In late November and early December, the Government of Tanzania (GOT) sought endorsement of its Poverty Reduction Strategy Paper (PRSP) from the Boards of the IMF and World Bank. Preparation of an acceptable PRSP, which is a three-year national development strategy, is a new pre-condition for low-income governments seeking assistance from donors and creditors, especially the IMF and World Bank. Never before have the IMF and World Bank possessed the power to endorse a borrowing country's entire national plan. Ironically, the institutions have seized these powers in the name of enhancing "country ownership" of the development process.

The Government of Tanzania (GOT) prepared its PRSP with more input from foreign creditors and donors than from its own citizens. The government is dependent on donors and creditors for the majority of its development budget and, to survive, it must heed its creditors and donors. There are fewer incentives to heed the cries of citizens -- especially the poor and disadvantaged.

The PRSP lacks credibility because the process lacked the informed participation of citizens' groups. Citizen "participation for validation" of the PRSP arises when donors and creditors, especially the IMF and World Bank, negotiate with the government in secret and fail to disclose agreements and commitments to the public. This was the case in Tanzania.

Key macroeconomic and structural adjustment issues were addressed in secret negotiations, occurring in parallel to the PRSP consultations. These negotiations excluded citizen's groups. Citizens that buy and sell and pay taxes were excluded from key decisions about whether or how the economy of Tanzania will be liberalized, privatized and increasingly oriented to produce exports. Policies, such as those relating to the price of money and goods, taxation options, tradeliberalization, and the privatization of key state-owned enterprises were not "on the table" for negotiation during the PRSP consultations. Beyond public view, a handful of government officials negotiated the following arrangements with the IMF and the World Bank during the first half of 2000:

1. IMF and World Bank Action in March 2000, which structured a debt relief operation for the GOT [through the Highly Indebted Poor Country (HIPC) Initiative] and set the terms and conditions of such relief.

2. IMF Action in April 2000, which extended a $181 million structural adjustment loan [through the IMF Poverty Reduction and Growth Facility (PRGF)] to the GOT. To secure the loan, the GOT agreed to execute a multitude of policies.

3. World Bank Action in June 2000, which extended a $290 million structural adjustment loan to the GOT. The World Bank's policy does not require disclosure of information about this loan.

4. Tanzania's macroeconomic and structural policy framework, which provides the basis for the PRSP. Although the PRSP will be disclosed to the public, the policy framework will not be.

Secrecy, especially secrecy about the role of powerful foreign creditors, undermines democratic processes and the rights of citizens. The daily lives of citizens are profoundly affected by the economic policies that the GOT is obligated to implement as conditions for securing loans and obtaining some debt reduction. Tanzanian citizens have a right to participate in the formulation of public policies through open and democratic analysis, debate, and consensus-building. They have the right to hold their government accountable for its performance, including its commitments to foreign creditors and donors. Ultimately, citizens bear the burden of repaying debts to the IMF and World Bank. Currently, the citizens of Tanzania experience "taxation without representation" because they are denied participation in formulating critical IMF and World Bank-financed operations.

Fifteen years of structural adjustment programs (SAPs) have not improved the quality of life for Tanzanian citizens. The IMF and the World Bank have financed structural adjustment policies in Tanzania for about 15 years. Per capita income and basic human welfare indicators have fallen during this time period. For example, per capita GDP has fallen to the 1960 level and primary school enrolment rates plunged below 50 percent from an average of 80 percent during the 1980s.

The excessive number of policy prescriptions, or conditions, attached to the new loans and debt relief amount to micromanagement of the GOT. Tanzania's "Policy Matrix, 2000-2002," which was appended to the Interim PRSP by the IMF and World Bank, lists approximately 157 policies that the Government of Tanzania will be pressured to implement during this time period. In addition, there are more than 20 policy conditions linked to debt relief, ten policy conditions linked to the World Bank's Country Assistance Strategy (CAS), and additional conditions linked to IMF and World Bank-financed structural adjustment loans.

Policy prescriptions will have various impacts on the citizens of Tanzania; some will be negative. Some policy conditions may principally benefit foreign creditors and investors. Others maysupport or undermine the objectives of sustainable development and poverty reduction in Tanzania. Problematic policy prescriptions include those which :

* Set fiscal and monetary targets that may continue to undercut public services, reduce internal demand, aggravate unemployment, and handicap efforts to boost investment in infrastructure and human development.

* Impose cost-sharing (i.e. new fees for services) in schools, health care centers and hospitals, which will continue to rob vulnerable communities of essential health and education services. (NB: The U.S. Government is now bound by law to oppose loans involving cost-sharing provisions. On October 25, 2000, the U.S. Congress passed a bill that requires the United States Executive Directors at the IMF, the World Bank and the regional development banks to oppose any loan that imposes user fees or service charges on poor people for primary education and health care. The legislation was subsequently signed into law.)

* Further reduce import tariffs. Such tariff reductions often result in a flood of imports that can undermine domestic industrial and agricultural producers.

* Require capital account liberalization to attract foreign investment. However, speculative transactions provide profits to foreign investors while offering few, if any, benefits to the poor majority of Tanzania.

* Require privatization of public companies, which can increase unemployment, lower wages, increase the cost of goods and services, and decrease access to poor populations.

* Require the privatization of agricultural enterprises. Already, privatization has increased the prices of fertilizer and other inputs, and reduced access to credit. While large farmers and private traders have benefited from liberalization and privatization, small farmers, who constitute the majority of Tanzania's population, have not.

* Require the GOT to remain current on debt service payments. This is a standard condition of IMF loans. However, nearly a quarter of the government's 2001 budget is devoted to servicing external debt. In fact, even after debt relief, the level of Tanzania's external debt service rises. (Debt servicing requirement in 2001 will be higher than requirements in 1996-2000.)

It is important to assess whether such policy conditions will hurt or help Tanzanians, especially poor and marginalized groups and women. However, the main issue relates to how these policy conditions are formulated. Behind closed doors, the IMF and World Bank push these policies on a government which is "on its knees" and desperate for foreign exchange. Negotiations relating to PRSPs and adjustment conditions should never undermine domestic consensus-building processes.

How to Convey Your Views to the Executive Directors of the IMF and World Bank

Tanzanians are conveying their views of the PRSP and adjustment processes to their government and to their representatives on the Boards of the IMF and World Bank. To convey your views, contact the Executive Directors of the IMF and World Bank using the addresses below. In designing the PRSP process, the Executive Directors committed their institutions to open and transparent processes that would reconcile structural adjustment conditions with poverty reduction goals. Their promises are unfulfilled. Macroeconomic and structural policies cannot be designed in a participatory fashion to serve poverty reduction goals because, for the most part, they are formulated in secret.

THE DECISION MAKING STRUCTURE OF THE IMF AND WORLD BANK

The IMF and the World Bank each have an Executive Board or Board of Directors. Each Executive Board consists of 24 appointed and elected Executive Directors. Eight member countries (China, France, Germany, Japan, Russia, Saudi Arabia, the United Kingdom, and the United States) are empowered to individually appoint Executive Directors. The other sixteen are appointed by groups of member countries. The Executive Directors oversee the financial affairs of the institutions and protect the interests of the shareholding governments. They have oversight over all loan operations and policies. The Executive Directors meet at least three times per week in formal session. Contact the Executive Director that represents your country on the IMF and World Bank Executive Boards, or one of those listed below.

IMF AND WORLD BANK EXECUTIVE DIRECTORS

World Bank
Jan Piercy, USA
Tel: 202-458-0110
Fax: 202-477-2967
Email: jpiercy@worldbank.org

IMF
Karin Lissakers, USA
Tel: 202-473-7759
Email: klissakers@imf.org

World Bank & IMF
Stephen Pickford, United Kingdom
Tel: 202-623-4560
Fax: 202-623-4965
Email: spickford@worldbank.org

World Bank & IMF
Jean-Claude Milleron, France
Tel: 202-623-6505
Fax: 202-623-4951
Email: jmilleron@worldbank.org

Extract from: SAP Information Alert, by Globalization Challenge
Initiative (USA)
e-mail: sgrusky@igc.org
and the Integrated Social Development Centre (Ghana)
e-mail:isodec@ghana.com