B MUSE integrated
duties system. As MUSE is not yet fully
financial management
implemented in all MDAs, some gaps
system, and the steady
in systems for segregation of duties
roll-out of MUSE since
may exist in the minority of the MDAs
2018 to most MDAs of
of BCG which continue to apply other
Central Government.
financial management systems used
with an interface to MUSE.
Commitment control procedures do
exist, which are partially effective. The
existence of extensive expenditure
arrears in several types of
(ii) Effectiveness of expenditure (PI-22) demonstrates
expenditure that the system of commitment
C C No Change
commitment control cannot be considered
controls comprehensive, nor to effectively
limit commitments to projected cash
availability and approved budget
allocations for most types of
expenditure.
Most payments are compliant with Score has improved
(iii) Compliance regular payment procedures and the due to MUSE
with payment majority of exceptions are properly implementation; CAG
D C
rules and authorized and verified. reports show clear
procedures improvement in
compliance since 2017.
366. This indicator has been assessed based on the Accounting Manual39, a review of the IFMIS system, the
CAG’s annual report of the financial statements for the financial year 2019/20 and the IAGD’s annual
QA reports for the financial year 2020/21, and interviews with MDAs’ Chief Accountants. Reference
is also made to evaluation of PI-6 and PI-22, and the evidence on which these scorings are based.
(i) Segregation of duties
367. The first dimension assesses the existence of the segregation of duties. This is a fundamental element
of internal control to prevent an employee or group of employees from being in a position both to
perpetrate and to conceal errors or fraud in the normal course of their duties.
39 Government of Tanzania – Accounting Procedures Manual 2021 (Second version)

368. The Accounting Manual defines clear segregation of duties between the persons responsible for 1)
granting application access to users of the IFMIS; 2) technical management of IFMIS; 3) authorization of
expenditure (e.g. payment vouchers), which happens outside of IFMIS; 4) insertion of transactions into
IFMIS (by accounts staff); and 5) approval or disapproval of all transactions in IFMIS, ensuring compliance
with financial regulations (Chief Accountants).
369. The Central Payments Office (CPO) in MoFP has the responsibility for processing payments for all
MDAs on a daily basis. Payment Vouchers originate from the Heads of Departments and are to be
authorized by the Accounting Officer before submission to the Payment Office. The Chief Accountants,
Regional Accountants and other heads of Accounts divisions are responsible for ensuring that
reconciliation is done to ascertain the correctness and integrity of transactions carried out during the
year. The reconciliation process is supported by the consolidation unit at ACGEN that receives all
bank statements and has access to the IFMIS data.
370. The Accounting Manual states that following the approval of budgets, specimen signatures of officials
who are permitted to authorize expenditure is sent to the Accounting Unit by each Warrant Holder.
The schedule of specimen signatures clearly states the types of transactions that the person may
authorize, the limits and the range of chart of account codes. In addition, each MDA has internal
guidelines detailing the requirements and the specific authorities.
371. The audit of the financial statements and compliance with rules and regulations of entities in the Central
Government is the responsibility of the CAG, as set down in the Constitution40 and the Public Audit
Act (2008). The CAG’s annual report of the financial statements for the financial year 2019/20 does
not indicate any significant problems or gaps in the application of the segregation of duties, although
there are some deficiencies in compliance in a few transactions. [See dimension (iii) below,]
372. The MUSE system includes a triple authorization and check of payments, and both specimens of
signatures as well as physical personal tokens to be used to access the parts of the system an individual
is authorized to use. Usernames and passwords are also used to restrict a person’s access to tasks and
code ranges and to enable complete transaction logs. The System’s Manager module in MUSE registers
responsibilities and the application access, security rights, passwords etc. for different users. The PEFA
team was shown the IFMIS system (MUSE) and the processing in practice of some functions and reports.
The review by the assessment team indicated that the prescribed system for segregation of duties was
followed in practice.
373. Thus, segregation of duties is prescribed throughout the expenditure process and responsibilities are
clearly laid down for all key steps. However, the operationalisation of the segregation of duties relies
critically on the controls established within the MUSE integrated financial management system. As
MUSE is not yet fully implemented in all MDAs, some gaps in control systems for segregation of duties
40
Constitution of the United Republic of Tanzania

may exist in the minority of the MDAs of Central Government (less than 10% by value, the assessment
team were informed), which continue to apply EPICOR or other financial management systems used
with an interface to MUSE41. Therefore, the rating accorded to dimension (i) is a B.
(ii) Effectiveness of expenditure commitment controls
374. The second dimension assesses the effectiveness of expenditure commitment controls. This process is
singled out as a separate dimension of this indicator due the importance of such controls for ensuring
that the Government’s payment obligations remain within the limits of annual budget allocations and
within projected cash availability, thereby avoiding the creation of expenditure arrears (See PI-22).
375. The Accounting Manual establishes the procedures for fund release and commitment control of
expenditure. After approval of the expenditure ceiling, the Budget department allocates funds to MDAs
based on their approved budget and cash flow forecast. The department forwards an allocation
schedule for salaries and other recurring recurrent expenditure, and on a monthly basis releases
warrants/exchequer notifications for development and other non-periodic recurrent expenditure, as
well as requests to pay outstanding arrears.
376. Functions are established in MUSE to ensure that the exchequer notifications are registered and
followed: the system conducts a commitment control to check funds committed are in line with
exchequer notifications and the relevant line items in the Accounts Payable, General Ledger and Cash
Management modules when a payment voucher, journal entry or manual transaction is recorded. If the
requested funds are not available, the expenditure will not go through.
377. However, there are two factors that impede effective commitment control: a) the monthly exchequer
release system that brings significant cash constraints to the MDAs, as it tends not to be consistent
with monthly needs in terms of implementing approved action plans, including procurement plans; b)
Limitations with MUSE, as the application of the cash control system means that it is not yet configured
to accept project-related or other commitments with a horizon of longer than one month.
378. As a consequence of these two factors, for development expenditures and “lumpy”, i.e. not regular,
recurrent expenditures, MDAs routinely make informal commitments outside the control of MUSE/
IFMIS – requesting suppliers to supply goods or services or contractors to proceed with work. These
informal commitments are later formalized through the issue of Interim Payment Certificates (IPCs),
once goods are supplied or specific stages of public works are completed. When these IPCs are
presented for payment and corresponding exchequer releases are granted, commitments, accounts
payable and actual payments are registered and actioned in quick succession. However, this weakens
the control environment and may give rise to the development of arrears, when Interim Payment
41 The assessment team were informed that the different interfaces to MUSE, primarily from Epicor, work well and
do not in themselves present problems: the issue is rather that the interface occurs after the MDA’s approval of
expenditures, thus limiting the scope of the MUSE controls to the payment and accounting stages.

Certificates are presented for payment and cash constraints prevent these from being paid
straightaway. The situation is exacerbated if projects are implemented faster than planned, resulting in
budgets being exceeded. In practice, what is entered into MUSE under the monthly cash limit system
is only a portion of the actual commitments (particularly for project contracts).
379. The existence of extensive expenditure arrears in several types of expenditure (PI-22) demonstrates
that the system of commitment control cannot be considered comprehensive, nor to effectively limit
commitments to projected cash availability and approved budget allocations for most types of
expenditure. However, commitment control procedures do exist, which are partially
effective: hence, dimension (ii) is scored as a “C”.
(iii) Compliance with payment rules and procedures
380. The Public Finance Act (2001) and the related financial regulations specify the established rules and
procedures for payment control. The PEFA team has not been able to analyse a sample of payments in
the time available and has thus relied on the reports of the CAG and IAG for the assessment of this
dimension. In addition, we have drawn on information gathered in relation to PI-6, regarding Central
Government operations outside financial reports.
381. Deficiencies prevail according to IAG and CAG reports for 2019/20 for central government. In
particular, CAG reports inadequately supported payments and missing payment vouchers of TShs. 7,3
bn and unauthorized expenditure of 3,2 bn. In IAG’s annual report on quality assurance for 2020/21,
payments totalling of Tsh.47,7bn had errors, the most significant related to “Electronic Fiscal Device
Receipts not issued” 15,0 bn, “Unsupported payments” 11,7 bn and “Missing Payment Vouchers” 8,4
bn. “Withholding Tax Deducted but not remitted amounted to Tsh.5,1bn, “Improperly vouched
Expenditure” 3,3 bn. However, these are not substantial figures in relation to the total budget;
moreover, the audited entities include all major MDAs of Central Government and, thus, these audits
should have captured the main deficiencies in compliance.
382. Our assessment is that most payments – well over 75% - are compliant with regular payment
procedures and that the majority of exceptions are properly authorized and verified. Dimension (iii)
therefore scores a “C”, giving a “C+” for the indicator as a whole.
383. Scoring against this indicator has improved from a “D+” in 2017 to a “C+” in 2022. In
comparison with the figures obtained for the previous PEFA assessment the amounts of the erroneous
payments have decreased considerably. In 2015/16 the CAG report included payment anomalies of a
total sum of Tsh. 136.6 billion for the Central Government. The use of MUSE, the deepening of the
Single Treasury Account and the related consolidation are likely sources of an improved level of
control.

384. Strengthening commitment controls remains the key priority in this area. As we noted in
the discussion on predictability of in-year resource allocation (PI-21), this is likely to require actions
not only on the control side but also in relation to budget formulation and the clearance of accumulated
arrears.
PI-26 Internal audit effectiveness
385. This indicator assesses the standards and procedures applied in internal audit. The internal audit
function should use a systematic, disciplined approach to evaluate and improve the effectiveness of
government processes, risk management and control. In the public sector, the function is primarily
focused on assuring the adequacy and effectiveness of internal controls, the reliability and integrity of
financial and operational information, the effectiveness and efficiency of operations, the safeguarding of
assets, and compliance with laws, regulations and contracts. Typical features of an operational internal
audit function are the existence of laws, regulations and/or procedures and the existence of audit work,
audit documentation, reporting, and follow-up activities consistent with international standards.
386. The indicator has been assessed based upon: the annual reports for the financial years 2019/20 and
2020/21 of the Internal Auditor General Department’s (IAGD) Quality Assurance Section; IAGD’s
Internal Audit Manuals, handbooks and guides; IAG’s QA handbook; and IAGD’s annual audit plan for
2021/22. The team also interviewed internal auditors in IAGD and project coordinators from the GIZ
support project. The JICA project completion report from November 2020 has also been studied.


Indicator
and dimensions
2017 2022 Rationale
PI-26 Internal Audit C+ C+ M1 Scoring Method (WL) No Change
The internal audit function is in place for
central government entities representing
most of total budgeted expenditure and
(i) Coverage of for central government entities
B B No Change
internal audit collecting all of government revenue.
However, staff turnover and shortages
puts the functionality and coverage of
their audit in jeopardy.
(ii) Nature of audits Internal audit activities have a primary
and standards C C focus on financial compliance. No Change
applied
Annual audit programmes and plans exist
(iii) Implementation and are submitted to IAGD. However
only 77 % submitted annual reports in
of internal
C C 2020/21. For audit committees the No Change
audits and submission rate was 35 % We assess that
reporting the majority of programmed audits are
completed.
Management provides a full response for
the majority of CG entities audited.
(iv) Response to
C C However, the implementation pace is No Change
internal audits slow for some entities and many
recommendations are not implemented.
387. The Tanzania Internal Audit service was established in 1961 by the Exchequer and Audit Ordinance of
1961 and Financial Order Part II. Each Ministry, Region and Department was required to establish an
internal audit unit, the head of each Internal Audit unit was to report to the entity’s Accounting Officer.
The Public Finance Act of 2001 strengthened the internal audit function by broadening the mandate
and prescribing the establishment of Audit Committees in each MDA and RAS to oversee the internal
audit units. A Systems and Internal Audit Section was established under the Accountant General’s
Division with the aim of strengthening, supervising and building the capacity of internal audit units in
MDAs and RASs. In 2010 the Public Finance Act was further amended to establish the Internal Auditor
General’s Department (IAGD) headed by the Internal Auditor General (IAG), reporting to the
Paymaster General.
388. The IAG has overall responsibility for the internal audit function in the Ministries, Departments,
Regional Administrative Secretariats and Executive Agencies of Central Government, as well as in Local
Government Authorities, and for Donor Funded Projects in Central or Local Government. The IAG
has the responsibility to:
a) Develop internal audit policies, standards, manuals and guidelines;

b) Develop and supervise implementation of the internal audit strategy and annual audit
programme;
c) Manage and control the quality of operations of the audit units and audit committees;
d) Facilitate development of the audit cadre;

e) Liaise with the CAG, Accountant General and Accounting Officers; and
f) Make follow up of agreed audit recommendations.
(i) Coverage of internal audit
389. For Central Government, all audit entities except one are reported to be in place in the MDAs.
However, the CAG has noted weaknesses in terms of shortage of staff and other resources and in the
functioning of Audit Committees, several of which do not meet or submit annual reports and whose
performance it has not been possible to evaluate.
390. At least one internal auditor is in place in all MDA entities. For the whole of government there are
2,409 staff positions for IA, of which 1,469 are filled. IAG in his annual QA report for 2020/21 has
identified staff and resource shortages in IA units at MDAs. The JICA report as well as GIZ project
co-ordinators mentioned staff turnover and shortages as a problem area for the proper functioning of
the IA. From the annual IAG reports, the statistics in Table 3-19 reveal the planned and actual
submission of annual audit reports for the three-year period.
Table 3-19: Planned & Actual Submission of Internal Audit Reports, 2018/19 – 2020/21
ANNUAL REPORTS
INSTITUTIONS SUPPOSED TO BE ANNUAL REPORTS SUBMITTED
SUBMITTED
2018/ 2019/ 2020/ 2018/ 2019/ 2020/

% % %
2019 2020 2021 2019 2020 2021
Ministries 26 26 26 22 85 16 62 26 100
Departments 34 34 30 15 44 32 94 29 97
Agency 38 38 31 22 58 28 74 28 90
Regional Secretariat 26 26 26 15 58 13 50 9 35
Board 17 17 26 5 29 11 65 13 50
Other Governent Institutions 40 40 151 21 53 35 88 119 79
GRAND TOTAL 181 181 290 100 55 135 75 224 77
Source: IAGD Annual Reports
391. For 2020/21it can be noted that 77% of expected IA reports and 50% of IA committee reports had
been submitted for CG entities. The submission rates have been increasing substantially over the
period, especially for MDAs.
392. Based on the list of current staffing of Internal Audit Units, as well as the results from the CAG
assessment, the statistics of submitted reports and interviews with IAGD, internal audit is considered
operational for CG entities representing most – but not all - total budgeted expenditures, and entities
collecting nearly all budgeted revenues. Staff turnover and shortages put the functionality and
coverage of audit in jeopardy but the dimension (i) is nevertheless rated a “B”.
(ii) Nature of audits and standards applied
393. The second dimension measures the nature of audits performed and the extent of adherence to
professional standards. The IAG has developed internal audit manuals and guidance material that reflect

the important elements of the IPPF (International Professional Practices Framework) of the Institute of
Internal Auditors (IIA). The internal audit manual has recently been updated and includes requirements
and guidance on evaluation of adequacy and effectiveness of internal control as part of an audit. A risk-
based approach has been introduced.
394. The IAG QA report for 2019/20 summarises findings from IA work in CG. Based upon the IA units'
reporting, IA work is clearly focussed on issues of compliance relating to procurement and supplies
management, expenditure and asset management, revenue management, implementation of
development projects, and management of liabilities/debt and human resources. The central IAGD
plans for 2021-2022 include several activities to evaluate internal controls and systems but the scope
and reach of such activities is not sufficient to change the primary focus of IA work.
395. The IAGD’s manual and guidance materials clearly reflect the IPPF of the Institute of Internal Auditors
and its training, and centrally coordinated activities focus on internal controls and systems.
Nevertheless, at the national level IA activities are primarily focused on financial compliance. Hence,
dimension (ii) is rated a “C”.
(iii) Implementation of internal audits and reporting
396. The third dimension assesses evidence of an effective internal audit function as shown by preparation
of annual audit programmes and their actual implementation, and availability of internal audit reports.
The rating is to be based on the annual audit report of the last completed fiscal year, i.e. 2020/21.
397. In line with the Public Finance Act as revised in 2010 and the Public Audit Act Section 15, each audit
unit in the MDAs and RASs is required to report on findings from their audits to the Accounting Officer
in their entity, and to submit a copy of quarterly internal audit reports to the Paymaster General (where
it can be reviewed by IAG) and to the CAG. The IAG is required to scrutinize audit reports from audit
units and prepare a summary of major audit observations and recommendations and submit this to the
Paymaster General for further action. Audit recommendations are also to be registered and followed
up in the GARI-ITS system
398. According to the 2020/21report, 91% of the CG entities have submitted internal audit plans to the
IAG. However, only 77% also submitted annual audit reports. In the case of audit committees, 35%
submitted annual reports to the IAG.
399. Annual audit programmes and plans exist and are submitted to IAGD. However only 77 % of the CG
entities submitted annual reports in 2020/21. For audit committees the submission rate was 35 %. We
assess that the majority of programmed audits are completed; hence, the rating of this
dimension is a “C.”
(iv) Response to internal audits
400. The Public Financial Regulations (2001) require the internal audit units in MDAs and RASs to review
and report on the adequacy of actions taken by the management in implementing recommendations

made by internal auditors. It is the responsibility of the individual internal audit units to keep record of
their recommendations and management’s follow up. They are also required to register the
recommendations and responses in the GARI-ITS system jointly with CAG. CAG makes a follow-up
of responses in GARI-ITS on a quarterly basis. The Accounting Officers provide management
responses, and CAG and IAGD follow up on the implementation. The 2021/21 report from IAGD
noted that among the 1,853 long outstanding audit recommendations from both external and internal
audit, 1,303 were still “under implementation” and 560 “not implemented”. CAGs annual report
reveals similar figures (See under Indicator 30.3.) For 2019/20 the total figure was 1,853 long
outstanding issues. A deeper scrutiny of such recommendations reveal that the majority referred to
“Other Government Institutions” not the central Ministries and Departments.
401. The evidence received from the MDAs interviewed on management responses to internal audit
recommendations indicates that the practice of preparing management responses to IA
recommendations is reasonably well established.
402. The assessment made is that management provides a full response for the majority of CG entities
audited. However, the implementation pace is slow in some entities where many recommendations
are not implemented. The score for this dimension is therefore a “C”, giving a “C+” for the
indicator.
403. The score against this indicator remains a “C+” in 2022 but our overall judgement is that
there has been progress in the internal audit function since 2017. Main achievements include
introduction of a risk-based audit and related training, the registration and monitoring of audit
recommendations in the GARI-ITS system, and programmes for capacity building and establishment of
a championship entity of internal auditors. However, the sustainability of these results are impeded by
staff turnover and high vacancy rates.
404. Further progress in strengthening Internal Audit calls for efforts to improve recruitment
and retention of staff. The CAG has noted weaknesses in terms of shortage of staff and other
resources and in the functioning of audit committees, and it would seem that new thinking is needed
to find solutions to these ongoing problems.
405. The introduction of computer support for the audit function and additional training in the use of MUSE
would assist the effectiveness of Internal Audit.
406. Notwithstanding the introduction of the GARI-ITS system, further efforts are needed to strengthen
management actions in response to audit recommendations. Continued staff shortages in IA units make
it difficult to ensure audit recommendations are effectively followed up.

3.7 Pillar VI – Accounting and Reporting
407. The indicators covered under Pillar VI assess the quality of accounting and reporting systems.
Specifically, they consider the extent to which accurate and reliable records of all transactions are
maintained, and information is produced and disseminated at appropriate times to meet decision-
making, management and reporting needs.
PI-27 Financial data integrity
408. This indicator assesses the extent to which treasury bank accounts, suspense accounts, and advance
accounts are regularly reconciled and how the processes in place support the integrity of financial data.
It should be read in conjunction with PI-21 and PI-22 on Predictability of in-year resource allocation
and Expenditure Arrears, respectively. The assessment of this indicator is based on interviews with
ACGEN, IAG and CAG staff, selected MDA staff members, as well as a review of the accounting manual
and the audit reports from IAG and CAG.

Indicator Explanation for the 2022
2017 2022 Rationale
PI-27 Financial Scoring Method M2 (AV) Improvement
C C+
data integrity
Bank reconciliation of all active
(i) Bank account central Government accounts takes
B B No Change
reconciliation place monthly, usually before 4
weeks from the end of each month
The absence of a suspense account In the absence of a
facility or of any alternative suspense account
organised procedure to keep track facility or any
of pending postings (receipts or equivalent procedure,
expenditure) is a deviation from this dimension has been
best practice. We remain of the rated ‘not applicable’.
(ii) Suspense accounts D N/A
opinion that dimension (ii) should As a result of excluding
be rated “D”, but to allow for this dimension, the
comparisons with other PEFA aggregate score has
assessments and to follow the improved from a C to a
guideline the rating given is N/A C+.
(Not Applicable).
A complete reconciliation of
advances and imprest accounts only
takes place annually within the
(iii) Advance accounts D D deadline for submission of the No Change
annual financial statements from
MDAs, namely three months after
year’s end.
Access to records is restricted and
(iv) Financial data all changes recorded, resulting in an
integrity B B audit trail. There is no specific unit No Change
processes in charge of verifying and checking
data integrity.
(i) Bank account reconciliation
409. In accordance with the accounting procedure, manual reconciliation should be undertaken as a daily
process and accounting officers should provide reconciliation of cash books against the Central

Payment Office's cash book on a monthly basis. The Accountant General's department is responsible
for preparing the consolidated bank reconciliation statement to the CAG by the end of the financial
year. ACGEN receives bank statements directly from BOT for the STA and subaccounts and other
accounts held at BoT and commercial banks. These are reconciled with MUSE reports and reports
from entities using other systems. This is done on a daily basis, but is reported in a monthly report.
MDAs get feed-back of the results and are tasked to clear their unused accounts and investigate
erroneous entries.
410. A limited number of commercial bank accounts – for externally financed projects and for the
management of retained non-tax revenues– are kept at MDA levels. Reconciliation of these accounts
is done by MDAs, and balances reported on a monthly basis to BoT and ACGEN.
411. Bank reconciliation of all active central Government accounts thus takes place monthly, usually before
4 weeks from the end of each month. Dimension (i) is therefore rated a “B”.
(ii) Suspense accounts
412. A suspense account is an account in the books of an organization in which items are entered
temporarily before allocation to the correct or final account. GoT does not operate suspense accounts.
Any transaction pending registration due to lack of information and in need of investigation is therefore
not posted in MUSE, EPICOR or other systems, but rather kept aside awaiting investigation.
413. The absence of a suspense account facility or of any alternative organised procedure to keep track of
pending postings (receipts or expenditure) is a deviation from best practice. We remain of the
opinion that dimension (ii) should be rated “D”, but to allow for comparisons with other
PEFA assessments and to follow the guidelines of the PEFA Secretariat the rating given
is N/A (Not Applicable).
(iii) Advance accounts
414. Standing imprest accounts and travel imprests can be paid in accordance with the Public Finance
Regulations of 2001, no 56-103. Travel imprest accounts must be retired within 14 days of return. No
further imprest may be advanced if the officer has an unretired imprest. Failure to retire any imprest
within 30 days of the end of the financial year may lead to recovery from the salary or other amounts
due.
415. Every MDA vote has an imprest account. It is used for small expenses and must be cleared by the end
of the year. They are paid by use of commercial bank accounts. Internal Audit checks the use and
clearance of imprest accounts.
416. Advances to contractors are the responsibility of accounting officers and must also be cleared by year's
end. The CAG notes in his annual report for 2019/20 the inadequate maintenance of imprest accounts
at five MDAs with a value of TShs. 6.8 billion where cash books for imprest are not maintained and a

monthly reconciliation has not been carried out. For the same year, the IAG notes unretired imprests
to a value of TShs 2.3 billion.
417. The consolidated accounts for 2019/20, in the report on the financial position, contain a disclosure of
current assets, under receivables and prepayments, with a narrative line in the explanatory note for
“staff advances and imprest” of Tsh. 57.7 bn as at 30 June 2020. The figure stood at Tsh. 56.3 bn as at
30 June 2019. For prepayments for assets the report discloses TShs. 2,143 bn. However, these figures
cover more than budgetary Central Government.
418. The assessment team’s interviews suggest that reporting and reconciliation takes place monthly in
connection with monthly reconciliation in MUSE. However, there is no documentary evidence of
monthly or quarterly reconciliations in the quarterly reports. We therefore draw the conclusion that
a complete reconciliation of advances and imprest accounts only takes place annually within the
deadline for submission of the annual financial statements from MDAs, namely three months after year’s
end. The rating for this dimension is hence a “D”.
(iv) Financial data integrity processes
419. The System Development Unit (SDU) in the Financial Management Information Systems Division in
MoFP has the responsibility for authorization of access to Governments central FMS systems, including
MUSE. The MUSE system includes a triple authorization and check of payments, specimen of signatures
as well as physical personal tokens to be used to access the parts of the system an individual is
authorized to use. The system can produce log reports. No specific team is responsible for data
integrity but in-built and consistency checks are made.
420. The CAG report for 2019/20 does not contain any observations related to the control efficiency of
MUSE, EPICOR or the HCMIS system. However, it includes some observations related to the general
ICT environment, such as a lack of a risk assessment and the need for a roadmap for further integration
of systems.
421. Access to records is restricted and all changes recorded, resulting in an audit trail. There is no specific
unit in charge of verifying and checking data integrity. The rating of dimension (iv) is therefore a
“B”, giving a “C+” for the indicator as a whole.
422. The assessment shows a modest improvement in financial data integrity, increasing from
a “C” in 2017 to a “C+” in 2022. The continued use of the MUSE (and locally EPICOR) and HCMIS
systems, and further integration of these systems is likely to further improve data integrity. The access
and use of these systems for audit purposes, both for internal and external audit, is also an area that
can be developed further and would bring gains in financial integrity.
423. Relatively simple, low cost changes could make a large positive difference. For example,
improved monitoring and/or consolidation of bank reconciliation processes, the introduction of a

facility for suspense accounts and a documented process of verification of financial data integrity would
significantly improve performance. A stricter, more timely process for dealing with advances could also
be introduced simply through procedural changes.
PI-28 In-year budget reports
424. This indicator assesses the comprehensiveness, timeliness and accuracy of in-year budget execution
reports. Regular in-year reporting is essential for budget monitoring and for ‘early warning’ of significant
deviations, whether due to under-collection of revenues, over-spending against budget or under-
spending (for example on development projects), and thus for timely implementation of corrective
measures. The publication of these reports ensures that budget monitoring takes place within a wider
framework of public accountability and that any corrective measures are taken in a transparent manner.
425. The assessment is based on study of the MoFP website, the quarterly and mid-year reports available
there, the Wajibu CASFAR report of 2019/20 and interviews with MoFP and MDA staff.
Previous New
Indicator Explanation for 2022 Performance Change
Score Score
and dimensions Score and Rationale
2017 2022
PI-28 In-year Scoring Method M1 (WL) Improvement
D C
budget reports
The coverage and classification The score has improved due
of the published quarterly Budget to the improvement in the
Execution Reports allow direct degree of accessibility of
comparison to the original quarterly Budget Execution
(i) Coverage and budget only for the main Reports. However, the
comparability of D C administrative headings. They do range of information
reports not include the details of actual provided therein, and the
expenditures made from the consequent scope of
transfers received by the de- potential comparison to the
concentrated units of Central original budget have not
Government expanded.
Apart from the report for the The score has improved due
first quarter, the published to the improvement in the
(ii) Timing of in-year
D C reports are available quarterly regularity and timeliness of
budget reports and issued within 8 weeks from quarterly Budget Execution
the end of the quarter. Reports.
There are some concerns The score has improved
(iii) Accuracy of in- regarding data accuracy. Data is because the quarterly BERs
however useful for analysis of have become more regular
year budget D C budget execution, but on a highly and more accurate in their
reports aggregate level. Expenditure is data, although concerns
captured at payment stage. over data accuracy persist.
(i) Coverage and comparability of reports
426. Detailed reports allowing a comparison with the budget are available on-line by use of the MUSE
systems instantly but these are not publicly available. The only in-year reports published on MoFP
website are the quarterly budget execution reports (BERs) and the mid-year report. These reveal a
comparison with the main administrative headings in the original budget with seven revenue categories

and 5 expenditure group items; Salaries and wages, Goods services and transfers, Interest, Debt
amortization and Development expenditure.
427. Direct access to reports in the MUSE system can give more detailed and frequent data. In this phase
of implementation such access cannot be said to be universally available for all stakeholders with an
interest in budget monitoring. The coverage and classification of the published quarterly BERs allow
direct comparison to the original budget for the main administrative headings only; moreover, they do
not include the details of actual expenditures made from the transfers received by the de-concentrated
units of Central Government, such as the universities. Therefore, dimension (i) is rated a “C”.
(ii) Timing of in-year budget reports
428. Reports from the IFMIS systems (MUSE and Epicor) are instantly available for the authorized users.
Quarterly Budget Execution Reports (BERs) are published on the MoFP website (appearing somewhat
randomly under the different menu headings on the website) and during 2020/21 were published within
8 weeks of the end of the quarter. The quarterly report for the first quarter of 2021/22 was, however,
by the 21 December 2021 still not published on the website.
429. Apart from the report for the first quarter, the published reports are available quarterly and issued
within 8 weeks from the end of the quarter. As many budget holders would rely on these reports the
dimension (ii) is rated a “C”.
(iii) Accuracy of in-year budget reports
430. In the quarterly and mid-year reports expenditure is captured at payment stage. The reports published
capture information neither on commitments nor on accounts payable, which would be of greater use
in anticipating the pattern of expenditure for the remainder of the fiscal year.
431. CAG noted in his annual report regarding the consolidated statements of cash flows and financial
performance that there were un-reconciled receipts and payments amounting to Tsh.8.4 and Tsh. 9.4
billion respectively and recommended government to strengthen its quality review mechanism to
ensure that consolidated information is accurately reported in compliance with IPSAS and ACGENs
circular.
432. There are some concerns regarding data accuracy. Data is however useful for analysis of budget
execution. Expenditure is captured at payment stage. This results in a C rating for dimension (iii).
433. The indicator score has improved to a “C” from a “D” in 2017, when quarterly reports
were not published at all in 2015/16. Nevertheless, given that more detailed reports are available
more readily and more timely through MUSE and the other accounting systems in use, an improved
access and publication policy would be easy to implement. With a systematic and structured policy

towards the preparation, publication and distribution of quarterly budget reports, an “A” score on this
indicator could be easily obtainable based upon the existing accounting and financial reporting systems.
PI-29 Annual financial reports
434. This indicator assesses the extent to which annual financial statements are complete, timely, and
consistent with generally accepted accounting principles and standards. This is crucial for accountability
and transparency in the PFM system.
435. The indicator has been assessed based on the consolidated and audited financial statements for
2017/18, 2018/19, 2019/20, The indicator has also considered the budget for the GoT for the financial
year 2019/20, the CAG’s audit report for the financial year 2019/20, the Public Finance Act (2001),
MoFP’s IPSAS user guide from 2021 and the MoFP’s Accounting Procedures Manual – second version
2021, as well as interviews with CAG, ACGEN and a small number of MDAs.
Previous New Performance change

Indicator and Explanation for 2022
Score Score and Rationale
dimensions Score
2017 2022
PI-29: Annual M1 Scoring Method (WL) No Change
C+ C+
financial reports
(i) Completeness Most of the desired information is
of annual contained in the annual report.
However, the level of aggregation
financial
is high, details of budgets
reports C C No Change
compared to outturn for votes/
ministries do not feature, and
arrears are not consistently
reported.
(ii) Timely The consolidated financial
submission of statement for budgetary Central
B B Government has in the past three No Change
reports for
years been received by CAG
external audit within 6 months of fiscal year end.
(iii) Accounting Accounting standards are applied Improved score due to the
standards to all financial reports and are incorporation of the
consistent with the country’s legal majority of international
framework. The majority of standards and the clear
C B international standards have been disclosure of gaps and
incorporated into the national variations. In earlier years,
standards, with the minor when migration to IPSAS
variations and gaps duly explained. accruals was incomplete, this
did not prove possible.
(i) Completeness of annual financial reports
436. The first dimension assesses the completeness of financial reports. Annual financial reports should
include an analysis providing for a comparison of the outturn with the initial Government budget, and
include information on revenue, expenditure, assets, liabilities, guarantees, and long-term obligations.
437. The Public Finance Act provides details of information to be included in annual accounts prepared by
the Accountant General. According to the Act, the financial statements should include revenues,
expenditure, assets and liabilities including financing, loans and guarantees, public debt, and contingent

liabilities. They should also include revenue arrears and outstanding commitments. This information
has been published in the latest three years’ consolidated financial statements.
438. The consolidated financial statements are prepared annually. They contain a table comparing the overall
summary outturn with the overall and initial Government budget. They disclose a segmented cash flow
statement divided into Budgetary Central Government (MDAs and RAS), Extra Budgetary entities,
social funds, LGAs, and financial and non-financial Corporations, although they do not include a
comparative table at vote or institution/entity level.
439. The statements are comparable with the approved budget in so far as there is a statement of
comparison of budget and actual amounts for the year. The statement reveals original and adjusted
budget amounts as well as actual outturn on a comparable basis for revenue and expenditure group
items, but does not include comparisons by vote.
440. The latest published statement for the year ended 30 June 2020 contains less detail when compared to
the two earlier years. There is no statement of financial position or of cash flow per ministry which
was the case in the 2017 and 2018 statements. Although those tables did not compare revenue and
expenditure for each ministry with the budgeted amounts, they did compare the outturn with the
previous year. The reporting of arrears is not reconciled with the GAMIS system reports and only
included in the accounts payable and accruals. (See indicator PI-22.)
Table 3-20: PI-29 - Content & Timing of Annual Financial Statements 2019/20
Financial Date Content of annual Consolidated Financial Statement

report submitted for Expenditure Financial and Guarantees Reconciled
external audit and revenue non-financial and long cash-flow
by economic assets and term statement
classification liabilities obligations
Annual MDAs submit Yes No - Yes Yes, although
Financial before 30th, Information on with certain
statements Nov. 2020. liabilities mis-statements
2019/20 ACGEN incomplete due as reported in
submits to arrears the audit by
consolidated reconciliation CAG.
annual report problem and
before 31 outdated pension
December fund liabilities
(See PI -22.)
441. Most of the desired information is contained in the annual consolidated financial statement (See Table
3-20.). However, the level of aggregation is high, details of budgets compared to outturn for votes or
ministries do not feature, and arrears – a key element of financial liabilities - are not consistently and
accurately reported. For these reasons, the dimension is rated a “C”.

(ii) Submission of reports for external audit
442. The second dimension assesses the timeliness of submission of reconciled year-end financial reports
for external audit. This is a key indicator of the effectiveness of the accounting and financial reporting
system.
443. The Public Finance Act 2001(revised 2004) requires Accounting Officers to prepare and submit to the
CAG financial statements in respect of the votes, revenues and moneys for which they are responsible
within four months of the end of the FY. The Accountant General, under article 25(1) of the Act, is
required within six months of the end of the FY to prepare and submit financial statement of the
Consolidated Fund to the CAG for external audit.
444. The CAG, the Accountant General and the Parliamentary Public Accounts Committee members all
confirmed that the 6-monthly deadline specified in the Act was systematically respected. The 1st level
review of the 2020/21 consolidated financial statements by the CAG has taken place between 17th and
31st, December 2021, meaning that financial statements were received in advance of the 17th,
December.
445. The consolidated financial statement for budgetary central Government has in the past three years
been received by CAG within 6 months of the end of the fiscal year. A “B” score is therefore
accorded to this dimension.
(iii) Accounting standards
446. The third dimension assesses the extent to which annual financial reports are understandable to the
intended users and contribute to accountability and transparency. This requires that the basis of
recording the Government’s operations and the accounting principles and national standards used
should be transparent. In order to assess this dimension, the team examined the consolidated and
audited financial statements for 2017/18, 2018/19, 2019/20, as well as MoFP’s IPSAS user guide from
2021 and the MoFP’s Accounting Procedures Manual – second version 2021, drawing also on interviews
with CAG, ACGEN and a small number of MDAs.
447. The Public Finance Act states that all accounts submitted to the CAG are to be prepared in accordance
with instructions issued by the Accountant General, regarding the basis of accounting to be adopted
and classification system to be used when preparing the financial statement. The Government adopted
International Public Sector Accounting Standards (IPSAS) on an accrual basis for the preparation of its
financial statements from 1st July 2012 and produced its first IPSAS cash financial statements for the
financial year 2012/2013.
448. The GoT is now fully compliant with IPSAS accrual standards as described in MoFP’s IPSAS User guide
of 2021 and Accounting Procedures Manual. Notes explain the significant accounting policies applied.
There are no specific notes for standards used in the annual audited financial statement, but mention
is made of IPSAS being fully applied. The IPSAS user guide refers to national regulations as well as all

relevant IPSAS standards, except for IPSAS 42 which relates to Social Benefits and IPSAS 18 Segment
Reporting.
449. The accounting standards applied to all financial reports are consistent with the country’s legal
framework. The majority of international standards have been incorporated into the national standards,
with the minor variations disclosed and gaps explained. The standards used in preparing annual financial
reports are disclosed. The assessment of this dimension leads to a “B” rating, giving a “C+”
for the indicator as a whole.
450. The score against this indicator has remained unchanged since the 2017 PEFA, remaining
a “C+”. However, this reflects the “weakest link” scoring methodology, which dictates that without
improvements across all three dimensions, the indicator score cannot improve to a “B” overall. If an
overall improvement is to be recorded, Government’s reporting on the real value of expenditure
arrears needs to be fully incorporated in “accounts payable”. This must be given priority if confidence
in consolidated financial reports is to be achieved.
451. The Government has managed to migrate from IPSAS cash basis to IPSAS accrual, which
is a major achievement. However, accrual reporting is not without its challenges. For example,
while tax payments due should be accrued and counted as assets, if a significant proportion of these
are never received – due to tax-owing companies going bankrupt for example - then this would give a
misleading picture of government’s financial position. Similarly, if arrears or accrued pensions are
understated, this would give an unduly favourable view of government’s liabilities. In the early stages of
application of IPSAS accrual accounts, it is important to introduce the necessary checks and balances
to ensure that accounts provide the truest and most accurate view of the net financial position.
452. The recently published IPSAS user guide and the second version of Accounting Procedures Manual are
fully IPSAS concurrent and should serve to improve reporting quality. It would be prudent to consider
further measures – perhaps in consultation with the CAG - to strengthen the procedures for the
production of the consolidated annual financial statements. In particular, we note that the level of
aggregation is high and details as compared to votes/ ministries do not feature. Reporting of accounts
payables and accruals would also benefit from further detail and calibration with arrears reporting.
3.8 Pillar VII – External Scrutiny and Audit
453. Pillar VII assesses the quality of the external audit of public finances and its external scrutiny by the
Legislature. In particular, it focuses on the extent to which public finances are independently reviewed
and there is external follow-up on the implementation by the Executive of recommendations for
improvements.

PI-30 External audit
454. Reliable and comprehensive external audit is an essential requirement for ensuring accountability and
transparency in the use of public funds. It provides assurance that information in financial reports is
accurate and contains no material errors that would affect the reports’ interpretation. The first three
dimensions of this indicator focus on the quality, timeliness and effectiveness of the audit of the
Government’s annual financial reports, and the fourth on the degree of independence of the external
audit function. A modern SAI would also be expected to adopt aspects of performance audit: this is
covered under dimension (iv) of PI-8, which assesses the evaluation of service delivery performance.

Indicator and
dimensions
2017 2022 Rationale
PI-30: External M1 Scoring Method (WL) Improvement
C+ B
Audit
CAG’s annual audit reports include results
from audit of CG entities representing most
total expenditures and revenues. These have
(i) Audit coverage
B B followed national audit standards which are No Change
and standards largely compliant with the ISSAIs, and audits
have highlighted relevant material issues and
systemic and control risks..
(ii) Submission of Audited reports have been submitted to the
audit reports National Assembly within six months from
B B receipt of the financial statements by CAG No Change
to the
for the last three completed fiscal years.
legislature
A formal, comprehensive, and timely
response was made by the Executive or the
audited entities on which follow-up was
(iii) External audit
B B expected, during the last three completed No Change
follow-up fiscal years. However, the follow-up to audit
recommendations by the Executive is not
fully effective.
The CAG has a 5-year renewable period of Score has
tenure and enjoys significant constitutional improved: because
protection from removal from office. The the CAG now
(iv) Supreme Audit CAG operates independently from the enjoys full
Executive with respect to the planning of operational
Institution C B
audit engagements and the de facto control in the
Independence procedures for appointment of the head of execution of his
the SAI as well as the execution of the SAI’s budget.
budget. The CAG has unrestricted, timely
access to records for all audited entities.
455. The indicator has been assessed based on the Constitution of the United Republic of Tanzania (1977),
the Public Finance Act 2001(revised 2004), the Public Audit Act 2008, the CAG’s audit reports for the
last three completed financial years (2017/18- 2019/20), including documentation of the status of audit
recommendations from previous years. Interviews have been carried out with CAG staff and the
secretariat of the PAC. The audit opinions for the consolidated financial statements for the three years
have also been studied as well as the Wajibu report on the Country’s Annual State of Financial
Accountability (CASFAR) of 2019/20. Although the CAG has responsibility for auditing public

enterprises and Local Government Authorities, the scope of this indicator is limited to Central
Government.
(i) Audit coverage and standards
456. Based on a review of the CAG’s CG annual audit reports for 2017/18, 2018/19 and 2019/20, it is clear
that audit coverage includes extra-budgetary funds and autonomous agencies as well as the ministries
and departments of Central Government. Reports highlight relevant and material issues, as well as
systemic and control risks.
457. The audits were conducted in conformity with International Standards of Supreme Audit Institutions
(ISSAIs) issued by the International Organisation of Supreme Audit Institutions (INTOSAI).
458. The audit reports include results from audit of CG entities representing most expenditures and
revenues. For 2019/20 the 43 Embassies and High Commissions have been excluded due to the
pandemic and travel restrictions.
459. In planning and executing audits, the CAG has a focus on significant and systemic financial management
issues. The CAG conduct regularity audits, which are a combination of financial audit and compliance
audit, and these audits encompass important compliance issues such as regulations on internal control
and procurement. An internal Quality Assurance function has been established, with a responsibility to
monitor that the policies and procedures relating to the system of quality control are relevant and
adequate and operating effectively.
460. CAG’s annual audit reports include results from audit of CG entities representing most but not all
assets and liabilities, expenditure and revenue; these have followed national audit standards which are
largely compliant with the ISSAIs, and audits have highlighted relevant material issues and systemic and
control risks. When travel restrictions can be lifted audit of the Embassies and High Commissions
should also be possible. Dimension (i) is therefore rated a “B”.
(ii) Submission of audit reports to the legislature
461. The Public Finance Act requires accounting officers to prepare and submit to the CAG financial
statements in respect of the votes, revenues and moneys for which they are responsible within four
months of the end of the FY42. The Accountant General is required within six months of the end of
the financial year to prepare and submit financial statements of the Consolidated Fund to the CAG for
external audit.
42 Our interviews with the CAG, the Accountant General and a small selection of MDAs suggest that a high
proportion of MDAs do indeed submit their financial statements to CAG within the 4-month limit, with a copy
also submitted to the Accountant General. However, the assessment team has not been able to access a
comprehensive listing of the MDA reports received by CAG each year with respective dates for each.

462. Pursuant to Public Audit Act, the CAG shall submit to the President and the Minister of Finance, or
appropriate Minister audited reports of public entities and the consolidated fund within nine months
following the expiration of the financial year. The final report shall be laid by the Minister or appropriate
Minister to the National Assembly within seven days of its next sitting after he has received it.
463. A meeting with CAG auditors confirmed that the financial reports were submitted from accounting
officers to the CAG and Minister by the 30th September each year. The consolidated financial
statements were submitted by the Accountant General to CAG in December each year. The audited
consolidated financial statements and annual audit reports were submitted to the President between
February and the end of March. Based upon data from the Clerk to the Parliament, the successive
reports of the CAG have been tabled in Parliament on 8th, April 2019, 6th, April 2020 and 8th, April
2021. (These dates are also confirmed in the Wajibu CASFAR report.)
464. Audit reports have hence been submitted to the National Assembly within six months from receipt of
the financial statements by CAG for the last three completed fiscal years. The dimension is
therefore scored “B”.
(iii) External audit follow-up
465. The Public Audit Act (PAA) provides clear regulations on how the Executive shall follow up on CAG’s
audit recommendations. It states that the Accounting Officer shall respond to the CAG's annual audit
report by preparing an action plan of the intended remedial actions for submission to the Paymaster
General (PG). The PG is required to lay the responses and action plans before the National Assembly
in the next session, submitting a copy to the CAG. In preparing the action plan both the Accounting
Officers and the PG shall take into account the observations of the PAC.
Table 3-21: PI-30 - Implementation of CAG audit recommendations, 2016/17 - 2018/19

Status 2018/19 2017/18 2016/17
Implemented 1,508 1,474 1,459
Under Implementation 2,003 1,588 1,626
Not Implemented 1,211 1,080 752
Overtaken by Events 259 286 445
Reiterated 502 308 -
Total 5,483 4,736 4,282
Percentage Implemented 27.5% 31.1% 34.1%
Percentage Under Implementation 36.5% 33.5% 38.0%
466. Further to the requirements of the PAA, an information system has been established to keep a
consolidated overview of the individual entities’ responses, with a database (the GARI-ITS system)
covering both internal audit and CAG recommendations, as well as PAC and LAAC recommendations,

management responses and action plans, thus allowing the CAG to monitor the status of
recommendations and actions. In the last three fiscal years, the CAG as well as the IAG have included,
as required by the PAA, an implementation status of the action plan in their annual audit reports.
467. There is evidence that a formal, comprehensive and timely response to CAG audits has been made by
the Executive in the last three fiscal years. However, reports from the IAG and the CAG to the
Legislature show that some PAC directives and a substantial percentage of CAG audit
recommendations from previous years have not been implemented or remain under implementation
as demonstrated in Table 3-21.
468. This indicates that a formal, comprehensive, and timely response was made by the Executive or the
audited entity on audit recommendations for which follow-up was expected, during the last three
completed fiscal years. However, the follow-up to audit recommendations by the Executive is not fully
effective. Dimension (iii) is thus rated a “B”.
(iv) Supreme Audit Institution Independence
469. The fourth dimension assesses the independence of the SAI from the Executive. Independence is
essential for an effective and credible system of financial accountability, and should be laid down in the
constitution or comparable legal framework. The Lima and Mexico Declarations43 are the main sources
of best practice for independence of an SAI, and identify financial independence, operational autonomy
and an independent Head of SAI as a minimum to obtain this level of independence.
470. The office of the Controller and Auditor General is established in the Constitution, which protects the
CAG’s independence and operational autonomy. Specifically, it gives him or her ‘unrestricted access to
such people, documents, computers and other information systems and assets as the CAG reasonably considers
necessary’ (Article 143). This Article further states that, ‘in the discharge of his functions, …the CAG shall
not be obliged to comply with the order or direction of any other person or Government Department.’
471. The Public Audit Act vests the power of appointment of the CAG with the President. In making this
appointment, the President is required by the Public Audit Act ‘to consider relevant professional
qualifications, experience and leadership skills suitable for appointment to the post.’ Moreover, there is a de
facto procedure, by which the President consults the Paymaster General, the outgoing CAG and other
senior members of Government in the process of appointing the CAG.
472. The Constitution (Article 144) contains detailed rules pertaining to removal from office of the CAG,
for which the President must follow a specific procedure, involving the appointment of a Special
Tribunal with a professional composition, the recommendation of which the President must follow.
43 Lima Declaration of Guidelines on Auditing Precepts, adopted by the 9th Congress of INTOSAI, Lima, 17-26
October 1977; Mexico Declaration on Supreme Audit Institutions’ Independence, adopted by the 19th Congress
of INTOSAI, Mexico City, 5-10 November 2007.

473. The Act prescribes a procedure for the preparation of estimates and budget approval for the CAG
office with a consultative meeting chaired by the chairman of the Public Accounts Committee, members
being the CAG, the Minister and members of the PAC. The budget proposal agreed by the committee
shall be submitted to the Minister and forwarded to the National Assembly without alteration.
474. Once its budget is approved, the CAG/ NAOT receives monthly transfers from the consolidated fund.
These funds are transferred into a segregated account that is managed by the Chief Accountant at
NAOT. The Chief Accountant reports to the Accounting Officer who is appointed by the CAG. The
NAOT receives monthly on-time distributions from the consolidated fund that reflect the approved
budget amount and are not subject to the discretionary cash ceilings applied to the majority of the
Central Government.
475. In accordance with Article 143 (6) of the Constitution, the CAG is not influenced by Government or
any other institution in the preparation of the annual audit plan. The CAG has the prerogative to decide
on which special audits to conduct.
476. The CAG has a 5-year renewable period of tenure and enjoys significant constitutional protection from
removal from office. The CAG operates independently from the executive with respect to the planning
of audit engagements and the de facto used procedures for appointment of the head of the SAI as well
as the execution of the SAI’s budget. Moreover, the SAI has unrestricted and timely access to records,
documentation and information for all audited entities. Dimension (iv) is therefore scored a “B”,
giving a “B” score for the indicator as a whole.
477. Scoring against this indicator has improved from a “C+” in 2017 to a “B” in 2021. The
CAG continues to be an important and trusted part of the accountability chain of the public sector in
Tanzania. Steady improvements have continued to be made in the coverage, quality and timeliness of
external audit. In addition, although the budget approval process leaves a significant role for the
Executive and the Legislature, the processes now in place have afforded a level of protection to the
CAG in the execution of his approved budget, which is enjoyed only by the President and other
constitutional office holders. As a result, the CAG enjoys full operational control in the execution of
his budget.
478. The rising trend of outstanding recommendations over the last three years is a cause for
concern regarding the follow up to audit recommendations. The implementation of the GARI-
ITS system has facilitated monitoring and tracking of audit recommendations and related management
responses and action plans. However, it is clear that greater support is needed from the Legislature
and Executive in ensuring stronger follow up to audit recommendations.
479. The continued widening and deepening of the audit scope to include forensic and performance audits
is worth noting and will require further support and attention. Access and use of the IFMIS systems for
auditors has also been mentioned as a problem area for the NAOT, requiring capacity development

and investments in ICT equipment. Together with audit follow up issues, these could usefully be
adopted as the priority areas for support under the next phase of the PFMRP.
PI-31 Legislative scrutiny of audit reports
480. This indicator assesses the process of scrutiny by the Legislature of the audited financial reports of
Central Government and the annual audit report of the Supreme Audit Institution (SAI).
481. The assessment of this indicator has been based on an analysis of the relevant legislation, of the CAG’s
reports for 2017/18, 2018/19 and 2019/20, including records of PAC and LAAC recommendations, and
the Wajibu CASFAR report, as well as an interview with the secretariat of the PAC.

Indicator
Score Score Explanation for 2022 Score change and
and dimensions
2017 2022 Rationale
PI-31 Legislative
scrutiny of audit B C+ Scoring Method M2 (AV) Deterioration
reports
In the last three fiscal years, scrutiny
of audit reports on annual financial
(i) Timing of audit
C C reports has been completed by the No Change
report scrutiny legislature within 12 months from
receipt of the reports.
Over the last three completed fiscal
years, in-depth hearings on the key
(ii) Hearings on audit findings in the CAG’s reports have
A A No Change
findings been undertaken with all entities
receiving disclaimer of opinion or
adverse or qualified opinions.
The Legislature – through the PAC –
issues directives on actions to be
implemented by the Executive and
(iii) Recommendations follows up on the implementation of
on audit by the B B these directives. However, No Change
legislature implementation performance by the
Executive is poor, suggesting that
further strengthening of the follow up
process is needed.
The reports of the PAC are provided Score has
to the full chamber of Parliament, deteriorated because
(iv)Transparency of committee hearings are open to the the reports of the
public and press, and announced on PAC for the last
legislative scrutiny C D the official website of the Parliament. three fiscal years have
of audit reports However, the committee reports and not been published
recommendations are not published on the official website
on the website. of the Parliament.
482. In line with the requirements of the Public Audit Act (2008), the CAG is required to present before
the Legislature and the Public Accounts Committee (PAC) the audited financial statements of the
Central Government and of the Public Authorities & Other Bodies (PA&OBs), as well as its audit

report on these accounts44. In addition, audit reports from forensic, special and performance audits are
presented to the Executive and Legislature. The PAC holds hearings on the audited accounts and the
CAG’s audit reports and issues directives to the Executive, which are also tabled before the Legislature.
(i) Timing of Legislative scrutiny of the Audit report
483. The first dimension assesses the timeliness of the scrutiny of the annual Audit report, and
corresponding accounts, by the PAC. As may be seen from Table 3-22, for the three most recently
completed fiscal years, audited financial statements and audit reports have been systematically tabled
before the Legislature by 30th, April each year – within 10 months of the close of the Fiscal Year.
Because this period coincides with the time of the consideration by the Legislature of the Executive’s
Budget Proposal for the subsequent FY, the PAC’s hearings on the audit reports cannot be held
immediately and, therefore, are normally held in January of the following year. However, for the CAG’s
report of 2019/20, the PAC hearings were held in September 2021.
Table 3-22: PI-31 - Timing of scrutiny of Audit report by the PAC
Financial Date of receipt of Dates of PAC Date of tabling of

Year CAG’s Audit Hearings PAC Report
report
2017/18 8th April. 2019 January 2020 29th January 2020
2018/19 6th, April 2020 January 2021 8th April 2021
2019/20 28th, March 2021 September 2021 Pending
484. As confirmed by the PAC secretariat, in the last three fiscal years, scrutiny of audit reports on annual
financial reports has been completed by the Public Accounts Committee within twelve months from
receipt of the reports. This dimension therefore scores a “C”.
(ii) Hearings on audit findings
485. The PAC holds detailed in-depth hearings each year on the CAG report and the audited financial
statements over a period of 4 weeks, normally in January or February. These hearings would be
primarily with the Accounting Officer and other staff of the audited entity but would always include
testimony and explanation of findings from the CAG, and sometimes from the Accountant General. In
some cases, specialist resource persons (from the universities or the private sector, for example) might
also be called in.
44 The audited financial statements of the LGAs and the corresponding report of the CAG are considered by the
Local Authorities Audit Committee (LAAC) of Parliament

486. Over the last three completed fiscal years, in-depth hearings on the key findings in the CAG’s reports
have been undertaken with all entities which have received a disclaimer of opinion, adverse or qualified
opinions45. Dimension (ii) therefore scores an “A”.
(iii) Recommendations on audit by the Legislature
487. The third dimension assesses the quality of follow-up to the directives issued by PAC. The PAC issues
directives each year for actions to be implemented by the Executive and has a structured process of
follow up, through three mechanisms:
§ through a review of implementation progress during the subsequent year’s PAC hearings;
§ through site visits by PAC members, organised to take place during the periods of
Parliamentary recess;
§ through a follow up on implementation of PAC directives by the CAG in the CAG’s annual
report on Central Government of the subsequent year and the GARI-ITS system.
488. There is therefore a structured process of follow-up to the PAC Directives. Despite this, the
implementation record of the Executive in relation to PAC directives is poor46, as may be seen from
Table 3-23.
Table 3-23: PI-31 Implementation of PAC Directives, 2016/17 - 2018/19
Status 2018/19 2017/18 2016/17

Implemented 130 92 82
Under Implementation 101 79 163
Not Implemented 17 105 19
Overtaken by Events 11 19 8
Total 259 295 272
Percentage Implemented 50.2% 31.2% 30.1%
Percentage Under Implementation 39.0% 26.8% 59.9%
489. There are two types of directives issued each year: a) PAC Directives on the CAG’s annual general
reports (which are generally cross-cutting directives, for follow-up by MoFP or the Office of the
President); and b) PAC Directives on individual audit reports (for direct follow-up by the audited
45 In the CAG reports on Central Government for the last three completed fiscal years, the number of entities with
adverse/ qualified opinions or disclaimers has been 17 (8%), 35 (14%) and 21 (8%) in 2017/18, 2018/19 and 2019/20
respectively. [CAG, (March 2020), Report on the CG Financial Statements for 2019/20.]
46 As reported in CAG, (March 2020), Report on the audit of CG Financial Statements for 2019/20.

entity.) Within the former category, of the PAC directives issued on the accounts of the 3 years
2016/17– 2018/19, by the time of the 2019/20 CAG Annual Report, only 37% had been implemented
with 42% still under implementation and 21% either not implemented or overtaken by events. We
conclude from these data that there remain some deficiencies in the process of follow up. Indeed, in
the PAC interviews it was highlighted that weak follow-up by the Executive is a significant problem.
490. Thus, the Legislature – through the PAC – issues directives on actions to be implemented by the
Executive and follows up on the implementation of these directives. However, implementation
performance by the Executive is poor, suggesting that further strengthening of the follow up process
is needed. Dimension (iii) therefore scores a “B”.
(iv) Transparency of Legislative scrutiny of Audit reports
491. The fourth dimension considers the transparency of the PAC’s scrutiny process, in terms of the degree
of public access. The schedule for the hearings of the PAC and LAAC is published on the internet and
in accordance with Parliament’s standing orders, they are open to the press and public.
492. When investigating the audit reports the committees, first have a session to disseminate audit opinions,
key findings and recommendations. The committee may seek assistance from the auditors for
clarification and invite the audited entity for the hearing. Hearings are organised for all issues of adverse
or qualified opinions, or disclaimers of opinion. The committees may make their own recommendations
and responses. Follow up on these is made in the subsequent audit report. The committees’ reports
are presented to the full house for debate and approval.
493. Transcripts from the hearings are not publicly available nor are the recommendations by the
committees. Minutes from the Parliamentary debates are published on the Bunge website under
“Hansard”. The minutes capture the debate but not the actual contents of recommendations.
494. Thus, the reports of the PAC are provided to the full chamber of Parliament, committee hearings are
open to the public and press, and announced on the official website of the Parliament. However, the
committee reports and recommendations are not published on the website. This dimension
therefore scores a “D”, giving a “C+” for the indicator as a whole.
495. The score for this indicator has fallen from a “B” in 2017 to a “C+” in 2021. This is simply
because the reports of the PAC for the last three fiscal years have not been published on the official
website of the Parliament. The reasons for this are not clear but it does seem important that the PAC
members should insist on the regular publication of their reports, in addition to perhaps taking other
measures to facilitate public access to PAC deliberations. For example, the PAC hearings are no longer
televised and, even though members of the press are systematically invited to their hearings, the rooms
utilised for PAC hearings are not readily adapted to include observers from the general public.

4. Conclusions of the analysis of PFM systems

496. This chapter presents a summary of the conclusions emerging from the detailed analysis of the 31
indicators of the 2016 PEFA framework, as presented in chapter 3. It comprises four sections:
§ We first present an integrated assessment of the results, reviewing PFM performance

against the seven pillars of the PEFA framework;
§ We examine the implications of the assessment for the achievement of the three core
objectives of the PFM system (Maintenance of aggregate fiscal discipline, Strategic
allocation of resources; and Efficient service delivery);
§ We then review the key changes since the 2017 PEFA assessment, in order to get a sense
of the ‘direction of travel’, the areas of most and least progress.
§ Finally, we examine what the assessment reveals about the effectiveness of the Internal
Control framework.
4.1 Integrated assessment of PFM performance
497. A one-page tabular summary of the results of the 2022 PEFA assessment, applying the 2016 framework,
is presented in Table 0-1 in the Executive Summary. Annex 1 presents the same information, with
summary explanations of the scores accorded to each dimension, and of the changes in performance
from 2017 to 2022, against the 31 indicators of the 2016 PEFA framework.
Table 4-1: 2022 PEFA Assessment of Tanzania Mainland - PEFA scores by Pillar
Pillar A, B+, B C+, C D+, D Total
I. Budget Reliability & Credibility 3 3

II. Transparency of Public Finances 1 2 3 6
III. Management of Assets & Liabilities 3 1 4
IV. Policy-based fiscal strategy & Budgeting 3 1 1 5
V. Predictability & Control in Budget Execution 4 3 1 8
VI. Accounting & Reporting 3 3
VII. External scrutiny & Audit 1 1 2
TOTAL (31 Indicators) 12 10 9 31
498. Table 4-1 presents a summary of the results by pillar. “A” and “B” scores can generally be interpreted
as consistent with international good practice, while “C+” and “C” scores reflect a basic level of
functionality, and “D+” and “D” scores generally reflect sub-standard performance. This table, along
with Tables 4-2 and 4-3, looking specifically at high and low scores, helps to provide a snapshot of the
current situation. However, the relative importance of the indicators does differ and to a degree is

country-specific47, The discussion below considers the relative importance of the scores for Tanzania,
reviewing performance within each pillar.
Table 4-2: 2022 PEFA Assessment: Where is Tanzania achieving good practice?
Pillar Indicators scoring “A”s or “B”s A, B+, B
I. No "A"s & "B"s 0
II. PI-6: CG operations outside financial reports 1
III. PI-10: Fiscal risk reporting; 3
PI-12: Public Asset Management;
PI-13: Debt Management
IV. PI-15 Fiscal Strategy 3
PI-17: Budget preparation process;
PI-18: Legislative Scrutiny of Budgets
V. PI-19 Revenue Administration 4
PI-20: Accounting for Revenue;
PI-23: Payroll Controls;
PI-24 Procurement Management
VI. No "A"s & "B"s 0
VII. PI-30: External Audit 1
Total: 12
Table 4-3: 2022 PEFA Assessment: Where do Tanzania’s systems need improvement?
Pillar Indicators scoring “D+” or “D” D+, D
I. PI-1, PI- 2 & PI-3: Budget Credibility indicators 3
II. PI-4: Budget Classification 3
PI-5: Budget Documentation;
PI-9: Public Access to Fiscal Information
III. PI-11: Public Investment Management 1
IV. PI-16: Medium-term perspective in expenditure budget 1
V. PI-22: Expenditure Arrears; 1
VI. No "D"s 0
VII. No "D"s 0
Total: 9
Pillar I: Budget reliability (PI - 1 to 3)
499. Budget reliability remains a significant area of weakness in Tanzania, scoring “D” for the
aggregate expenditure out-turn (PI-1), “D+” for Expenditure composition out-turn (PI-2) and “D+” for
47 Not all indicators are equally important – some cover aspects which are essential to a functional PFM system,
whereas others cover aspects which are highly desirable but not essential for basic functionality. Secondly, their
importance is to a significant extent country-specific: for example, transfers to subnational Governments are less
important in countries where the functions of SN Governments are very limited.

revenue out-turn (PI-3). The capability to define a realistic budget and to collect revenues and execute
expenditures in line with the budget is fundamental if the State is to use its public budget as a tool of
development policy, to attain strategic objectives and promote growth and social welfare. At present,
Tanzania is falling short of this goal, despite a number of areas of strength in the overall PFM system.
500. Receipts of Government revenue and grants in the period under review have been
consistently below the targets forecast in the approved annual budget (See Annex IV). In the
last three fiscal years, receipts averaged 86.2% of the total budgeted. As a result, borrowing has been
higher than planned, payment arrears have accumulated and substantial budget reallocations have had
to be made to keep aggregate expenditure broadly consistent with resource limits.
501. A considerable part of the difference between budget and execution can be explained by the variance
in the grants items, where actual receipts have fluctuated sharply below and above the budgeted targets.
This is in part explained by the big influx of unplanned grants in 2019/20 and 2020/21, related to the
response to the Coronavirus pandemic.
502. However, performance has been consistently poor with regard to the budget forecasts of domestic
revenue collections. Over the three-year period tax collections have averaged 87.8% of budgeted
forecasts, and non-tax revenues have averaged only 71.1 % of forecasts.
503. Improvements in budget reliability in future will rely on reversing these trends, while also developing
more realistic budget forecasts for external grants, and ensuring that expenditures are accurately
budgeted. The difficulty is that after several years of unrealistic budgets, the good habits of rigorous,
accurate budgeting are easily lost: achieving lasting change is therefore likely to require
prioritisation at the political level of budget reliability, backed up by a rigorous process of in-
year budget monitoring and review.
Pillar II: Transparency of public finances (PI – 4 to 9)
504. Within the transparency pillar, improvements have continued to be made in the quality
of reporting on Central Government extra-budgetary operations (PI-6). Indeed, there has
been a continuous improvement in the reporting of off-budget CG revenues and expenditures since
the 2013 PEFA assessment. This was rated a “D+” in 2013, and the score improved to a “B” in 2017
and now to an “A” in 2022.
505. This is a consequence of three parallel improvements: (i) better financial reporting by the extra-
budgetary units of Central Government, (ii) the adoption of electronic payment of Non-Tax Revenues
through the GePG, and (iii) introduction of the D-Fund system for externally financed projects. The
quality of reporting of disbursements and expenditures by grant financed projects constitutes the
“weakest link” in this area. Continued improvements in this should therefore remain a priority for the
External Finance Department of MoFP and for Development Partners, working together on the
consolidation and deepening of the D-Fund system.

506. Against the indicator of performance information for service delivery (PI-8), the Tanzania
PFM system continues to be rated a “C”. This is one of the more challenging indicators in the
2016 PEFA framework. Some progress has been made through the work that has been undertaken to
develop the MTEF, as well as through the growing body of performance evaluation being undertaken
by the NAOT in its performance audits.
507. Nevertheless, significant work is needed to refine and develop the definition of objectives, targets and
activities within the MTEF, so as to focus at a higher, more strategic level (less micro) and to move
towards a more precise definition of outcomes. Once the definition of outcomes is clarified and they
come into regular use by MDAs, then it will become easier to define indicators by which to measure
and monitor progress towards the outcome targets of the MDAs48.
508. Performance has remained poor in three key aspects of transparency: in the classification
system used in the public budget documentation (PI-4) in the comprehensiveness and
quality of the budget documentation submitted to the Legislature (PI-5) and in public
access to budgetary information (PI-9). In each of these areas, it is notable that the data necessary
to improve the comprehensiveness of the information presented in the Budget documentation and
made available to the general public are readily available. Thus, there is the scope for making “quick
wins” in transparency by addressing the relatively simple requirements for meeting good practise
standards in these areas.
Pillar III: Management of Assets and Liabilities (PI-10 to 13)
509. Within this pillar, three indicators have shown steady improvements and now indicate systems and
procedures largely consistent with international good practice – debt management, fiscal risk reporting
and public asset management - and one – public investment management – reveals a system which
currently falls short of an adequate level of functionality.
510. The Tanzania debt management system is robust and again scored a “B”, as it did in 2017.
The reforms currently being implemented should further strengthen debt management capacity. In
particular, the establishment of the Debt Management Department (DMD) as the single debt
management entity of Government, bringing together “front”, “middle” and “back” office functions
should serve to strengthen control over debt and guarantees. In addition, the migration to the
Commonwealth Secretariat’s Meridian system should facilitate further improvements in the recording
and reporting of debt and guarantees, including the systematisation of monthly reconciliations.
511. Significant improvements in fiscal risk reporting have been made since the 2017 PEFA
assessment, building on the improvements already achieved since the 2013 PEFA
assessment. This has been driven in particular by improvements in the accounting and financial
48 See also the comments below on Pillar IV, “Policy based Fiscal strategy and budgeting”.

reporting of the Government due to the adoption of IPSAS standards and accrual accounting, as well
as by continued expansion of the audit coverage achieved by the NAOT regarding the Public
Authorities & Other Bodies. In addition, the Office of the Treasury Registrar (OTR) has strengthened
its capabilities since 2017, and this is notable both in the expanded scope of its work and the increased
analytical content of its annual reports.
512. Tanzania’s systems for the management of financial and non-financial assets have shown
continuous improvement, raising the score for this indicator from “B” in 2017 to “B+” in 2022.
Through the PFMRP, significant efforts have been made to strengthen the functions of OTR and GAMD
– notably through the establishment and continuous updating and expansion of GAMIS. Further
improvements in the scope of reporting of non-financial assets as well as in the public access to the
GAMIS asset register would help to consolidate the gains made to date. In particular, it would be
desirable to include a register of sub-soil assets and to provide an appropriate mechanism for public
access to GAMIS.
513. There remain significant weaknesses in the process of public investment management and
the assessment shows an unchanged score of “D+” between 2017 and 2022. There are important
reforms being put in place through the introduction of the Public Investment Management Operational
Manual (PIM-OM) and the related structures and procedures, including the development of the
National Project Management Information System (NPMIS). However, the roll-out of this process has
been slower than planned. This is not surprising – the development of a modern, comprehensive Public
Investment Management (PIM) system is a major undertaking for any country. However, it will be
important for the Government to re-energise the process so as to avoid stagnation. It may be that a
more phased approach would facilitate greater progress. Such a process might focus initially on creating
strong systems for major (Type I) projects, and then building a wider coverage over time.
Pillar IV: Policy-based fiscal strategy and budgeting (PI- 14 to 18)
514. A fiscal strategy enables Government to articulate its fiscal policy objectives to the
institutions of central Government, to the Legislature and to the public. It provides the
benchmarks against which the fiscal impact of revenue and expenditure proposals can be assessed
during the budget preparation process. In this way, a strong fiscal strategy can drive the budget ensuring
that it is realistic and yet at the same time strategic. There has been a significant improvement in the
quality of the fiscal strategy since the 2017 assessment – indeed, this is the single indicator that has
shown the greatest improvement since 2017, rising from a “D+” to a “B”. This bodes well for
addressing in future the problems of budget reliability noted under Pillar 1.
515. The process of budget preparation and the mechanism for legislative scrutiny of the
budget have been traditional strengths in Tanzania and remain fully consistent with
international best practice. Both scored “A” in the 2022 assessment.

516. Despite the fact that the MTEF has been formally in existence since the late 1990s, the
current system still remains a long way from serving the objectives for which it was
designed – namely to improve the programming of spending over the medium term, to focus spending
more closely on results and to generate predictable resource flows for MDAs. A precondition for any
MTEF to work well is that there should be a reasonable degree of consistency and predictability in the
annual budget. This has not been the case in Tanzania, as may be seen from the poor scores on Pillar
I. If MDAs are conscious that even annual budgets are rarely implemented as planned, then they will
naturally be sceptical of the usefulness of making detailed medium term projections and are very
unlikely to undertake the task with any degree of rigour.
517. An additional problem has arisen from the peculiarly detailed format that has been chosen for the
formulation of medium term projections on the basis of detailed activity-based costing. Apart from the
heavy burden of work that the preparation of such formats must represent, their length and complexity
make them very difficult to adapt and change in the light of the annual budget scrutiny process. A review
of the approach to the MTEF would appear to be overdue, with the basic objective of developing a
framework for medium term budgeting that is simple and fit for purpose. This should start from a
careful reassessment of what are the objectives of such a system in Tanzania: does it aim to strengthen
medium term planning and budgeting in all ministries or rather to prioritise the big spending and more
strategic ministries? By carefully addressing these and other similar questions, it may prove possible to
design a simpler system which addresses a narrower set of objectives and does so more effectively.
Pillar V: Predictability & control in Budget execution (PI.19-26)
518. Although budget execution remains an area of weakness in the Tanzania PFM system as
evidenced by the poor score relating to control of payment arrears (PI-22), there have
been significant improvements since 2017. In particular, many of the core processes of revenue
and expenditure management have improved, including revenue administration and accounting for
revenue (PI-19 and PI-20), payroll controls (PI-23) and internal controls on non-salary expenditure (PI-
25), as well as – perhaps most notably – procurement management (PI-24). Each of these have been
areas of steady investment in systems improvement and it seems clear that the fruits of these
investments, through the PFMRP and related initiatives, are now being reaped.
519. Reforms have also been implemented leading to some improvement in the predictability
of in-year resource allocations (PI-21) as well as reduced borrowing costs and better
liquidity. The introduction and use of the single treasury account has improved liquidity control and
fund availability. Also the predictable monthly releases/warrants to cover salaries and regular office
expenses is an important advance since 2017. As the migration to accrual accounting has been finalised
it should also be expected that data related to arrears and accounts payable might be integrated and
be managed better and more timely. Among the planned reforms are the further integration and/or
interfacing of the different financial management systems in operation which would further improve
availability of data, thus providing the basis for better cash forecasting.

520. On the other hand, high levels of expenditure arrears and weaknesses in the monitoring
of arrears have been persistent problems in Tanzania, reported in the 2010, 2013 and 2017
PEFA assessments, and with no improvement reported in 2022. The 2017 assessment pointed to a
further deterioration in this area since 2013, with the stock of arrears hovering at around 10% of total
expenditure in 2016/17. This level of 10-11% continued into 2019/20, although data on arrears for
2020/21 has not been obtained and is said to be more favourable.
521. Monthly “cash rationing” continues to be practiced in relation to development

expenditures and “lumpy” Other Charges within the recurrent budget. The very
constrained liquidity position which the Government has to manage demands such measures, and it is
clear that the process for deciding upon and managing monthly releases has become both more
transparent and more predictable. However, there is a need for steady progress towards a situation
where commitments and payments can be made in line with a predictable schedule consistent with the
approved budget. This will require greater precision in the formulation of the annual budget so as to
ensure that all planned expenditures are captured in the original budget, and that available resources
are accurately projected and budgeted.
522. Internal Audit (PI-26) has maintained a consistent score, being a “C+” in 2017 and 2022.
However, our overall judgement is that there has been some progress in the internal audit function
since 2017. Main achievements include introduction of a risk-based audit, the registration and
monitoring of audit recommendations in the GARI-ITS system, and programmes for capacity building
and establishment of a championship entity of internal auditors. However, the sustainability of these
results is impeded by staff turnover and high vacancy rates.
523. Further progress in strengthening Internal Audit calls for efforts to improve recruitment
and retention of staff. The CAG has noted weaknesses in terms of shortage of staff and other
resources and in the functioning of audit committees, and it would seem that new thinking is needed
to find solutions to these ongoing problems.
Pillar VI: Accounting and reporting (PI.27-29)
524. Within the area of accounting and reporting, the focus of reform has been firstly the
transition towards IPSAS accrual accounting, and secondly the move from the EPICOR
integrated financial management system to a new one based on MUSE. There has been good
progress in respect of both of these initiatives, with improvements in the consistency and
comprehensiveness of the consolidated financial statements (PI-29), as well as in financial data integrity
(PI-27). Nevertheless, both of these initiatives require a long time to reach full implementation: so long
as the new IT systems are not fully consolidated and the accounting system remains in the transition
phase to full IPSAS accounting, gaps will remain. The real benefit of these reforms will not be seen until
they are largely complete, although the signs are that good progress is being made.

525. The continuing area of concern within this pillar relates to the availability, timeliness and
quality of regular quarterly budget execution reports. The indicator score has improved to a
“C” from a “D” in 2017, when quarterly reports were not published at all in 2015/16. Nevertheless,
given that more detailed reports are available more readily and more timely through MUSE and the
other accounting systems in use, an improved access and publication policy would be easy to
implement. With a systematic and structured policy towards the preparation and publication of
quarterly budget reports, a high score on this indicator could be easily obtainable based upon the
existing accounting and financial reporting systems.
Pillar VII: External scrutiny and audit (PI.30-31)
526. The CAG continues to be an important and trusted part of the accountability chain of the
public sector in Tanzania. Steady improvements have continued to be made in the coverage, quality
and timeliness of external audit. As a result, the score against this indicator improved from a “C+” in
2017 to a “B” in 2022.
527. The rising trend of outstanding recommendations over the last three years is a cause for
concern regarding the follow up to audit recommendations. The implementation of the GARI-
ITS system has facilitated monitoring and tracking of audit recommendations and related management
responses and action plans. However, it is clear that stronger support is needed from the Legislature
and Executive in ensuring more effective follow up to audit recommendations.
528. The continued widening and deepening of the audit scope to include forensic and performance audits
is worth noting and will require further support and attention. Access and use of the IFMIS systems for
auditors has also been mentioned as a problem area for the NAOT, requiring capacity development
and investments in ICT equipment. Together with audit follow up issues, these could usefully be
adopted as the priority areas for support under the next phase of the PFMRP.
529. The score for Legislative scrutiny of Audit reports has fallen from a “B” in 2017 to a “C+”
in 2022. This is because the reports of the PAC for the last three fiscal years have not been published
on the official website of the Parliament49. The reasons for this are not clear but it does seem important
that the PAC members should insist on the regular publication of their reports, in addition to perhaps
taking other measures to facilitate public access to PAC deliberations. For example, the PAC hearings
are no longer televised and, although members of the press are systematically invited to PAC hearings,
the rooms utilised are not readily adapted to include observers from the general public.
530. The consistent tracking of PAC and LAAC recommendations through the GARI-ITS
system is an important improvement. As is the case with the follow up to CAG
recommendations, what is now required is systematic attention by the Executive and the Legislature
49 Hansard does provide minutes of the discussions of the Public Accounts Committee but these are drafted in a
summary manner and do not present the details of PAC recommendations.

to compel more timely implementation of recommendations by the management of audited entities.

This might potentially include some consideration of sanctions for Accounting Officers.
4.2 Key strengths and weaknesses of the Tanzania PFM system
531. This sub-section analyses the extent to which the Tanzanian PFM system supports the achievement of
the three main objectives of the PFM system, namely:
§ The maintenance of aggregate fiscal discipline;
§ The allocation of resources in line with strategic priorities; and
§ The efficient use of resources for service delivery.
Maintenance of Aggregate Fiscal Discipline
532. Over a number of years, the PFM system in Tanzania has demonstrated its ability to
control aggregate expenditure and to maintain sustainable levels of fiscal deficits and of
borrowing. As was noted in Chapter 2 and highlighted in Table 2-1, Tanzania’s stock of public debt
stood at 39.1 % of GDP at end 2020/21, substantially less than many countries in the region and
comfortably sustainable with current trend levels of revenue mobilisation, public expenditure and GDP
growth.
533. The Tanzania system has shown continued improvements over 2017 – 2022 in the systems
for monitoring and controlling potential future risks to the fiscal position. In particular, there
have been improvements in the coverage of financial reporting on the extra-budgetary operations of
Central Government (PI-6), in reporting on fiscal risks from the wider public sector (PI-10) and in the
quality of debt management (PI-13), with each of these indicators scoring “As” or “Bs” in the 2022
assessment.
534. However, the processes used for the control of current expenditure are not finely
targeted and therefore impact negatively on the ability of the system to achieve its other
objectives. The systems of expenditure control maintain fiscal discipline but undermine the strategic
allocation of resources and the efficient delivery of services. In particular, the system of cash rationing
which is employed harms the credibility of the budget (PI-2), tends to create expenditure arrears (PI-
22), and reduces the predictability of in-year resource allocation for MDAs (PI-21), with significant
negative effects for service delivery. As noted above and in the detailed discussion in Chapter 3 of the
performance against these indicators, there have been improvements since 2017 in the transparency
and predictability of the processes used for cash management but they still fall short of being an effective
method of predictable in-year resource allocation. A revision of the cash ceiling and commitment
control process and the related functions of MUSE would be necessary in order to tackle this problem
in an effective and lasting manner.

The allocation of resources in line with strategic priorities
535. Perhaps the most effective measure of the ability of the PFM system to allocate resources in line with
strategic priorities is the degree of consistency between the composition of the expenditure out-turn
and the composition of the approved budget. This is precisely what is measured by indicator PI-2, which
measures the consistency in the outturn of expenditure by institution and also by economic
classification. This was rated a “D+” both in 2017 and in 2022, meaning that the adjustments made to
the aggregate budget, due to short-falls in revenue and financing, did not respect the composition of
the budget as originally proposed by the Executive and approved by the Legislature.
536. As we have noted, the application of short-term cash rationing processes is a significant part
of the reason why strategic allocation of resources is being undermined but it is also the
result of weaknesses in budgeting. Although the budget preparation process is orderly and well
managed (PI-17) with a clear role for the Legislature (PI-18), it is weak in its incorporation of medium
term forecasts and plans (PI-16) and also weak in the processes of identifying, formulating and
implementing investment projects (PI-11).
Efficient use of resources for service delivery
537. A key requirement for efficient service delivery is that service managers (hospital directors, head-
teachers, road engineers, etc.) should receive resources on a predictable basis, so as to organise their
work in advance and take the necessary steps – in terms of staff recruitment, procurement, etc. – to
ensure programmes can be implemented as planned. However, Tanzania scores poorly on predictability
of in-year resource allocation (PI-21) and, as a result many service managers find themselves having to
commit expenditures outside of the MUSE system, leading to the build-up of expenditure arrears (PI-
22). Improvements have been introduced over 2020/21 and 2021/22, and indicator PI-21 scores better
now (“C”) than it did in 2017 (“D+”) but additional improvements will be needed to reach a system
which can regularly provide predictable resource flows to service managers.
538. Nevertheless, a number of the functions which support good service delivery have
improved since 2017. Notably, procurement management (PI-24) is stronger, as is Payroll control
(PI-23) while Revenue administration (PI-19) and Accounting for Revenue (PI-20) have also improved,
with each of these indicators now scoring “B”, “B+” or “A”. If further improvements can be attained
in the core processes of budgeting, cash management and commitment control, this should have a
direct positive impact on the efficiency and quality of service delivery.
4.3 Performance changes since last PEFA assessment
539. The table in Annex I shows in detail the scores of the 2017 and 2022 PEFA assessments following the
2016 PEFA methodology. Of the 31 indicators, it shows an improvement in 12 indicators,
deterioration in 3 indicators and 16 with no changes. Table 4-4 presents a summary, and Table
4-5 shows the specific indicators which have improved or deteriorated.

Table 4-4 Summary of Changes recorded between 2017 and 2021 PEFA assessments
Summary of Changes recorded between 2017 and 2021 Assessments

(Based on 2016 PEFA Framework)
Decline by more Decline by 1 No Change Improvement by Improvement by
than 1 score score or less 1 score or less more than 1
score
0 3 16 11 1
NB. 1) “One score” represents a difference of only one letter, e.g. C èB, whereas C èC+ would be a difference of
half a score, and CèB+ would be a difference of one score and a half.
540. Overall, there is strong evidence of positive changes in a wide range of areas, with 6 of the
7 pillars showing net improvements. In some cases, this is due to specific policy decisions that
have been taken recently but in most cases it reflects the results of steady and continuous
improvements, introduced across various phases of the PFM reform programme. These improvements
have included reforms in legislation and regulations, modernisation and greater integration of IT
systems, and the building of human resource capability. Systemic improvements in PFM take a long time
to implement - particularly in a large country like Tanzania with a substantial public sector – but the
signs are that the fruits of past investment in PFM improvement are now being reaped.
Table 4-5: Areas of Improvement and Deterioration in PFM Performance 2017 -2022
Areas of Improvement 2017 – 2022 Areas of Deterioration 2017 -2022
PI-6 CG Operations outside financial reports PI-1 Aggregate Expenditure Out-turn
PI-12 Public Asset Management PI-4 Budget Classification
PI-15 Fiscal Strategy PI-31 Legislative scrutiny of Audit reports
PI-18 Legislative scrutiny of Budgets
PI-19 Revenue Administration
PI-20 Accounting for Revenue
PI-21 Predictability of in-year resource allocation
PI-24 Procurement Management
PI-25 Internal Controls on non-salary expenditure
PI-28 In-year Budget Reports
PI-30 External Audit
4.4 Effectiveness of the Internal Control Framework
The control environment – laws and regulations
541. The PFM control environment in Tanzania is well defined in laws and regulations. The
Constitution Part II sets the conditions to draw moneys from the consolidated fund and procedures for
authorization of expenditure and rules for taxation as well as the role and mandate of the Controller
and Auditor General. The Public Finance Act defines roles and responsibilities of the Minister of Finance,

and Treasury as well as the Permanent Secretary, Paymaster General and Accountant General. It also
stipulates the responsibility of the Paymaster General to appoint accounting officers for all votes and
specifies their duties. The Office of the Internal Auditor General is established in the Act which also
provides for the key functions of the IAG. The Budget Act defines principles of fiscal policies and
management and responsibilities for other key officers in PFM such as the Treasury Registrar, the
Budget Commissioner and Accounting Officers. The legislation also defines the right to prepare
subsidiary regulations as well as principles for management of revenue.
542. The access to information Act of 2016 gives the right to all citizens of the Union to access information
under the control of information holders as well as the procedures to follow.
543. The Public Audit Act defines the scope, responsibilities and duties of the Controller and Auditor General.
544. The Accounting Manual in its chapter 2 describes the roles of key actors and also has a section for
internal control and risk management that includes many of the internal control elements, such as
authorization and organizational structures, segregation of duties, ICT related controls, etc. The manual
has an elaborate description of payroll processes and management. In terms or risk management
guidelines it is less prescriptive and more elaborate methods are to be found elsewhere, e.g. in manuals
directly related to taxation, audit etc.
545. The Public Finance Regulation 11 (2) requires Accounting Officers to establish and maintain an effective
system of internal control over financial and related operations.
The control environment – positive developments
546. The degree of accountability is gradually being deepened, not least regarding payroll
responsibility and control where the accounting officer and HR manager have key roles to sign off
on the monthly payroll.
547. Internal controls need to be orderly, guided by a strategic vision where risks are determined, leading
to prioritised plans for scrutiny and audit. Amongst the positive developments noted are:
§ Rules, regulations and manuals being established and improved;
§ Internal Audit coming into place, albeit with vacancies and staff shortages;
§ A strong role and presence of External Audit and its annual reports
§ The emerging capability for Performance Audit
§ The procurement function being supported and overseen through PPRA and PPAA
§ TRA’s initiatives for tax compliance and risk-based approaches to tax administration and audit;
§ Efforts to streamline and regulate public investment management;
§ CAGs, IAGs and PAC’s scrutiny of audit reports and the Executive’s follow-up

The control environment – some continuing weaknesses
548. There are however still a number of weaknesses in the control environment, some of
which are highlighted in the annual CAG reports. In the report for the year ended 30 June 2020
the CAG has included a chapter 6 with an “evaluation of the internal controls system” where he raises
a number of concerns s related to internal control as follows: “The areas that need improvement in
internal control include information technology (IT) over systems supporting financial preparation and reporting;
internal controls related to financial reporting, compliance with government policies, legislation, and regulations,
and accounting and financial reporting practices; Internal Audit Function; Audit Committees, risk management
processes and fraud assessment that occurred within Ministries, Departments and Agencies and Regional
Secretariats.”
549. It is specifically noted that
§ There are weaknesses in some entities related to fraud assessment, fictitious payments and
fraud issues
§ A number of Government units (5 MDAs and 4 regional secretariats) had deficiencies in their
internal audit function, including vacancies, insufficient resources for IA, or unapproved audit
plans.
§ Some audit committees were not functioning well with few meetings or a lack of members.
§ The CAG noted that 5 MDAs and 2 RS had deficiencies in their ICT controls environment,
such as a lack of IT policy, ICT strategic Plan, Business Continuity Plan, ICT steering committee
and the consequent absence of disaster recovery sites.
§ In procurement, weaknesses are noted for use of non-competitive methods, decisions made
without the approval of a tender board, payments made without binding contracts or to un-
approved suppliers, or goods never supplied.
§ There were also findings related to expenditure management, e.g. nugatory expenditure,
transfer of funds lacking accountability, overpayments and payments missing payment vouchers
or otherwise inadequately supported or lacking receipts.
§ Related to the consolidated financial statement, the CAG noted inconsistencies in the reporting
of value of assets, including biological assets, pension liabilities and that consolidation and
elimination of internal transactions had met difficulties.
The control environment – role and status of the Internal Auditor General (IAG)
550. Each MDA and Regional Secretariat has to establish its internal audit function as well as appoint an
audit committee. In 2010 the Public Finance Act was amended to establish the Internal Auditor
General’s Department headed by the Internal Auditor General (IAG), reporting to the Paymaster
General.

551. The IAG has the overall responsibility for the internal audit function in MDAs, RASs, LGAs,
Government Institutions and donor funded projects, and has the responsibility to:
- Develop internal audit policies, standards, manuals and guidelines;

- Develop and supervise implementation of the internal audit strategy and annual audit
programme;
- Manage and control the quality of operations of the audit units and audit committees;
- Facilitate development of the audit cadre;
- Liaise with the CAG, Accountant General and Accounting Officers; and
- Make follow up of agreed audit recommendations.
552. The Quality Assurance Section in IAGD produces an annual implementation report for internal audit.
The report for the financial year ending 30th June 2021 contains a number of observations concerning
anomalies and weaknesses with internal audit. Hence it is reported that 2020/21:
§ Around 20 % of IA units in MDAs and RTS did not submit quarterly audit reports,
§ Around 40 % did not submit audit plans
§ More than 50 % did not submit annual audit reports
§ More than 70 % of the audit committees did not submit audit committee reports.
§ There were 1,811 long outstanding internal audit recommendations, whereof 1,451 were
reported being under implementation and 360 not implemented.
§ The Internal auditors reported various anomalies related to expenditure, revenue and asset
management, implementation of development projects, Human Resource Management, debt
and contract management.
The control environment – conclusions
553. Thus deficiencies clearly remain, but many have been significantly reduced. A positive
element is that they are largely detected and subject to a clear set of rules, and audit is playing its role
in addressing these deficiencies. There is of course a need to continue to monitor the extent and trend
of the deficiencies, and to monitor and ensure that appropriate corrective action is taken.
Risk assessment
554. There is clear evidence of risk based assessment and planning being applied for taxation and tax audit,
procurement audit, and by both internal and external audit entities. Payroll audit is for example based
on a study of risks and anomalies. There is also evidence of monitoring of the execution of risk-based
planning.
555. A risk-based approach is also used at the Office of the Treasury Registrar (OTR) in their monitoring
of public enterprises and liquidity risks.

Control activities
556. The control activities related to PFM are based on separate control steps: automatic controls built into
the MUSE, EPICOR and HCMIS systems, clear separation of duties and possibilities for control by an
audit trail, proof of signature, passwords and electronic devices, etc. Systems, forms and documents
are designed to secure that the intended parties are involved in verification, authorization and
execution of payment. As demonstrated by the CAG reports, not all controls are carried out as
intended, but the ex post review by auditors is intended to detect systemic problems and deviations.
557. Other control activities include specific studies related to accumulation of arrears, pension schemes,
ineligible payment of salaries, tax mobilization etc. In addition, specific performance and special audits
have been conducted. The special audits have covered a number of critical investment projects as well
as some of government’s ICT systems.
558. Some aspects of the control system appear weaker, such as the follow up by the Executive of audit
recommendations; or the tax appeals entities that are accumulating cases.
559. It is likely that regular production, distribution, scrutiny and use of financial reports, involving
management could be strengthened as well as auditors’ access to and use of the IFMIS systems.
560. In terms of bank reconciliation, a strong central control is exercised through the ACGEN’s office where
bank statements are collected and compared to the financial reports from the IFMIS system with
feedback to the government entities.
561. Most internal audit units still operate with a focus on compliance audit, although at headquarters the
IAGD plans contain system audit efforts.
Information and communication
562. The degree and quality of information varies between PFM entities and fields:
§ The system to monitor audit recommendations and management response through GARI-ITS
is a useful tool to track performance.
§ The CAG reports are commonly available.
§ Performance is also monitored through the MTEF.
§ The PPRA produces comprehensive procurement performance reports that are well
structured,
§ The budget documents and annual budget speeches could be much more informative and
should include more summary information. The addition of the citizen’s budget document is a
step in this direction.

§ The consolidated annual financial report is comprehensive but leaves a lot to desire in clarity
and structure to give a clearer picture of tiers of Government, budget performance and
summaries.
§ Quarterly reports are published but provide limited information.
§ MUSE, EPICOR and HCMIS are designed to allow for immediate reporting to MDAs, who have
access points and authority to draw reports. The systems also have query functions which
would be useful also for audit purposes, but it is not clear whether they are utilized.
§ The quality of the MoFP website is rather poor, reports are not easy to find and there is a
somewhat problematic architecture, whereas other websites like PPRA, BoT and TRA have
better structure and quality.
Monitoring
563. Some aspects of the quality of financial reporting make monitoring by accounting officers cumbersome.
The systems have the potential to provide timely data. Reporting and queries to the systems require
both access, which appears to be there, and competence to formulate queries and draw reports. If not,
entities will rely on readily published reports, that need to be published timely to be useful. There are
question-marks related to competency to draw queries.
564. Monitoring is only useful if information is both provided and in demand. The monthly cash rationing
system in addition to the arrears problem makes budget reports less useful. Budget availability for the
year is fairly unpredictable except for salaries and regular office costs.
565. As mentioned, risks and monitoring related to MDA’s ICT systems and environment are an area for
concern. As mentioned in the PEFA framework guide:
“An effective internal control system plays a vital role across every pillar in addressing risks and providing
reasonable assurance that operations meet the four control objectives: (i) operations are executed in an orderly,
ethical, economical, efficient, and effective manner; (ii) accountability obligations are fulfilled; (iii) applicable laws
and regulations are complied with; and (iv) resources are safeguarded against loss, misuse and damage.”
566. Table 4-6 shows that the sub-indicators related to the information and communication aspect of
internal control stand out as problematic, followed by aspects of the control environment.
567. We conclude that the control system has been well established and contributes towards
the specified control objectives but that the system will not fully deliver and be credible
unless some deficiencies in the PFM system are addressed. These relate especially to budget
credibility, prudent reporting and follow-up of audit recommendations. Improved development and
integration and/or inter-facing of ICT systems also has the potential to improve internal control.

Table 4-6 Implications of 2022 PEFA assessment for Internal Control Framework
1.
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PI-2 Expenditure composition outturn D+
(i) Expenditure composition outturn by function D
(ii) Expenditure composition outturn by economic type C
(iii) Expenditure from contingency reserves. A
PI-4 Budget Classification C
PI-5 Budget Documentation D
PI-7 Transfers to subnational Governments C+
(i) System for allocating transfers D
(ii) Timeliness on information for transfers A
PI-8 Performance information for service delivery C
(i) Performance plans for service delivery B
(ii) Performance achieved for service delivery C
(iii) Resources received by service delivery units D
(iv) Performance evaluation for service delivery C
PI-10 Fiscal risk reporting B+
(i) Monitoring of public corporations C
(ii) Monitoring of sub-national government (SNG) A
(iii) Contingent liabilities and other fiscal risks A
PI-11 Public investment management D+
(i) Economic analysis of investment proposals C
(ii) Investment project selection C
(iii) Investment project costing D
(iv) Investment project monitoring D
PI-12 Public asset management B+
(i) Financial asset monitoring A
(ii) Nonfinancial asset monitoring C
(iii) Transparency of asset disposal A
PI-13 Debt management B
(i) Recording and reporting of debt and guarantees B
(ii) Approval of debt and guarantees B
(iii) Debt management strategy C
PI-14 Macroeconomic and fiscal forecasting C+
(i) Macroeconomic forecasts A
(ii) Fiscal forecasts C
(iii) Macro-fiscal sensitivity analysis D
PI-15 Fiscal strategy B
(i) Fiscal impact of policy proposals C
(ii) Fiscal strategy adoption A
(iii) Reporting on fiscal outcomes B
PI-16 Medium term perspective in expenditure budgeting D
(i) Medium-term expenditure estimates D
(ii) Medium-term expenditure ceilings D
(iii) Alignment of strategic plans and medium-term budgets C
(iv) Consistency of budgets with previous year estimates D
PI-17 Budget preparation process A
(i) Budget calendar A
(ii) Guidance on budget preparation A
(iii) Budget submission to the legislature A
PI-18 Legislative scrutiny of budgets B
(i) Scope of budget scrutiny A
(ii) Legislative procedures for budget scrutiny A
(iii) Timing of budget approval C
(iv) Rules for budget adjustments by the executive C

1.
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PI No Indicators and subindicators
21
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PI-19 Revenue administration B
(i) Rights and obligations for revenue measures A
(ii) Revenue risk management A
(iii) Revenue audit and investigation C
(iv) Revenue arrears monitoring C
PI-20 Accounting for revenues A
(i) Information on revenue collections A
(ii) Transfer of revenue collections A
(iii) Revenue accounts reconciliation A
PI-21 Predictability of in-year resource allocation C
(i) Consolidation of cash balances C
(ii) Cash forecasting and monitoring C
(iii) Information on commitment ceilings D
(iv) Significance of in-year budget adjustments C
PI-22 Expenditure arrears D
(i) Stock of expenditure arrears D
(ii) Expenditure arrears monitoring D
PI-23 Payroll controls B+
(i) Integration of payroll and personnel records A
(ii) Management of payroll changes B
(iii) Internal control of payroll B
(iv) Payroll audit B
PI-24 Procurement B
(i) Procurement monitoring D
(ii) Procurement methods A
(iii) Public access to procurement information B
(iv) Procurement complaints management A
PI-25 Internal controls on nonsalary expenditure C+
(i) Segregation of duties B
(ii) Effectiveness of expenditure commitment controls C
(iii) Compliance with payment controls C
PI-26 Internal audit effectiveness D+
(i) Coverage of internal audit B
(ii) Nature of audits and standards applied C
(iii) Internal audit activity and reporting D
(iv) Response to internal audits C
PI-27 Financial data integrity C+
(i) Bank account reconciliation B
(ii) Suspense accounts N/A
(iii) Advance accounts B
(iv) Financial data integrity processes D
PI-28 In-year budget reports C
(i) Coverage and comparability of reports C
(ii) Timing of in-year budget reports C
(iii) Accuracy of in-year budget reports C
PI-29 Annual financial reports C+
(i) Completeness of annual financial reports C
(ii) Submission of reports for external audit B
(iii) Accounting standards B
PI-30 External audit B
(i) Audit coverage and standards B
(ii) Submission of audit reports to the legislature B
(iii) External audit follow-up B
(iv) Supreme Audit Institution (SAI) independence B
PI-31 Legislative scrutiny of audit reports C+
(i) Timing of audit report scrutiny C
(ii) Hearings on audit findings A
(iii) Recommendations on audit by the legislature B
(iv)Transparency of legislative scrutiny of audit reports D

5. The PFM Reform Process
5.1 Approach to PFM reforms
Box 5–5-1 Key objectives of the different phases of the Tanzania PFMRP
Evolution of Tanzania PFMRP:
PFMRP I: 1998 - 2004 This Phase implemented from 1998-2004 had an objective of controlling
expenditure, introducing aggregate fiscal discipline and contributing to stable macro-economic
growth. PFMRP I focused on minimizing resource leakage, strengthening financial control and
enhancing accountability by reforming the budget process and introducing an Integrated
Financial Management System (IFMS).
PFMRP II: 2004- 2008 The objective of Phase II was to progressively modernize the processes,
procedures and systems involved in PFM through the implementation and use of ‘best practice’
tools, techniques and methodologies to improve revenue forecasting and resource allocation
for strategic priorities.
PFMRP III: 2008- 2011 The objective of Phase III was to ensure greater predictability and
availability of medium term resources to executing agencies. The thrust was about getting the
tools, techniques, methodologies and systems that were introduced in the previous phase to
work efficiently and effectively in an integrated manner.
PFMRP IV: 2012 -2017 The PFMRP IV aimed at strengthening and improving public financial
management systems in a more coordinated manner in order to meet the current fiscal policy
challenges. Phase IV was intended to enable reforms in the areas of revenue management,
planning and budget management, budget execution transparency and accountability, budget
control and oversight and programme management, monitoring and communication including
change management.
PFMRP V: 2017-2022 The goal of PFMRP V was to promote sustainable PFM reforms. It aimed
to deliver on 7 strategic objectives, and within each a number of sub-objectives:
1. Improved macro-economic management as basis for a credible budget,

2. Efficient allocation of resources on a medium-term basis aligned with national priorities,
3. Budget executed as planned with timely and accurate reporting available
4. Strengthened internal controls and better procurement practices contributing to
improved financial accountability
5. Effective control and oversight of PFM functions by oversight institutions
6. PFM systems and outcomes in Local Governments are improved,
7. PFM systems and outcomes in Zanzibar are improved.
568. PFM reforms have been on-going in Tanzania since the 1990’s, when efforts were made to improve the
budget process and structure, and to introduce IT systems for accounting and budget monitoring. The
fifth phase of the PFM reform programme, which started 1 July 2017, is coming to an end in July 2022.

A Mid-Term Review of the fifth phase has recently been undertaken analysing results until 202150. A
sixth reform phase is under preparation based on this PEFA report, the mid-Term Review and other
findings. Box 5-1 shows the objectives of the previous programmes. Overall, the objectives for PFMRP
V are in line with the standards demonstrated by the PEFA framework
5.2 The Mid Term Review of PFMRP V
569. The review shows that PFMRP V during its four out of five years of implementation has achieved about
49% of its combined outcome level and output level targets. PFMRP achievement has, however, been
at a higher level (64%) when assessing what the Programme can be directly accountable for, i.e. at the
output level only. However, the PFMRP outputs have led to less than the planned changes at the
outcome level (23%). The latter is attributable to many other factors beyond the control of activities
implemented within the work plan and budget, and many of the PFMRP outcome targets reflect very
high ambitions.
Strengths of PFMRP V
570. Among notable achievements the report mentions: improved fiscal management including
macroeconomic management, planning and budgeting as well as key aspects of budget execution. Also
public procurement has improved, in part due to implementation of e-procurement (TANePS). The
report mentions that efforts are underway to improve internal audit and controls.
571. For the oversight functions the programme has been successful in strengthening the Parliamentary
Budget Office (PBO), and thereby the key PFM committees of Parliament in conducting their roles.
Also, the National Audit Office of Tanzania (NAOT) capacity has been strengthened.
572. In terms of strengthening of PFM at Local Government Authorities (LGAs) in Mainland Tanzania, the
most notable achievements have been raising LGAs own source revenue and the implementation of
various LGA level ICT systems and procedures for planning, budgeting and expenditure management.
573. For the PFMRP strategic objective for Zanziba,r the most notable achievements have been in the areas
of tax administration, the Office of the Controller and Auditor General of Zanzibar (OCAGZ) capacity
in conducting audits, and establishing an asset register for registration and monitoring of public assets.
Weaknesses of PFMRP V
574. Among the areas that will need more resources and attention in the future the review mentions:
integration of the key Information, Communication & Technology (ICT) systems used for planning,
budgeting, payment processing and accounting, asset management, etc. as well as their functionality in
50 J Claussen and E S Maliti, (4 February 2022), Public Management Reform Programme (PFMRP -V) Mid Term Review,
Final Report.

reporting. Another weakness relates to disclosure of information through redesign of websites with
more timely and easier access to core documents/reports.
575. In terms of engaging the civil society and media in the field of financial oversight, achievements were
limited. An issue in need of more attention is a wider engagement of the public combined with efforts
in making PFM budget and fiscal information more accessible.
576. The report also notes limited information from the Government websites on LGA budgets, revenue
performance and expenditures.
577. For the PFMRP strategic objective for Zanzibar one of the key areas that needs further attention, is
improving capacity in making more realistic fiscal forecasts which in turn will allow for realistic budget
projections.
Other observations on PFMRP V and recommendations for PFMRP VI
578. The review notes that the budget allocated through the Annual work plan and budget for PFMRP has
only been one source of funding (approximately 51%) for activities contributing to PFMRP. The major
areas of assistance from the larger scale projects have, however, focused on strengthening PFM for
LGAs. As suggested by the very low level of AWPB budget execution (only 49% total expenditures
compared to budget allocations as of end FY 2020/21), these other interventions have likely been
equally important to the level of PFMRP achievements observed.
579. Planning and monitoring for PFMRP has been done for only one year at a time rather than with a multi-
year perspective. The assessment has also shown that the task of coordinating a multi-institutional,
multi-dimensional programme like PFMRP has been challenging and more so with several larger scale
interventions contributing to the same objectives but outside the planning and monitoring arrangement
reflected in the AWPB and progress reports.
580. The report recommends that for a new PFMRP phase it should be based on a new PFM strategy
informed by the PEFA assessment and other information, and that thematic programme workshops be
organised with outcomes drawn from the strategy, Planning and budgeting should cover the different
development and support efforts, both with domestic and external sources.
581. The report goes on to recommend several interventions for each of the seven target areas, both for
the remaining six months of the fifth phase, and for an upcoming sixth programme.
5.3 Observations on PFM emerging from the 2022 PEFA assessment
582. This PEFA assessment concurs – not surprisingly – with many of the observed strengths and
weaknesses observed by the mid-term review. As our summary reveals, notable progress has been
made in terms of macro forecasting, revenue collection, asset management and accrual accounting,
IFMIS systems and reporting structures, monitoring of audit recommendations, internal and external
audit guidance, and performance audit.

583. Our assessment has observed weaknesses in the areas of budget credibility and revenue forecasting,
poor or missing information in budget documents, transparency of transfers to local government, and
the extent of revenue and expenditure arrears. Our judgement is that many of the problems of budget
credibility result from the past legacy of unbudgeted or under-budgeted public investment projects on
the one hand and the build-up of payment arrears. Fiscal and debt interventions – rather than reform
measures - will be needed to clear the accumulated payment arrears but, without such actions, budget
credibility is likely to remain a problem. Further improvements in Public Investment Management
systems and in the design of the Medium Term Expenditure Framework should also assist in improving
the accuracy and comprehensiveness of budget estimates.
584. Problems are also noted for consolidation of financial reports and consolidation in accordance with
accrual accounting principles. Much of the financial data is in place but remains unpublished or published
at a very high level of aggregation thereby obstructing transparency and oversight. Publication of data
on the MoFP website appears haphazard, with poor oversight and in many cases with an absence of
important documents and severe delays in publication. The layout and content of the key budget
documents is also a matter of concern.
585. Other challenges can be noted for the multitude of ICT systems now in use, where it is likely that gains
can be made through analysis and careful implementation of future opportunities for integration and
structured interfaces.
Considerations for the design of PFMRP VI
586. The future design of the PFMRP could well benefit from the advice given by the review report related
to the formulation of a new PFM reform strategy and thematic workshops. In our experience the PFM
area is however quite vast and although one can distinguish areas which can be planned, managed and
monitored as “stand-alone”- programmes (for revenue, asset management and procurement for
example) – there are also areas with a very high degree of interdependence (e.g. macro forecasting,
programme budgeting, performance audit, accounting and internal and external audit). A PFMRP
programme needs to be anchored and steered at a central policy level and also to be designed with a
large degree of technical co-operation and interaction between involved entities; these cooperation
structures and systems need to be reflected in the reform organization.
587. Also the sequencing of reform must be considered carefully. Tanzania’s budget credibility has always
fared low with a persisting problem of arrears mounting as the budget becomes exhausted at year’s
end. The ensuing budget out-turn therefore has poor resemblance with the original budget allocation.
If this problem is unattended, efforts to engage in programme budgeting and improved service delivery
are likely to fail. Priority must be given to produce credible projections, to contain the budget within
resources available, and to monitor financial data accurately as the basis for projections and budget
decisions. There have been considerable improvements in these aspects, and some of the remaining
challenges may have been caused by the revenue unpredictability over the period of the Coronavirus

pandemic. Nevertheless, arrears containment and timely and accessible financial reporting are key basic
cornerstones that need to be reinforced.
588. There has been mention of the need for further integration of ICT systems – also in the review report.
This can certainly be beneficial, but one has to distinguish carefully between fully integrated functions
and modules within one system, as compared to arrangements for data transfers and interfaces
between distinctly different databases and systems. Experience shows that e.g. full integration of the
payroll, pension or tax systems into the IFMIS system may be cumbersome, whereas data interfaces
can be very beneficial. Considering the mapping we have attempted of systems in the GoT (See Table
5-1) a specific roadmap is highly recommended for the development of ICT systems and their
integration and interfacing.

Table 5-1: Mapping of PFM-related IT systems
AbbreviationFull name of the system Main use Catergory

CBMS Central Budget Management System Processing and compilation of budget data Budget
GeRAS Government electronic Resource Allocation System Calculation and distribution of allocations Budget
MUSE Mfumo wa Uhasibu Serikalini Government Payment and Accounting System Accounting
GACS Government's Accounting Consolidation System Consolidation of accounting data and reports Accounting
ERMS Electronic Resource Management System Accounting and payment system Accounting
EFDMS Electronic Fiscal Device Management System Registration of fiscal devices for revenue payment to govt Payment
GePG Government's Electronic Payment Gateway Register and interface to accounts authorised for payment of taxes etc Payment
HCMIS/LawsonHuman Capital Management Information System Payroll for government employees Salary
GSPP Government Salary Payment Portal Register of individuals and accounts for payment of salaries to govt employees Salary
TPPS Treasury Pension Payment System Pension payroll Salary
Tax Exemption Management Information System Register of tax exemptions Revenue
NRD National Revenue Database Register of taxes and receipts of such Revenue
LGRCS Local Government Revenue Collection System Revenue collection system Revenue
PMIS Procurement Information System Procurement registration and processing Procurement
GAMIS Government's Asset Management System Register of assets, transfers, depreciations, losses etc. Assets
D-funds Management Information System Register of Development funds and projects and flow of funds Development
National Development Projects Management Information System Register of development projects and sources and use of funding Development
Governmetn Employee Loan System Register of loans to govt employees Debt
CS-DRMS Commonwealth Secretariat Debt Recording and Management System Management of government loans and debt Debt
GFSM Government's Finance Statistics Module Production of govt financial statistics Statistics
API Application programming interface Application allowing transfer of data between systems IT
TISS Tanzania Inter-Bank Settlement System Arrangement for settlements between banks IT
GARI-ITS Government Audit Recommendation Implementation Tracking System Record of audit recommendations, responses and action Audit
GIAMIS Government's Internal Audit Managament Information System Audit planning, budgeting and monitoring Audit
OTR-MIS Office of the Treasury Registrar Management Information System Register of Public Service Corporations PSCs
OTR-MIS FAR OTR Financial Analysis Reporting System Data capture and reporting on finances of PSC:s PSCs
OTR- BMIS OTR - Board Management Information System Register on Board members and appointment and reports. PSCs
OTR-PLANREP OTR- Planning and Reporting System Planning and budgeting of PSCs PSCs
OTR-GIS/BIS OTR - Geographical and Business Information System Location of PSCs and key data. PSCs

Annex 1: 2022 Performance Assessment in comparison with 2017

Score Score Performance Change and
Indicators and dimensions Scoring Justification 2022 Assessment
2017 2022 Rationale
Aggregate expenditure outturn was below 85% of the approved budget Deterioration in score, because
Aggregate expenditure in two out of three of the last three fiscal years under this assessment previously the expenditure outturn was
PI-1 C D
out-turn (FY18/19=79% and FY19/20=84.1%). between 85% & 115% of the approved budget in
2 of the previous 3 fiscal years.
Expenditure
PI-2 D+ D+ No Change
composition outturn
(i) Expenditure composition Variance in expenditure composition by administrative classification was
outturn by function D D more than 15% in each of the last three years (25.3%, 33.1% and 48.8% No Change
in 2018/19, 2019/20 and 2020/21, respectively)
(ii) Expenditure composition Variance in expenditure composition by economic classification was
outturn by economic type C C more than 10% but less than 15% in two of the three most recent fiscal No Change
years - FY18/19 (13.6%) and FY20/21 (12.4%)
(iii) Expenditure from Contingency allocations were transferred and spent within the budget
contingency reserves. A A line items in need. As a result, there were no direct expenditures against No Change
the contingency fund itself.
PI-3 Revenue outturn D+ D+ No Change
(i) Aggregate revenue outturn Actual revenue was less than 92% of budgeted revenue in not only two,
D D but all of the last three years (85.2%, 83.5% and 90% in FY18/19, FY No change
19/20 and FY 20/21, respectively)
(ii) Revenue composition Variance in revenue composition in two of the last three years under
outturn C C review was less than 15%. (7.6%, and 11.6% and 53.3% in FY18/19, No change
and FY 19/20, respectively)
An economic classification consistent with GFSM 2014 is applied to all Apparent deterioration in the score but
revenues and recurrent expenditures but not to development projects, this is due to a mis-scoring in 2017. The factors
PI-4 Budget Classification C D due to the difficulties of its application to externally funded projects. A constraining improvement in the score
framework for applying the COFOG functional codes and for applying pertained then as now.
programme codes is in place but it is not yet applied.


2017 2022 Rationale
Budget documentation is presented in the Budget Speech, the four No change: coverage of additional elements
Volumes of the Budget and the Plan & Budget Guidelines submitted in has increased from 4 to 6 of the 8 listed but, as
PI-5 Budget Documentation D D advance of the Budget. However, only 2 of the 4 basic elements of in 2017, only 2 of the 4 basic elements are
information are fulfilled, although 6 of the 8 additional elements are fulfilled.
present.
PI-6 Central Govt. operations
B A Improvement
outside financial reports
(i) Expenditure outside The historical sources of under-reporting of expenditures have been Performance has improved due especially to the
financial reports largely addressed. Although some under-reporting of expenditures from improved capture of expenditures from non-tax
grant-financed projects may have continued, there is no audit or other revenues, and to a lesser extent from the
evidence of its value. Assuming an under-reporting rate of 30% of the improved capture of expenditures from grant-
B A
value of grant-financed project expenditures, the overall level of financed projects, through the newly introduced
unreported expenditure is estimated to be 0.8 % of total expenditure “D-fund” system. These improvements
for 2019/20. reduced unreported expenditure from an
estimated 4% in 2017 to 0.8% in 2019/20.
(ii) Revenue outside financial Most revenue collection functions are centralised within TRA (see PI- Performance has improved significantly due to
reports 19) and the non-tax revenues of MDAs are now controlled by being paid the effective capture of non-tax revenues via the
through the GePG. Unreported disbursements by grant-financed GePG, and the improved coverage of revenues
C A
development projects comprise the main source of unreported from grant-financed projects, through the D-
revenues. These are estimated to comprise 0.87% of total revenue for fund system. Uncaptured revenues fell from an
2019/20. estimated 5.7% of total revenue in 2017.
(iii) Financial reports of extra- All extra budgetary units submit annual financial reports to Government;
budgetary units B B not all of these submit within three months of the end of the fiscal year No change in this dimension.
but most of them do submit within 6 months.
PI-7 Transfers to subnational
C+ C+ No Change
Governments
(i) System for allocating Horizontal allocations have been transparent in the sense of being pre-
transfers announced and publicly discussed with the relevant stakeholders.
D D No Change
However, they have been based not on formulae, which are legally or
constitutionally defined, but on administratively determined norms.
(ii) Timeliness of information The process by which LGAs receive information on their annual
on transfers transfers is managed through the regular budget calendar, which is
A A No Change
generally adhered to and provides sufficiently detailed information to
allow at least 6 weeks for the budget formulation process at LGA level.


2017 2022 Rationale
PI-8 Performance
information for service C C No Change
delivery
(i) Performance plans for All ministries publish annually, within the MTEF, information on the
service delivery activities to be performed through their projects and recurrent
B B spending, the anticipated outputs and the objectives. However, the No Change
MTEF does not include a clear presentation of outcomes, nor is it
disaggregated by budget programme.
(ii) Performance achieved for Information is published annually within the MTEF by all ministries on
service delivery C C the outputs produced through the Development budget but, for the No Change
Recurrent Budget, reporting is at the level of activities.
(iii) Resources received by Information on resources received by front-line service delivery units is
service delivery units not systematically collected and reported on an annual basis by any
D D No Change
sector ministry. There has been no survey in the last three years
estimating resources so received.
(iv) Performance evaluation for Through the 39 performance audits of NAOT and the Health Sector
service delivery PER conducted with the World Bank in 2020, evaluations of the
C C efficiency or effectiveness of service delivery have been carried out at No Change
least once within the last three years in ministries comprising more than
25% of public spending.
PI-9 Public access to Only 3 of the 5 basic elements are made available to the public on a
information timely basis. Key budget documents and Quarterly Budget Execution
D D reports are not published regularly and were not available for the year No Change
under review. However, three of the four ‘additional elements’ were
made available on time.
PI-10 Fiscal risk reporting B B No Change
(i) Monitoring of public For 2019/20, most of the Public Corporations (76 out of 82) submitted The score on this dimension has improved as a
corporations audited annual financial reports within 9 months of fiscal year end. In result of the improved reporting by the Public
D C addition, a consolidated report on the financial performance of the public Corporations, with most now submitting
corporation sector is published annually by central government, audited annual statements within 9 months, as
specifically by the Office of the Treasury Registrar (OTR). opposed to just over 50% in 2017.


2017 2022 Rationale
(ii) Monitoring of sub-national Audited financial statements are published for all LGAs within nine
Government (SNG) months of the end of the fiscal year. Moreover, consolidated reports on
the net fiscal position of the majority of LGAs are produced by PO-
A A No change: monitoring of LGAs remains strong.
RALG on a quarterly basis, and the MoFP also include a consolidated
report on the financial position of all LGAs in the audited annual financial
statements.
(iii) Contingent liabilities and Most significant contingent liabilities of Central Government are
No change: while there have been
other fiscal risks identified and quantified in the annual consolidated financial statements
improvements in the monitoring of contingent
of the MoFP. Potential liabilities from loan guarantees are analysed in the
B B liabilities, it is not yet the case that all contingent
annual financial reports of the ORT and in annual Debt Sustainability
liabilities are comprehensively and
Analyses. However, potential contingent liabilities from PPPs do not
systematically reported.
appear to be comprehensively covered.
PI-11 Public Investment Mgt. D+ D+ No Change
(i) Economic analysis of Economic analyses are conducted for some major investment projects
investment proposals (more than 25% of the total number). Some of these analyses were
C C No Change
published but they were not reviewed on a systematic basis by any
central entity other than the sponsoring MDA.
(ii) Investment project selection Through the process of budget scrutiny, some, indeed a majority, of the
major investment projects were prioritised by the NDP and BMD prior
C C No Change
to inclusion in the Budget. The criteria for this process were stated in
the Plan and Budget Guidelines, which were publicly available.
(iii) Investment project costing The Budget documentation does not include a presentation of the total
cost of major investment projects nor of their anticipated recurrent
D D No Change
costs, in addition to the presentation of capital costs for the coming
budget year.
(iv) Investment project Major projects are monitored by the implementing MDA; some of this
monitoring information is reported in the sector MTEF. Cumulative information on
total cost to date, projected costs to completion, and total progress
against completion targets is not publicly reported for all major projects.
D D No Change


2017 2022 Rationale
PI-12 Public asset
B B+ Improvement
management
(i) Financial asset monitoring Government maintains a record of its holdings in all categories of Score improved from “B” to “A” because of the
financial assets, recognised at fair or market value in line with introduction of an annually published report (by
international accounting standards. Information on performance of the ORT) comprising a consolidated report on the
B A
financial assets is presented within the consolidated financial statements overall performance of the portfolio of financial
and in the OTR’s annual report which includes a consolidated report on assets.
the performance of the portfolio of financial assets.
(ii) Nonfinancial asset Within GAMIS, the Government maintains a register of its holdings of
monitoring non-financial assets, including information on their usage, and remaining
C C No change
economic life. However, GAMIS does not yet include a register of sub-
soil assets.
(iii) Transparency of asset Clear procedures & rules for the transfer/ disposal of non-financial and Score improved from “B” to “A” due to the
disposal financial assets are established in legislation and regulations. improved reporting on the transfer/ disposal of
Comprehensive information on transfers/ disposals of non-financial financial assets through the ORT in the form of
B A assets is presented in the GAMD annual report, and for financial assets its annual report. The level of detail on asset
in the ORT Annual Report. Summary information on both is presented acquisition/disposal and transfer in the ACGEN
in the annual consolidated financial statements, which are tabled before consolidated annual statements has also
Parliament and the Public Accounts Committee. improved.
PI-13 Debt management B B No Change
(i) Recording and reporting of Records on domestic and foreign debt and guaranteed debt are
debt and guarantees complete, accurate and updated quarterly. Most information is
B B No Change
reconciled quarterly. Comprehensive management and statistical
reports are produced annually.


2017 2022 Rationale
(ii) Approval of debt and The GLGGA grants the Minister of Finance exclusive responsibility to
guarantees borrow, issue new debt and issue loan guarantees on behalf of the CG.
GLGGA regulations provide guidance for undertaking borrowing,
issuance of loan guarantees and for other debt-related transactions. All
B B such transactions are reported by the ACGEN and monitored on a No Change
quarterly basis by the NDMC. The annual borrowing plan is approved
by Cabinet. However, establishment of the Debt Management
Directorate (DMD) as the single debt management entity is not yet
complete.
(iii) Debt management strategy The MTDS is publicly available and comprises a 5-year strategy for
existing and projected Government debt. It indicates the preferred
evolution of interest rate, refinancing and foreign currency risks but it
C C No Change
does not explicitly lay down target ranges for these indicators. The
annual borrowing plan is broadly consistent with the strategy but it is
difficult to compare directly.
PI-14 Macroeconomic and
C+ C+ No Change
fiscal forecasting
(i) Macroeconomic forecasts Macroeconomic forecasts are prepared annually for the budget year and
the subsequent 4 years.. They are presented in the Plan & Budget
Guidelines (PBG). Forecasts include estimates of GDP growth, inflation,
interest rates and the exchange rate. A narrative explanation of the
A A No Change
underlying assumptions is included in the PBG and also presented in
summary form within the Budget Speech. Forecasts incorporated are
reviewed and approved by a committee including BoT, TRA and NBS in
addition to MoFP.


2017 2022 Rationale
(ii) Fiscal forecasts The Government prepares forecasts of revenue, expenditure and the
budget balance for the budget year and the two following fiscal years.
However, the documentation on these forecasts presented to the
C C Legislature, through the PBG and the Budget Speech, lacks a No Change
presentation of the revenue breakdown for the 2 years consecutive to
the budget year and also lacks explanation of the differences from the
forecasts made in the previous year’s budget.
(iii) Macro-fiscal sensitivity The macro-fiscal forecasts prepared by the Government do not include
analysis a qualitative assessment of the impact of alternative macroeconomic
D D No Change
assumptions. Budget documentation does not include any discussion of
forecast sensitivities.
PI-15 Fiscal strategy D+ B Major Improvement
(i) Fiscal impact of policy Government prepares and presents in the Budget Speech and Budget Improved score, due to the inclusion in the
proposals Documents estimates of the fiscal impact in the budget year of all Budget Speech and Budget documents of the
proposed changes in revenue and expenditure policies. Estimates of fiscal impact of expenditure measures.
D C anticipated fiscal impacts for the subsequent two fiscal years are included (Previously such estimates covered revenue
only in the Planning and Budget Guidelines (PBG): these are at a highly policies only.)
aggregate level which cannot be related to specific tax or spending
measures.
(ii) Fiscal strategy adoption Within the PBG, the Government has adopted, submitted to the Improved score, due to the inclusion in the PBG
Legislature and published a current fiscal strategy that includes explicit, of explicit, time-based quantitative fiscal targets,
time based quantitative fiscal targets, together with qualitative fiscal including for the fiscal deficit.
C A objectives for the budget year and the following two years. The FYDP III
extends these projections for a further two years, based on
macroeconomic and fiscal projections consistent with those in the PBG
and the 2021/22 Budget.


2017 2022 Rationale
(iii) Reporting on fiscal The Budget Speech and the PBG, both of which are submitted to the Improved score due to inclusion in the budget
outcomes Legislature each year, include reviews of performance against the fiscal documentation of a more comprehensive
C B targets for the previous FY. However, the explanation of the reasons for explanation of the divergences from previous
the main deviations from the targets is only occasionally accompanied by fiscal targets.
discussion of corrective actions.
PI-16 Medium term
perspective in D D No Change
expenditure budgeting
(i) Medium-term expenditure Each MDA produces a detailed 3-year MTEF as part of the budget
estimates formulation process but the MTEF is not included in the annual budget
documentation, which is limited to estimates of the budget year itself.
D D This may be attributable to the activity-based costing approach used to No Change
develop the sector MTEFs, which results in voluminous documents and
worksheets that are exceedingly difficult to adapt and refine in the time
available.
(ii) Medium-term expenditure The aggregate “budget frame” included in the Plan & Budget Guidelines,
ceilings includes indicative three-year targets for the overall fiscal strategy.
D D No Change
However, the ceilings issued to MDAs are limited to the budget year
only and do not include the subsequent two fiscal years.
(iii) Alignment of strategic Medium-term strategic plans are prepared for the major sector
plans and medium-term ministries, which together comprise more than 25% by value of CG
C C No Change
expenditure. Some expenditure proposals in the annual budget estimates
budgets align with these strategic plans.
(iv) Consistency of budgets Budget documents do not provide an explanation of the changes to
with previous year estimates D D aggregate expenditure estimates between the second year of the most No Change
recent MTEF and the first year of the new MTEF.
PI-17 Budget preparation
A A No Change
process
(i) Budget calendar A clear budget calendar exists, supported by the Budget Act (2015) and
A A Regulations. It is adhered to and allows MDAs over 6 weeks from receipt No Change
of the Budget Circular to complete their estimates on time.


2017 2022 Rationale
(ii) Guidance on budget A comprehensive budget circular – the PBG - has been issued annually
preparation to MDAs covering total budget expenditure for the full fiscal year. This
circular, and its accompanying aggregate, sectoral and, for 2022/23
A A No Change
ministerial ceilings, has been approved by Cabinet in advance of its
circulation to MDAs. These ceilings have been reflected in the
subsequently approved budgets.
(iii) Budget submission to the The Executive’s Budget Proposal (EBP) has been submitted to Parliament
legislature A A in April in each of the last three fiscal years, in slightly more than two No Change
months before the end of the fiscal year on 30th, June.
PI-18 Legislative scrutiny of
B+ A Improvement
budgets
(i) Scope of budget scrutiny Parliament reviews fiscal policies as contained in the PBG, as well as the Score has improved due to the improvement in
details of planned revenue and expenditures presented in the Budget the information presented to the Legislature in
Documents. The PBG include medium term forecasts and priorities, and the PBG, specifically through the inclusion of
B A an aggregate budget frame, with details of the anticipated fiscal deficit greater information on medium term priorities.
and its planned financing. This process has been followed for the last
three completed fiscal years and also for the approval of the 2022/23
Budget
(ii) Legislative procedures for The Legislature’s procedures for scrutiny of budget proposals include
budget scrutiny specialised committees, public consultations and agreed negotiation
A A processes. Procedures are approved in advance by the Legislature and No Change
respected. The Parliamentary Budget Committee coordinates the
process with technical support from the Parliamentary Budget Office.
(iii) Timing of budget approval The Legislature approved the annual budget in advance of the fiscal year Improvement in timing of Budget approval
B A
in 2018, 2019 and 2020.
(iv) Rules for budget Clear rules exist in the Budget Act (2015) and Regulations for in-year
A A budget amendments by the Executive. These are always adhered to. No Change
adjustments by the executive
PI-19 Revenue administration C+ B Improvement
(i) Rights and obligations for TRA, which is responsible for most Government revenue collection The score has improved significantly, due to the
revenue measures (88%), uses multiple channels to provide tax-payers with easy access to improvement in the quality of information
C A
comprehensive information on main revenue obligations and rights, provided, especially through advance notice of
including redress procedures. tax changes.


2017 2022 Rationale
(ii) Revenue risk management TRA uses approaches that are well structured and systematic for Score has improved due to the introduction of
C A assessing and prioritising compliance risks for all revenue streams, a structured and systematic process for
including large, medium and small taxpayers. assessing compliance risk.
(iii) Revenue audit and TRA, which is responsible for collecting most revenues, undertakes
investigation audits and fraud investigations as part of a compliance improvement plan
C C No Change.
and completes a majority (but not all) of its planned audit and fraud
investigations.
(iv) Revenue arrears Based on data received from TRA the stock of arrears at end 2020/21 is Score has declined due to the expansion in the
monitoring 37.4% of the total revenue collections for the year, with the revenue stock of arrears, which in 2017 comprised less
B C
arrears older than 12 months comprising less than 75% of total arrears. than 20% of total revenue collection, and 37.4%
in 2022.
PI-20 Accounting for revenues B+ A Improvement
(i) Information on revenue PAD obtains revenue data monthly from entities collecting all central
collections A A Government revenue. The information is broken down by revenue type No Change
and consolidated into a monthly report.
(ii) Transfer of revenue Through the GePG system, transfers to the BoT revenue account are Improvement, due to introduction of GePG.
B A made daily for most Government revenue.
collections
(iii) Revenue accounts TRA, representing most central Government revenue, undertakes a
reconciliation complete reconciliation of its assessments, collections, arrears and
A A No Change
transfers to BoT as frequently as needed, including daily, using the
GePG..
PI-21 Predictability of in-year
D+ C Improvement
resource allocation
(i) Consolidation of cash GoT operates a single treasury account (STA). Most bank accounts are Score has improved due to the expansion of
balances D C connected to the STA. Cash balances are consolidated on a monthly the STA, which now accounts for over 75% of
basis. cash balances.
(ii) Cash forecasting and Annual cash forecasts are prepared; monthly forecasts are produced
monitoring C C based upon updated projections of cash outflows and inflows, but do not No Change
successively update the forecast for the remaining part of the year.


2017 2022 Rationale
(iii) Information on For salaries and recurring payments predictable monthly releases take
commitment ceilings place in accordance with the budget. For other recurrent items and
domestic development projects, exchequer releases are made each
month subject to requests from budget entities and a negotiation
D D procedure with MoFP. MDAs only receive final information on the No Change
releases for these items during the month of payment. Adjustments
relative to the budget for these items have been significant, meaning that
MDAs cannot be provided reliable information on spending limits one
month in advance.
(iv) Significance of in-year Significant in-year budget adjustments took place and were partially
C C transparent. No Change
budget adjustments
PI-22 Expenditure arrears D D No Change
(i) Stock of expenditure arrears The stock of expenditure arrears has exceeded 10 % in at least two of
D D the last three completed fiscal years No Change
(ii) Expenditure arrears Given that there is no regular in-year reporting of expenditure arrears
monitoring and that they are not reconciled with accounts payable and accruals in
MUSE, nor with the consolidated annual financial statements, systematic
D D No Change
reporting of arrears cannot be said to take place currently in
Government’s consolidated financial reporting. Dimension (ii) is
therefore rated a “D”.
PI-23 Payroll controls B+ B+ No Change
(i) Integration of payroll and The approved staff list, personnel database and payroll for CG and LGAs
personnel records are all integrated in the new HCMIS system and have an electronic
A A No Change
interface with the MUSE system for processing of salary payments to
ensure budget control, data consistency, and monthly reconciliation.
(ii) Management of payroll Changes to the personnel and payroll system are updated monthly
changes through the new HCMIS system, generally in time for the following
Deterioration in score, due to an increase in the
A B month’s payments. However, the number of retroactive adjustments as
number of retroactive salary adjustments.
demonstrated by the figures for salary-related arrears is likely to have
exceeded the 3 % needed for an A rating.
(iii) Internal control of payroll Authority to change personnel and payroll records is restricted and
B B results in an audit trail. Although it has not yet been possible to ensure No Change
full integrity of data, evidence suggests that data integrity is high.


2017 2022 Rationale
(iv) Payroll audit Payroll audits are undertaken by Internal audit and CAG. Also PO-PSM
checks on integrity of data and carries out site visits. Between these 3
B B No Change
entities, payroll audits covering all CG entities would have been
conducted at least once in the last three completed fiscal years.
PI-24 Procurement C B Improvement
(i) Procurement monitoring Records are maintained in TANePS for the whole public sector on what
has been procured, the value of procurement and who has been awarded The score has improved due to the introduction
contracts. A majority (73%) of public sector procurements were of TANePS and the success achieved in
managed and published through TANePS in 2020/21. The institutions of registering all 718 Procuring Entities (PE) of the
D C
Budgetary Central Government in turn comprised a majority (54%) of public sector, and in ensuring that a majority of
the Procuring Entities publishing awards through TANePS. We thus the procurements of BCG institutions were
estimate that a majority of BCG procurements were managed and managed through the system.
published through TANePS.
(ii) Procurement methods Proposed procurement methods must be stated in General
Procurement Notices (GPNs) and methods cannot later be changed The score has improved significantly because
without a valid justification and formal approval by PPRA. The statement there now exists comprehensive data on the
D A of planned procurement methods in GPNs is therefore a very good guide planned procurement methods of the whole
to the methods actually used. 93.5 % of procurements by value for the public sector, through the GPNs published in
public sector were planned to be undertaken by competitive methods in TANePS and reported by PPRA annually.
2020/21.
(iii) Public access to Four of the six key procurement information elements (1,2,3 & 5) are
procurement information complete and accurate for BCG entities representing a majority of BCG
C C No Change
procurement operations, and are made available to the public on a timely
basis.
(iv) Procurement complaints In 2020/21, the procurement complaints system met all six PEFA criteria
management for the effectiveness of an independent procurement complaint
resolution mechanism.
A A No Change


2017 2022 Rationale
Internal controls on non-
PI-25 D+ C+ Improvement
salary expenditure
(i) Segregation of duties Segregation of duties is prescribed throughout the expenditure process
and responsibilities are clearly laid down for all key steps. However, the Score has improved due to the more extensive
operationalisation of the segregation of duties relies critically on the process of segregation of duties incorporated in
C B controls established within the MUSE system. As MUSE is not yet fully the MUSE integrated financial management
implemented in all MDAs, some gaps in systems for segregation of duties system, and the steady roll-out of MUSE since
may exist in the minority of the MDAs of BCG which continue to apply 2018 to most MDAs of Central Government.
other financial management systems used with an interface to MUSE.
(ii) Effectiveness of expenditure Commitment control procedures do exist, which are partially effective.
commitment controls The existence of extensive expenditure arrears in several types of
expenditure (PI-22) demonstrates that the system of commitment
C C No Change
control cannot be considered comprehensive, nor to effectively limit
commitments to projected cash availability and approved budget
allocations for most types of expenditure.
(iii) Compliance with payment Most payments are compliant with regular payment procedures and the Score has improved due to MUSE
controls D C majority of exceptions are properly authorized and verified. implementation; CAG reports show clear
improvement in compliance since 2017.
Internal Audit
PI-26 C+ C+ No Change
effectiveness
(i) Coverage of internal audit The internal audit function is in place for central government entities
representing most of total budgeted expenditure and for central
B B government entities collecting all of government revenue. However, staff No Change
turnover and shortages puts the functionality and coverage of their audit
in jeopardy.
(ii) Nature of audits and Internal audit activities have a primary focus on financial compliance.
C C No Change
standards applied
(iii) Internal audit activity and Annual audit programmes and plans exist and are submitted to IAGD.
reporting However only 77 % submitted annual reports in 2020/21. For audit
C C No Change
committees the submission rate was 35 % We assess that the majority
of programmed audits are completed.
(iv) Response to internal audits Management provides a full response for the majority of CG entities
C C audited. However, the implementation pace is slow for some entities No Change
and many recommendations are not implemented.


2017 2022 Rationale
PI-27 Financial data integrity C C+ Improvement
(i) Bank account reconciliation Bank reconciliation of all active central Government accounts takes place
B B monthly, usually before 4 weeks from the end of each month No Change
(ii) Suspense accounts The absence of a suspense account facility or of any alternative organised In the absence of a suspense account facility or
procedure to keep track of pending postings (receipts or expenditure) any equivalent procedure, this dimension has
D N/A is a deviation from best practice. We remain of the opinion that been rated ‘not applicable’. As a result of
dimension (ii) should be rated “D”, but to allow for comparisons with excluding this dimension, the aggregate score
other PEFA assessments and to follow the guideline the rating given is has improved from a C to a C+.
N/A (Not Applicable).
(iii) Advance accounts A complete reconciliation of advances and imprest accounts only takes
D D place annually within the deadline for submission of the annual financial No Change
statements from MDAs, namely three months after year’s end.
(iv) Financial data integrity Access to records is restricted and all changes recorded, resulting in an
B B audit trail. There is no specific unit in charge of verifying and checking No Change
processes
data integrity.
PI-28 In-year budget reports D C Improvement
(i) Coverage and comparability The coverage and classification of the published quarterly Budget The score has improved due to the
of reports Execution Reports allow direct comparison to the original budget only improvement in the degree of accessibility of
for the main administrative headings. They do not include the details of quarterly Budget Execution Reports. However,
D C
actual expenditures made from the transfers received by the de- the range of information provided therein, and
concentrated units of Central Government the consequent scope of potential comparison
to the original budget have not expanded.
(ii) Timing of in-year budget Apart from the report for the first quarter, the published reports are The score has improved due to the
reports D C available quarterly and issued within 8 weeks from the end of the improvement in the regularity and timeliness of
quarter. quarterly Budget Execution Reports.
(iii) Accuracy of in-year budget There are some concerns regarding data accuracy. Data is however The score has improved because the quarterly
reports useful for analysis of budget execution, but on a highly aggregate level. BERs have become more regular and more
Expenditure is captured at payment stage. accurate in their data, although concerns over
D C data accuracy persist.


2017 2022 Rationale
PI-29 Annual financial reports C+ C+ No Change
(i) Completeness of annual Most of the desired information is contained in the annual report.
financial reports However, the level of aggregation is high, details of budgets compared
C C No Change
to outturn for votes/ ministries do not feature, and arrears are not
consistently reported.
(ii) Submission of reports for The consolidated financial statement for budgetary Central Government
external audit B B has in the past three years been received by CAG within 6 months of No Change
fiscal year end.
(iii) Accounting standards Accounting standards are applied to all financial reports and are Improved score due to the incorporation of the
consistent with the country’s legal framework. The majority of majority of international standards and the clear
C B international standards have been incorporated into the national disclosure of gaps and variations. In earlier
standards, with the minor variations and gaps duly explained. years, when migration to IPSAS accruals was
incomplete, this did not prove possible.
PI-30 External audit C+ B Improvement
(i) Audit coverage and CAG’s annual audit reports include results from audit of CG entities
standards representing most total expenditures and revenues. These have followed
B B national audit standards which are largely compliant with the ISSAIs, and No Change
audits have highlighted relevant material issues and systemic and control
risks..
(ii) Submission of audit reports Audited reports have been submitted to the National Assembly within
to the legislature B B six months from receipt of the financial statements by CAG for the last No Change
three completed fiscal years.
(iii) External audit follow-up A formal, comprehensive, and timely response was made by the
Executive or the audited entities on which follow-up was expected,
B B No Change
during the last three completed fiscal years. However, the follow-up to
audit recommendations by the Executive is not fully effective.
(iv) Supreme Audit Institution The CAG has a 5-year renewable period of tenure and enjoys significant Score has improved: because the CAG now
(SAI) independence constitutional protection from removal from office. The CAG operates enjoys full operational control in the execution
independently from the Executive with respect to the planning of audit of his budget.
C B
engagements and the de facto procedures for appointment of the head
of the SAI as well as the execution of the SAI’s budget. The CAG has
unrestricted, timely access to records for all audited entities.


2017 2022 Rationale
Legislative scrutiny of
PI-31 B C+ Deterioration
audit reports
(i) Timing of audit report In the last three fiscal years, scrutiny of audit reports on annual financial
scrutiny C C reports has been completed by the legislature within 12 months from No Change
receipt of the reports.
(ii) Hearings on audit findings Over the last three completed fiscal years, in-depth hearings on the key
A A findings in the CAG’s reports have been undertaken with all entities No Change
receiving disclaimer of opinion or adverse or qualified opinions.
(iii) Recommendations on audit The Legislature – through the PAC – issues directives on actions to be
by the legislature implemented by the Executive and follows up on the implementation of
B B these directives. However, implementation performance by the No Change
Executive is poor, suggesting that further strengthening of the follow up
process is needed.
(iv)Transparency of legislative The reports of the PAC are provided to the full chamber of Parliament, Score has deteriorated because the reports of
scrutiny of audit reports committee hearings are open to the public and press, and announced on the PAC for the last three fiscal years have not
C D
the official website of the Parliament. However, the committee reports been published on the official website of the
and recommendations are not published on the website. Parliament.

Annex II: Observations on the Internal Control Framework
Internal control components and elements Summary of observations

1. Control environment
1.1 The personal and professional integrity and No information available from the PEFA
ethical values of management and staff, assessment.
including a supportive attitude toward internal
control constantly throughout the organisation
1.2 Commitment to competence Training features as a strong ingredient in most
PFM reform efforts including for LG tax
administration, planning and budgeting for MDAs
and LG staff and budget committees, procurement
staff , cash management training, debt
management training, internal audit training,
fraud risk management training, risk based audit
training, OTR staff training, capacity building for
PAC members, IFMIS user training, ACGEN staff
training.
1.3 The “tone at the top” (i.e. management’s No information available from the PEFA
philosophy and operating style) assessment.
Most elements established, such as for external
and internal audit, procurement oversight and
regulation, tax administration, accounting,
budget, macro-analysis, debt management etc.
1.4 Organisational structure Vacancies/ staff shortages noted for internal audit.
No information available from the PEFA
1.5 Human resource policies and practices assessment.
2. Risk assessment
Taking place for taxes, procurement audit, internal
and external audit. Less emphasis in general MDA
management where risk-based policies and plans
2.1 Risk identification are at times lacking.
Evidence noted for audit, procurement and tax
2.2 Risk assessment (significance and likelihood) audit and investigation.
Evidence noted for audit, procurement and tax
2.3 Risk evaluation audit and investigation.
2.4 Risk appetite assessment assessment.
2.5 Responses to risk (transfer, tolerance, treatment Risk assessments guide audit planning and
or termination) execution, procurement and tax audit.
3. Control activities
3.1 Authorization and approval procedure In place in procedures and Accounting Manual,
which covers more than accounting.
3.2 Segregation of duties (authorizing, processing, Segregation of duties evidenced for procurement,
recording, reviewing) payment and payroll.
3.3 Controls over access to resources and records assessment.
3.4 Verifications Guided by Accounting Manual
3.5 Reconciliations Regularly conducted in MUSE
Performance audit is being introduced and special
3.6 Reviews of operating performance studies undertaken, still on a limited scale.

Tax administration has been revised and tax

administration regulations revised for
3.7 Reviews of operations, processes and activities streamlining. Otherwise little evidence of process
design efforts.
3.8 Supervision (assigning, reviewing and approving, No information available from the PEFA
guidance and training) assessment.
Efforts made through web-site publication,
brochures, manuals, training, sessions for the
4. Information and communication public, help line for tax information, etc
5. Monitoring
Oversight authorities in procurement, taxation,
OTR plus internal and external audit. Also through
5.1 Ongoing monitoring the MUSE system internal controls.
PFMR contains several special studies.
Performance audit and financial audit also
5.2 Evaluations conduct special audits of specific problems.
Evidence of management responses exist for
internal and external audit, but may not be
comprehensive. Planning by oversight authorities
and MDAs is informed by studies and information
5.3 Management responses obtained.

Annex III: Sources of Information
Annex 3 a) Surveys & Analytical Work

PI-19 Revenue administration • TRA Fifth Corporate Plan
19.1 Rights and obligations for • www.tra.go.tz
revenue measures • Statistics for use of call centre TRA
19.2 Revenue risk management • Consolidated financial statements for
19.3 Revenue audit and investigation the year ended 30th June 2021, and
19.4 Revenue arrears monitoring previous years
• Tax arrears status Report as at 30th
June 2021 Large tax payers, TRA
• Monitoring revenue arrears 2019/20,
TRA – customs and excise
• Annual performance review 2020/21
of taxes established form tax audit,
TRA
• Revenue risk based audit process
description, TRA.
• TRA annual report 2020/21
• IMF documents from Article IV
Mission 2021
• PFMRP V Review 2021.
PI-20 Accounting for Revenues

20.1 Information on revenue
collections
See PI-19
20.2 Transfer of revenue
collections
20.3 Revenue accounts reconciliation.
PI-21 Predictability of in-year
resource allocation
21.1 Consolidation of cash balances. - Accounting Manual
21.2 Cash forecasting and monitoring. - Consolidated annual accounts for
21.3 Information on commitment 2019/20
ceilings. -
21.4 Significance of in-year budget
adjustments.
PI-22 Expenditure arrears • CAG report for 2019/20
22.1 Stock of expenditure arrears. • Arrears reports BMD, MoFP
22.2 Expenditure arrears monitoring
PI-23 Payroll controls • CAG reports for 2018/19 and

23.1 Integration of payroll and 19/20

personnel records. • IAG report for 2019/20 and
23.2 Management of payroll changes. 2020/21
23.3 Internal control of payroll.
23.4 Payroll audit.
PI-24 Procurement • PPRA performance reports
24.1 Procurement monitoring. 2019/20 and 2020/21
24.2 Procurement methods. • www.ppra.go.tz
24.3 Public access to procurement • www.tender.ppra.go.tz
information. • www.ppaa.go.tz
24.4 Procurement complaints • Brochures from PPRA
management. • Internal and external audit reports
• Public Investment Management
Operational Manual, President’s
Office 2015
PI-25 Internal controls on non-

salary expenditure
• CAG and Internal audit interviews and
25.1 Segregation of duties.
reports
25.2 Effectiveness of expenditure
• The accounting manual of 2015
commitment controls.
25.3 Compliance with payment rules
and procedures.
PI-26 Internal audit
26.1 Coverage of internal audit.
26.2 Nature of audits and standards
• IAG annual report 2019/20 and
applied
2020/21
26.3 Implementation of internal
audits and reporting.
26.4 Response to internal audits.
27.1 Bank account reconciliation.
• CAG and Internal audit reports
27.2 Suspense accounts.
• The accounting manual of 2015
27.3 Advance accounts.
27.4 Financial data integrity
processes
28.1 Coverage and comparability of
reports.
• Quarterly reports for 2020/21
28.2 Timing of in-year budget reports.
28.3 Accuracy of in-year budget
reports

29.1 Completeness of annual financial

• CAG reports
reports.
• Consolidated financial reports for
29.2 Submission of the reports for
2018/19-2020/21
external audit.
• Accounting manual
29.3 Accounting standards.
VII. External scrutiny and Audit
PI-30 External audit

30.1 Audit coverage and standards. • External reports on SAI independence
30.2 Submission of audit reports to and financial governance,
the legislature • Annual report of NAOT
30.3 External audit follow up. • Performance audit reports from NAOT,
30.4 Supreme Audit Institution see www.nao.go.tz
independence.
PI-31 Legislative scrutiny of audit • NAOT annual reports and PAC annual
reports reports
Annex 3 b) Sources of Information for each Performance Indicator
Indicator/dimension Data Sources

I. Budget reliability
PI-1. Aggregate expenditure outturn • Annual budget law

1.1 Aggregate expenditure outturn /documentation/estimates
approved by the legislature;
• Annual budget execution report
PI-2. Expenditure composition • Annual budget
outturn law/documentation/estimates
2.1. Expenditure composition outturn approved by the legislature;
by function • Annual budget execution
2.2. Expenditure composition outturn report or annual financial
by economic type statements
2.3. Expenditure from contingency • Annual budget
reserves law/documentation/estimates
approved by the legislature
PI-3. Revenue outturn • Annual budget
3.1 Aggregate revenue outturn law/documentation/estimates
3.2 Revenue composition outturn approved by the legislature
• Annual budget execution report or
audited annual financial statements
• Information on revenue outturn for
the most recent completed fiscal
year may also be presented in the
budget estimates document

II. Transparency of public finances
• Relevant legislation and regulations

identifying the application of the
classification
• Annual budget document
provided by the MoF for the last
completed fiscal year
PI-4. Budget classification • Copy of the chart of accounts used
4.1 Budget classification for the last completed fiscal year
• Last annual budget proposal
submitted to the legislature.
• Supporting documentation for the
budget
• Additional documentation relating to
the budget submitted to the
PI-5. Budget documentation legislature prior to the budget
5.1 Budget documentation proposal
PI-6. Central Government operations • Information from the MoF, central
outside financial reports bank, SAI, and others about
6.1 Expenditure outside financial Government bank accounts that
reports are not managed by the Treasury
6.2 Revenue outside financial reports • Financial records of ministries and
6.3 Financial reports of extra- extra-budgetary units not reported
budgetary units in central Government financial
reports (e.g., bookkeeping and/or
petty cash records, invoices, bank
statements, etc.)
• Annual financial reports of extra-
budgetary units
• Correspondence with central agency
regarding financial reports
PI-7. Transfers to subnational • Legislation or rules governing
Governments transfers from CG to SNG.
7.1 System for allocating transfers • Annual budget documents
7.2 Timeliness of information on • Interviews with MoFP, and
transfers PO-RALG
• Triangulation with
representatives of Dodoma
Municipal Council
PI-8. Performance information for • Annual budget document and/or
service delivery supporting budget
8.1 Performance plans for service documentation.
delivery • Ministry budget statements

8.2 Performance achieved for service and/or performance plans.

delivery • Other documents on ministry
8.3 Resources received by service service delivery plans containing
delivery units performance information;
8.4 Performance evaluation for • Annual financial statements;
service delivery • In-year budget execution reports
• Budget management system or
accounting system
• Line ministries and departments
• National Audit Office
• Internal audit department
• MoFP
PI- 9 Public access to fiscal • Listed documents accessible from
information the MoFP, CAG, and PPRA.
9.1 Public access to fiscal information • Access corroborated through
availability at Government websites,
and notice boards, and through
conversations with Wajibu and TCCIA.
III. Management of assets and liabilities
PI- 10 Fiscal risk reporting • List of public corporations in OTR

10.1 Monitoring of public Annual Report and in ACGEN financial
corporations statements for 2019/20;and
10.2 Monitoring of sub-national • Data on dates of submission,
Government (SNG) publication and audit o b t a i n e d i n
10.3 Contingent liabilities and other discussion with ACGEN and NAOT
fiscal risks • PO-RALG data on LGAs
• Triangulation with information from
Dodoma Municipal Council
• Annual financial statements
• Financial or other reports of
budgetary units (OTR)
PI- 11: Public investment • DNP in MoFP
management • Ministries of Education and
11.1 Economic analysis of investment Transport/ Works and TANROADS
• National guidelines to conduct
proposals
economic analysis
11.2 Investment project selection
• Economic analysis of investment
11.3 Investment project costing
projects by Donors
11.4 Investment project monitoring
• Legislation on public investment
• Annual budget documentation
• Medium-term expenditure
frameworks
• Guidelines on monitoring public
investments
• NPIMS Database

• Project monitoring reports

PI-12: Public asset management • Consolidated financial statements,
12.1 Financial asset monitoring including notes relating to the
12.2 Nonfinancial asset monitoring holdings of financial assets.
12.3 Transparency of asset disposal. • Asset management agency - GAMD.
• Budget and extra-budgetary units
holding financial and non-financial
assets
• MoFP
• Internal audit units
• NAOT
PI-13: Debt management

13.1 Recording and reporting of debt
• MoFP Debt Management office
and guarantees
• BoT
13.2 Approval of debt and guarantees
13.3 Debt management strategy
IV. Policy-based fiscal strategy and budgeting
PI-14: Macroeconomic and fiscal • Annual budget documents

forecasting • Annual budget circular
14.1 Macroeconomic forecasts • Policy and analytical advice to
Government
14.2 Fiscal forecasts • MoFP working papers
14.3 Macro-fiscal sensitivity analysis • The reviewing entity (BoT)
• The unit preparing the initial
forecasts -PAD
• Records of legislative proceedings
PI-15 Fiscal strategy
15.1 Fiscal impact of policy proposals • MoFP
15.2 Fiscal strategy adoption • POPC
15.3 Reporting on fiscal outcomes
PI-16 Medium-term perspective in
expenditure budgeting • Annual budget estimates
16.1 Medium-term expenditure • Formal directions or instructions on
estimates ceilings to ministries
16.2 Medium-term expenditure • Budget circular
ceilings • MoFP
16.3 Alignment of strategic plans and • Large sector ministries (Education and
medium-term budgets Transport/ Works, also TANROADS.)
16.4 Consistency of budgets with
previous year’s estimates
PI-17: Budget preparation process • MoFP (budget department),
17.1 Budget calendar. corroborated by finance officers of
17.2 Guidance on budget preparation large spending budgetary units;

17.3 Budget submission to the • MoFP (budget department),

legislature corroborated by the legislature
(Budget & Finance Commission)
PI-18: Legislative scrutiny of budgets • Budget director, secretary or chair of
18.1 Scope of budget scrutiny. budget committee(s) of legislature,
18.2 Legislative procedures for corroborated by advocacy, civil
budget scrutiny. society, and interest groups
18.3 Timing of budget approval. • Legislature committees, corroborated
18.4 Rules for budget adjustments by by W a jib u a n d T C C IA ;
the executive. • MoFP (budget department),
corroborated by the legislature
(budget/finance commissions)
• Internal and/or external audit reports
PI-19 Revenue administration - Tax Administration Act, Cap.438;

19.1 Rights and obligations for regulation 2016
revenue measures - Value Added Tax Act, Cap.148;
19.2 Revenue risk management Regulations 2015
19.3 Revenue audit and investigation - Income Tax Act, Cap 332;
19.4 Revenue arrears monitoring regulation 2014
- Tanzania Revenue Authority Act, Cap.
399
- Tax Revenue Appeals Act, Cap 408
- Other acts and regulations for specific
taxes.
- TRA Fifth Corporate Plan 2018/19-
2022/23
- www.tra.go.tz
- PFMRP V Review
- Budget execution report 2020/21 MoF
-
- Interviews with Fiscal Unit, Policy
Directorate MoF, TRA, Chamber of
Commerce.
PI-20 Accounting for Revenues
20.1 Information on revenue
collections
See PI-19
20.2 Transfer of revenue collections
20.3 Revenue accounts
reconciliation.
PI-21 Predictability of in-year - Accounting manual of 2015
resource allocation - Interviews with ministries of Education,
21.1 Consolidation of cash balances. Works and Regional Secretariat, BoT,
21.2 Cash forecasting and monitoring. ACGEN, IFMIS, Government Budget

21.3 Information on commitment Division

ceilings. - Budget documents and outcomes.
21.4 Significance of in-year budget - Consolidated annual accounts for
2014/15- PER – Study on the
adjustments. prevention and management of
payment arrears, IMF 2014
PI-22 Expenditure arrears • Study on the prevention and
22.1 Stock of expenditure arrears. management of payment arrears, IMF
22.2 Expenditure arrears monitoring 2014
• CAG report for 2014/15
• Arrears reports MoE
• Interviews: ACGEN; Government
Budget Division; Debt Management
Unit, TCCIA (Chamber of Commerce)
PI-23 Payroll controls • Office of the President – Personnel
23.1 Integration of payroll and management Division
• IFMIS unit MoF
personnel records.
• Regional Secretariat, Dodoma
23.2 Management of payroll changes.
• ACGEN
23.3 Internal control of payroll. • Finance and HR officers at
23.4 Payroll audit. Ministries of work and Education
• CAG report for 2014/15
• Interviews with CAG, Internal
auditor general and internal audit
departments
PI-24 Procurement • Interviews with Public Procurement
24.1 Procurement monitoring. Regulatory Authority;
24.2 Procurement methods. • The Public Procurement Ac, Cap
24.3 Public access to procurement 410, with regulations (2013).
information. • PPRA performance reports
24.4 Procurement complaints 2014/15 and 2015/16A
management. • www.ppra.go.tz
• www.tender.ppra.go.tz
• www.ppaa.go.tz
• Tanzania Procurement Journal
• Procurement plans, tender
documents, award decision
• Brochures from PPRA
• Chamber of Commerce interview
• Internal and external audit reports
• Case descriptions and results on PPAA
website.
• Public Investment Management-
Operational Manual, President’s
Office 2015

PI-25 Internal controls on non- • CAG and Internal audit interviews and
salary expenditure reports
25.1 Segregation of duties. • The accounting manual of 2015
25.2 Effectiveness of expenditure • Study of EPICOR functions, incl
commitment controls. commitment control
25.3 Compliance with payment rules • The IMF arrears study
and procedures. • Study of forms and documents for
payment processing
• Interview with reconciliation unit and
systems development unit in ACGEN
• Interview with PO-DPSM and IFMIS
unit-MoF
• Heads and finance officers at
Ministries of Education , Works and
Regional Secretariat
PI-26 Internal audit

• IAGD
26.1 Coverage of internal audit.
• Accountant General
26.2 Nature of audits and standards • Heads and finance officers of major
applied budgetary units (Education,
26.3 Implementation of internal Transport/ Works)
audits and reporting. • SAI for triangulation of information
26.4 Response to internal audits.
PI-27 Financial data integrity • CAG and Internal audit interviews and
27.1 Bank account reconciliation. reports
27.2 Suspense accounts. • The accounting manual of 2015
27.3 Advance accounts. • Study of EPICOR and Lawson system
27.4 Financial data integrity functions,
processes • Study of forms and documents for
payment processing
• Study of user registration process and
authority levels
• Interview with reconciliation unit and
systems development unit in ACGEN
• Interview with PO-DPSM and IFMIS
unit-MoF, Heads and finance officers
at Ministries of Education , Works and
Regional Secretariat

• Accountant General
28.1 Coverage and comparability of
corroborated by SAI or internal
reports.
audit
28.2 Timing of in-year budget reports.
• MoFP
28.3 Accuracy of in-year budget
reports


29.1 Completeness of annual financial
reports. • Accountant General corroborated by
29.2 Submission of the reports for SAI
external audit.
29.3 Accounting standards.
VII. External scrutiny and audit
PI-30 External audit • SAI, corroborated by the

30.1 Audit coverage and standards. parliamentary public accounts
30.2 Submission of audit reports to committee and Wajibu;
the legislature • SAI and internal auditors of major
30.3 External audit follow up. budgetary units, corroborated by
30.4 Supreme Audit Institution Parliamentary Public Accounts
independence. committee, Government ministers,
the MoF, audited entities and civic
interest groups
• SAI
• Legislation
• External reports on SAI independence
and financial governance
• CAG, MoF, and Public Accounts
PI-31 Legislative scrutiny of audit Committee of Parliament,
reports corroborated by civic interest groups
(TCCIA and Wajibu).

Annex 3 c) Schedule of Interviews undertaken
DAR ES SALAAM & DODOMA

Time Monday 8th, Tuesday 9th Wednesday 10th Thursday 11th Friday 12th Saturday 13th
November November November November November November
9:00 - Trond Augdal, Norway; 10:00 Development Tanzania PEFA Task Force Internal Auditor
10:30 Partners' Group Revenue Secretariat: 1) General's Dept.
(PEFA indicator PI- Authority (PEFA PEFA logistics & (PEFA indicators
11, briefing on PFM indicators PI-19, documents; 2) PI-25, 26)
reform issues) 20) PFM Reform mgt
& Implementation
structure
11:00 - 10:00 a.m. Office TANROADS 12:30 IMF Budget MOFP Policy
12:30 of the Treasury (Procurement Representative Management Analysis Division Team
Registrar (PEFA issues, also budget (Briefing on IMF Division (PEFA (PEFA indicators discussions,
indicators PI-6 & formulation & PFM work; indicators PI- PI-10,14,15) data analysis,
PI-10) execution; PI-24, PI- update on 1,2,3,4,5,6,7,16,1 report writing,
17, PI-21, 22) economic 7, 28) etc. (in
situation) Dodoma)
LUNCH LUNCH LUNCH LUNCH LUNCH
14:00 - Medical Stores Team travel to Accountant Government
15:30 Department Meetings with Dodoma @15.25 General's Asset Mgt
(Procurement, also Wajibu and TCCIA Department (PI-6, Division (PEFA
budget formulation (Perceptions on 12, 21, 22, 23, 27, Indicator PI-12)
& execution; PI-24, transparency, GoT 29); and National
PI-17, PI-21, 22) procurement; PI-5, Planning
PI-6, PI-9, PI-24) Directorate (PI-11
and PI-16)
16:00 Follow-up meetings for data/ document collection, etc.

16:00 Follow-up meetings for data/ document collection, etc.

DODOMA MEETING WEEK
Time Monday 15th, Tuesday 16th, Wednesday Thursday 18th Friday 19th Saturday 20th
November November 17th, November November November November
9:00 - 8:30 a.m. Debt Ministry of Parliamentary Presentation of
10:30 Management Education Public Accounts Preliminary
Division (PI- 13, (MoESTVT) Committee and PEFA
also PI-12.1); (annual Budget & Finance Assessment
simultaneously with budgeting & Committee (PI-18, results to
Zoom Conference financial PI-31) Management &
with TRA (PI -19 reporting; payroll Oversight
and 20) management, Committee,
procurement MoFP (and
11:00 - Public 10:00 a.m. President's Office -
12:30 Procurement Financial Public Service
Regulatory Information External Finance Mgt. (PO-PSM)
Authority and Systems Mgt (PI-6, PI-11) (PEFA indicator
Team
Appeals Body Division - FISM PI-23)
discussions
(PEFA indicator PI- (Functioning of
and report
24) LUNCH IFMIS, Payroll
LUNCH LUNCH LUNCH LUNCH writing in
14:00 - President's Office - Ministry of Works, Brief to PST on Dodoma Follow-up DSM;
15:30 Regional Transport & PEFA Municipal Council meetings in Departure for
Administration & Communications Assessment (transfers from Dodoma for home on
Local Government (Investment Preliminary Central missing Saturday
(PO-RALG) (PI-7 planning, annual results (in Government; documents/ evening 20th,
transfers to LGAs; budgeting & Dodoma) management of data, etc. November
also review of financial reporting; LGA payroll and
Payroll mgt for payroll procurement
LGAs) management); issues)
simultaneously with
Controller & Auditor
General (PEFA
Indicators PI-30, PI-
8, and opinions on
16:00 - Budget Mgt. Follow-up meetings PEFA Task Preparation of PEFA team
17:00 Department (follow- Force Secretariat Presentation of depart Dodoma
up meeting to (Briefing on Preliminary for Dar @ 17.00
discuss Progress & Results by PEFA
commitment Logistics for team
controls, etc.) Friday

Annex IV: Calculations for Budget Reliability Pillar (PI-1,2 & 3)
PI-1 and PI- 2 dimensions i) and iii). (2016 PEFA Methodology)

Table 2
Data for year = 2018/19
Administrative or functional head Budget Actual Adjusted Budget Deviation Absolute Deviation Percent
Ministry of Works, Transport and Communication-Transport 2,387,032,626,131 884,755,845,999 1,854,364,442,011 -969,608,596,012 969,608,596,012 52.3%
Ministry of Works, Transport and Communication-Works 1,864,970,280,066 1,948,503,200,158 1,448,800,713,867 499,702,486,291 499,702,486,291 34.5%
The Treasury 1,779,501,323,500 512,385,178,288 1,382,404,221,327 -870,019,043,039 870,019,043,039 62.9%
Ministry of Energy 1,692,286,014,000 1,557,894,600,372 1,314,651,075,868 243,243,524,504 243,243,524,504 18.5%
Ministry of Education, Science and Technology 1,406,469,626,000 1,197,976,318,401 1,092,614,836,794 105,361,481,607 105,361,481,607 9.6%
Defence 1,372,232,770,000 1,415,902,507,365 1,066,017,961,797 349,884,545,568 349,884,545,568 32.8%
Ministry of Health, Community Development, Gender, Elderly and Children - Health 866,233,475,000 608,521,568,602 672,932,802,399 -64,411,233,797 64,411,233,797 9.6%
Ministry of Water 697,577,902,677 456,544,827,029 541,912,852,005 -85,368,024,976 85,368,024,976 15.8%
RAS Dar es Salaam 651,363,397,500 323,668,765,632 506,011,149,546 -182,342,383,914 182,342,383,914 36.0%
Ministry of Home Affairs-Police Force 596,638,468,000 708,868,279,039 463,498,130,559 245,370,148,480 245,370,148,480 52.9%
President's Office and Cabinet Secretariat 576,213,769,000 592,426,413,794 447,631,219,001 144,795,194,793 144,795,194,793 32.3%
President's Office - Regional Administration and Local Government Authorities 387,981,784,000 338,416,591,385 301,403,347,621 37,013,243,764 37,013,243,764 12.3%
RAS Mwanza 365,484,688,000 267,350,364,577 283,926,496,064 -16,576,131,487 16,576,131,487 5.8%
RAS Dodoma 348,167,579,500 421,675,397,691 270,473,713,773 151,201,683,918 151,201,683,918 55.9%
RAS Morogoro 320,744,992,000 246,397,622,041 249,170,497,968 -2,772,875,927 2,772,875,927 1.1%
RAS Tanga 315,134,761,000 258,153,512,615 244,812,194,372 13,341,318,243 13,341,318,243 5.4%
National Service 299,239,411,000 354,407,122,130 232,463,904,067 121,943,218,063 121,943,218,063 52.5%
RAS Arusha 282,049,903,000 206,877,444,659 219,110,248,126 -12,232,803,467 12,232,803,467 5.6%
RAS Mbeya 280,695,752,500 209,831,106,147 218,058,277,361 -8,227,171,214 8,227,171,214 3.8%
RAS Kilimanjaro 277,765,305,000 234,671,720,059 215,781,761,497 18,889,958,562 18,889,958,562 8.8%
21 (= sum of rest) 5,694,438,514,545 4,704,531,598,169 4,423,720,138,130 280,811,460,039 280,811,460,039 6.3%
allocated expenditure 22,462,222,342,419 17,449,759,984,152 17,449,759,984,152 0 4,423,116,527,665
Public Debts (Including principals) 10,013,706,140,000 8,250,570,554,451
contingency 43,772,675,000 0
total expenditure 32,519,701,157,419 25,700,330,538,603
aggregate outturn (PI-1) 79.0%
composition (PI-2) variance 25.3%
contingency share of budget 0.0%

Table 3 `
Ministry of Works, Transport and Communication-Transport 3,629,130,373,895 1,614,045,784,373 2,872,976,766,104 -1,258,930,981,731 1,258,930,981,731 43.8%
Ministry of Energy 2,142,793,309,000 1,215,140,001,319 1,696,327,978,626 -481,187,977,307 481,187,977,307 28.4%
The Treasury 1,956,519,138,721 547,404,052,444 1,548,865,278,695 -1,001,461,226,251 1,001,461,226,251 64.7%
Defence 1,412,726,908,000 1,485,025,738,105 1,118,375,799,538 366,649,938,567 366,649,938,567 32.8%
Ministry of Education, Science and Technology 1,386,508,723,272 1,257,292,010,571 1,097,620,349,110 159,671,661,461 159,671,661,461 14.5%
Ministry of Works, Transport and Communication-Works 1,330,194,268,268 2,047,798,319,567 1,053,039,387,791 994,758,931,776 994,758,931,776 94.5%
Ministry of Health, Community Development, Gender, Elderly and Children - Health 959,152,164,597 607,001,075,314 759,306,390,277 -152,305,314,963 152,305,314,963 20.1%
Ministry of Water 634,196,197,530 510,621,326,975 502,057,174,292 8,564,152,683 8,564,152,683 1.7%
Ministry of Home Affairs-Police Force 604,282,104,679 663,367,671,336 478,375,882,940 184,991,788,396 184,991,788,396 38.7%
RAS Dar es Salaam 592,668,099,243 376,827,435,803 469,181,733,284 -92,354,297,481 92,354,297,481 19.7%
President's Office and Cabinet Secretariat 564,312,423,717 581,437,321,816 446,734,152,574 134,703,169,242 134,703,169,242 30.2%
President's Office - Regional Administration and Local Government Authorities 550,000,293,910 373,583,311,679 435,404,050,822 -61,820,739,143 61,820,739,143 14.2%
RAS Mwanza 356,139,142,933 296,083,613,912 281,935,168,410 14,148,445,502 14,148,445,502 5.0%
RAS Dodoma 331,047,905,625 251,595,116,853 262,071,858,363 -10,476,741,510 10,476,741,510 4.0%
National Service 302,035,425,000 543,152,922,418 239,104,322,294 304,048,600,124 304,048,600,124 127.2%
RAS Tanga 295,388,526,283 263,211,952,162 233,842,349,420 29,369,602,742 29,369,602,742 12.6%
RAS Morogoro 286,295,746,116 271,624,585,919 226,644,110,871 44,980,475,048 44,980,475,048 19.8%
RAS Mbeya 263,893,919,677 239,818,038,408 208,909,854,934 30,908,183,474 30,908,183,474 14.8%
RAS Arusha 263,152,019,925 209,855,572,567 208,322,534,962 1,533,037,605 1,533,037,605 0.7%
RAS Kilimanjaro 240,549,639,731 222,156,621,433 190,429,511,988 31,727,109,445 31,727,109,445 16.7%
21 (= sum of rest) 5,242,873,346,061 4,902,967,769,503 4,150,485,587,183 752,482,182,320 752,482,182,320 18.1%
contingency 75,500,000,000 0

Table 4
Ministry of Works and Transport - Transport 3,152,858,745,000 2,042,288,916,392 3,944,999,313,219 -1,902,710,396,827 1,902,710,396,827 48.2%
Ministry of Energy 2,196,836,774,000 2,141,096,306,517 2,748,781,428,419 -607,685,121,902 607,685,121,902 22.1%
The Treasury 1,729,181,704,000 854,308,190,324 2,163,630,275,390 -1,309,322,085,066 1,309,322,085,066 60.5%
Defence 1,617,164,984,000 1,658,306,980,981 2,023,469,894,222 -365,162,913,241 365,162,913,241 18.0%
Ministry of Works and Transport - Works 1,616,361,206,000 1,697,464,681,931 2,022,464,170,872 -324,999,488,941 324,999,488,941 16.1%
Ministry of Education, Science and Technology 1,348,563,375,000 1,371,683,194,388 1,687,383,425,167 -315,700,230,779 315,700,230,779 18.7%
Ministry of Health, Community Development, Gender, Elderly and Children - Health 900,088,240,000 1,044,268,341,265 1,126,231,073,393 -81,962,732,128 81,962,732,128 7.3%
Ministry of Water 733,284,075,000 392,431,308,620 917,518,165,651 -525,086,857,031 525,086,857,031 57.2%
President's Office - Regional Administration and Local Government Authorities 703,447,305,000 437,106,898,110 880,185,050,951 -443,078,152,841 443,078,152,841 50.3%
President's Office and Cabinet Secretariat 608,155,446,000 476,608,199,402 760,951,571,524 -284,343,372,121 284,343,372,121 37.4%
Ministry of Home Affairs-Police Force 564,531,310,000 622,277,082,012 706,367,081,549 -84,089,999,537 84,089,999,537 11.9%
RAS Dar es Salaam 551,554,736,500 366,889,300,342 690,130,206,482 -323,240,906,140 323,240,906,140 46.8%
RAS Mwanza 382,145,108,000 323,798,473,543 478,157,225,090 -154,358,751,547 154,358,751,547 32.3%
National Service 354,234,958,000 370,448,737,095 443,234,784,382 -72,786,047,287 72,786,047,287 16.4%
RAS Tanga 324,147,756,000 280,856,277,369 405,588,317,849 -124,732,040,481 124,732,040,481 30.8%
RAS Morogoro 317,268,537,000 284,916,631,663 396,980,728,222 -112,064,096,559 112,064,096,559 28.2%
RAS Dodoma 314,447,367,000 269,170,527,459 393,450,752,853 -124,280,225,394 124,280,225,394 31.6%
RAS Arusha 303,052,660,500 253,856,776,167 379,193,181,248 -125,336,405,080 125,336,405,080 33.1%
RAS Mbeya 286,337,169,500 283,521,897,763 358,278,003,675 -74,756,105,912 74,756,105,912 20.9%
RAS Kagera 275,929,540,499 247,226,546,768 345,255,508,034 -98,028,961,266 98,028,961,266 28.4%
21 (= sum of rest) 6,112,415,139,000 15,101,854,881,222 7,648,129,991,140 7,453,724,890,082 7,453,724,890,082 97.5%
contingency 80,000,000,000 0
Results Matrix
for PI-1.1 for PI-2.1 for PI-2.3
year total exp. Outturn composition variance contingency share
2018/19 79.0% 25.3%
2019/20 84.1% 33.1% 0.0%
2020/21 114.0% 48.8%

PI-2 dimension ii), Variance composition by Economic classification. (2016 PEFA Methodology)
Table 2
Economic Head Budget Actual Adjusted Budget Deviation Absolute Deviation Percent
Compensation of employees 4,945,597,838,191 4,480,441,618,030 3,892,890,021,828 587,551,596,201 587,551,596,201 15.1%
Use of goods and services 3,507,554,615,393 1,960,224,587,301 2,760,945,149,611 -800,720,562,310 800,720,562,310 29.0%
Consumption of fixed capital 0 16,045,790.00 0 16,045,790 16,045,790 0.0%
Interest 2,103,298,000,000 2,056,481,729,118 1,655,595,150,480 400,886,578,639 400,886,578,639 24.2%
Subsidies 1,251,551,052,997 1,273,141,452,815 985,148,967,916 287,992,484,899 287,992,484,899 29.2%
Grants 13,027,501,209,626 9,757,257,093,594 10,254,499,279,476 -497,242,185,882 497,242,185,882 4.8%
Social benefits 431,250,940,350 427,270,186,905 339,455,923,737 87,814,263,168 87,814,263,168 25.9%
Other expenses 248,650,713,996 129,425,312,848 195,723,533,353 -66,298,220,505 66,298,220,505 33.9%
Total expenditure 25,515,404,370,554 20,084,258,026,402 20,084,258,026,402 0 2,728,521,937,395
composition variance 13.6%

Consumption of fixed capital 90,000,000 15,444,590,860 83,584,411 15,361,006,449 15,361,006,449 18378%
Interest 2,426,262,000,000 2,333,895,611,776 2,253,307,570,067 80,588,041,709 80,588,041,709 3.6%
Subsidies 1,823,168,602,195 953,872,520,886 1,693,205,273,311 -739,332,752,425 739,332,752,425 43.7%
Grants 13,541,135,942,587 13,439,087,896,042 12,575,865,313,283 863,222,582,759 863,222,582,759 6.9%
Social benefits 598,487,078,286 579,464,822,946 555,824,335,578 23,640,487,368 23,640,487,368 4.3%
Other expenses 292,138,057,594 41,041,330,175 271,313,195,640 -230,271,865,465 230,271,865,465 84.9%


Consumption of fixed capital - - 0 0 0 0.0%
Interest 2,870,582,468,000 2,205,380,219,384 2,210,202,750,257 -4,822,530,873 4,822,530,873 0.2%
Subsidies 1,900,755,405,855 949,480,856,223 1,463,485,154,117 -514,004,297,894 514,004,297,894 35.1%
Grants 13,848,099,303,718 11,136,670,973,299 10,662,333,344,576 474,337,628,723 474,337,628,723 4.4%
Social benefits 550,947,601,625 542,618,908,484 424,201,679,601 118,417,228,883 118,417,228,883 27.9%
Other expenses 303,915,247,141 114,912,409,599 233,999,309,396 -119,086,899,797 119,086,899,797 50.9%
Composition variance Composition variance

PEFA
by economic PEFA 2021 by economic
2017
classification. (PI-2) classification. (PI-2)
2013/14 9.40% 2018/2019 13.60%
2014/15 15.80% 2019/2020 15.20%
2015/16 14.80% 2020/2021 12.40%
Average 13.33% 13.73%

PI-3. Revenue Out-turn (2016 PEFA Methodology)

Table 2
Tax revenues
Taxes on income, profit and capital gains 6,053,548,183,123 4,690,841,608,373 5,158,356,134,954 -467,514,526,580.6 467,514,526,580.6 9.1%
Taxes on payroll and workforce 336,828,613,468 296,009,405,006 287,018,768,522 8,990,636,483.7 8,990,636,483.7 3.1%
Taxes on property 30,004,000,000 11,121,932,780 25,567,041,476 -14,445,108,696.0 14,445,108,696.0 56.5%
Taxes on goods and services 8,132,026,598,971 7,173,574,774,277 6,929,471,448,391 244,103,325,885.5 244,103,325,885.5 3.5%
Taxes on international trade and transactions 3,405,210,468,570 3,242,295,320,293 2,901,651,689,224 340,643,631,068.9 340,643,631,068.9 11.7%
Other taxes 125,994,532,948 78,988,204,808 107,362,599,973 -28,374,395,165.0 28,374,395,165.0 26.4%
Grants
Grants from foreign governments 559,575,293,000 570,608,798,913 476,825,914,042 93,782,884,870.9 93,782,884,870.9 19.7%
Grants from international organizations 521,200,957,000 427,791,828,014 444,126,332,649 -16,334,504,635.1 16,334,504,635.1 3.7%
Grants from other government units 0 0.0 0.0 0.0%
Other revenue
Property income 567,182,155,902 484,190,133,268 483,307,882,424 882,250,844.3 882,250,844.3 0.2%
Sales of goods and services 1,893,373,748,305 1,451,542,503,231 1,613,383,720,569 -161,841,217,338.0 161,841,217,338.0 10.0%
Fines, penalties and forfeits 9,114,700 19,628,681,005 7,766,828 19,620,914,177.2 19,620,914,177.2 252625%
Transfers not elsewhere classified 326,782,503,504 279,069,865,636 278,458,266,252 611,599,383.4 611,599,383.4 0.2%
Premiums, fees, and claims related to
nonlife insurance and standardized 23,618,110,508 0 20,125,490,299 -20,125,490,299.2 20,125,490,299.2 100.0%
Sum of rest 0 0.0 0.0 0.0%
Total revenue 21,975,354,280,000 18,725,663,055,604 18,725,663,055,604 0.0 1,417,270,485,427.8
overall variance 85.2%


Table 4

Tax revenues
Taxes on income, profit and capital gains 6,980,709,927,450 5,767,300,000,000 6,282,096,673,001 -514,796,673,001 514,796,673,001 8.2%
Taxes on payroll and workforce 353,228,550,280 248,600,000,000 317,878,256,450 -69,278,256,450 69,278,256,450 21.8%
Taxes on property 21,694,985,715 6,500,000,000 19,523,801,877 -13,023,801,877 13,023,801,877 66.7%
Taxes on goods and services 9,174,826,149,102 3,700,500,000,000 8,256,630,833,490 -4,556,130,833,490 4,556,130,833,490 55.2%
Taxes on international trade and transactions 3,726,047,593,084 5,371,200,000,000 3,353,153,394,315 2,018,046,605,685 2,018,046,605,685 60.2%
Other taxes 69,297,169,748 2,264,100,000,000 62,362,069,767 2,201,737,930,233 2,201,737,930,233 3530.6%
Grants
Grants from foreign governments 605,806,673,798 1,680,326,134,887 545,178,947,342 1,135,147,187,545 1,135,147,187,545 208.2%
Grants from international organizations 343,515,799,202 952,809,865,113 309,137,534,967 643,672,330,146 643,672,330,146 208.2%
Grants from other government units 0 0 0 0.0%
Other revenue
Property income 634,552,003,899 427,605,925,557 571,047,511,495 -143,441,585,938 143,441,585,938 25.1%
Sales of goods and services 2,552,026,030,686 1,719,735,256,043 2,296,625,186,178 -576,889,930,135 576,889,930,135 25.1%
Fines, penalties and forfeits 124,311,679,184 83,769,983,088 111,870,854,732 -28,100,871,644 28,100,871,644 25.1%
Transfers
Premiums,not elsewhere
fees, classified
and claims related to nonlife 410,469,276,000 276,603,168,217 369,390,463,137 -92,787,294,921 92,787,294,921 25.1%
insurance and standardized guarantee 18,379,890,000 12,385,667,096 16,540,473,250 -4,154,806,154 4,154,806,154 25.1%
Sum of rest 0 0 0 0.0%
Total revenue 25,014,865,728,148 22,511,436,000,000 22,511,436,000,000 0 11,997,208,107,218
overall variance 90.0%
Results Matrix
year total revenue deviation composition variance

2018/19 85.2% 7.6%
2019/20 83.5% 16.8%
2020/21 90.0% 53.3%

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The United Republic of Tanzania

MINISTRY OF FINANCE AND PLANNING

ASSESSMENT OF THE PUBLIC FINANCE MANAGEMENT

Based on PEFA 2016 Framework

Andrew Lawson, Finn Hedvall and Wangari Muikia

Tanzania Fiscal Year: 1st, July – 30th. June

Currency: Tanzanian Shilling (Tsh.)

US $ 1 = Tsh. 2,311 (February 2022)

Public Expenditure and Financial Accountability (PEFA)

The quality assurance process followed in the production of the PEFA

September 16, 2022

1.1 Rationale and Purpose .................................................................................................................... 15

1.2 Assessment management and quality assurance ....................................................................... 15

1.3 Assessment methodology .............................................................................................................. 17

2. Country Background Information ...................................................................... 19

2.1 Country economic situation .......................................................................................................... 20

2.2 Fiscal and budgetary trends ........................................................................................................... 22

2.3 Legal and regulatory arrangements for PFM .............................................................................. 23

2.4 Institutional arrangements for PFM ............................................................................................. 26

3. Assessment of PFM Performance ...................................................................... 28

3.1 Overview ........................................................................................................................................... 28

3.2 Pillar I – Budget Reliability .............................................................................................................. 30

3.3 Pillar II – Transparency of Public Finances ................................................................................. 37

3.4 Pillar III – Management of Assets & Liabilities ........................................................................... 58

3.5 Pillar IV – Policy-based Fiscal Strategy and Budgeting ............................................................. 78

3.6 Pillar V – Predictability and Control in Budget Execution ...................................................... 95

3.7 Pillar VI – Accounting and Reporting ........................................................................................ 133

3.8 Pillar VII – External Scrutiny and Audit ..................................................................................... 141

4. Conclusions of the analysis of PFM systems .................................................... 151

4.1 Integrated assessment of PFM performance ............................................................................ 151

4.3 Performance changes since last PEFA assessment ................................................................. 160

4.4 Effectiveness of the Internal Control Framework .................................................................. 161

5. The PFM Reform Process ................................................................................. 169

Fiscus, September 2022, Final Report Page |4

5.1 Approach to PFM reforms ........................................................................................................... 169

5.2 The Mid Term Review of PFMRP V ........................................................................................... 170

Annex 1: 2022 Performance Assessment in comparison with 2017................... 175

Annex II: Observations on the Internal Control Framework ............................. 191

Annex III: Sources of Information .......................................................................... 193

Table of Boxes, Figures and Tables

Box 3-1: Introduction to the Government Electronic Payment Gateway (GEPG)................101

Table 2-1: Selected Economic Indicators 2018/19 - 2020/21 ........................................................ 21

Table 3-2: Expenditure Composition Variance by Institution (Vote), 2018/19 – 2020/21..... 32

Table 3-5: PI-5: Assessment of 2021/22 Budget documentation .................................................. 41

Table 3-6: Performance Audits published by NAOT in 2019/20 ................................................. 54

Table 3-7: PI-9: Assessment of Public Access to Fiscal Information ............................................ 56

Fiscus, September 2022, Final Report Page |5

Table 3-17: PI-24 - Public Access to Procurement information .................................................121

Table 3-18: PI-24 Assessment of Procurement complaints mechanism, 2020/21 ..................122

Table 3-23: PI-31 Implementation of PAC Directives, 2016/17 - 2018/19 ..............................149

Table 5-1: Mapping of PFM-related IT systems ..............................................................................174

Fiscus, September 2022, Final Report Page |6

Acronyms and Abbreviations

Fiscus, September 2022, Final Report Page |7

IDI INTOSAI Development Institute

Fiscus, September 2022, Final Report Page |8

PBG Plan & Budget Guidelines

Fiscus, September 2022, Final Report Page |9

Fiscus, September 2022, Final Report P a g e | 10