The European Union has agreed to provide the Tanzanian government with TSh487bn ($205m) in budget support over the next four years ending in 2020. The money will be used to finance priority expenditure in the Second Five Year Development Plan, particularly in the agriculture, energy, health and industrial development sectors. The first tranche will be dispersed this year, as the two sides have managed to separate the grant from their long-running dispute over the proposed Economic Partnership Agreement (EPA). Doto James, the Permanent Secretary in the Ministry of Finance and Planning, said: “This confirms EU as one of our strategic and reliable development partner in terms of amount, reliability, predictability and amount of financial support as well as alignment of the support to country’s plans and strategies. The partnership has remarkably enabled the government to implement its development strategies and plans.” In return for the financial support, the government has agreed to maximise its own domestic revenue raising. The head of the European Union delegation in Tanzania, Roeland van de Geer, added: “We’re committed to supporting the government to address the challenges they are facing.” Trade Pact Tanzania’s relations with Brussels over the past year have been punctuated by negotiations over the EPA between the European Union and the East African Community (EAC). In November last year, Tanzania’s parliament, or Bunge, voted for the country not to sign the EPA. MPs were – and remain – concerned about the impact of the deal on domestic producers. EAC states can already export goods to the EU duty-free but this advantage would work both ways if the EPA were adopted. The EPA was supposed to have been signed in July 2016 but Tanzania asked the EU to extend the deadline. Kenya has both signed and ratified the EPA, while Rwanda has signed it. Burundi cannot sign it as the EU has suspended relations with its government. Some Ugandan politicians and businesses share Tanzania’s concerns, but Kampala says that it will sign it. Tanzania has been less than enthusiastic and its government insists that all five member states should sign together or not at all. Talks on the EPA took eight years to negotiate and were finally signed in 2015.
Source: Africa Business Magazine