Support to Multilateral Debt Fund - Tanzania
Summary

1. Objectives
   By contributing to the Multilateral Debt Fund (MDF) during the period 1998-2000, to relieve Tanzania of some of the fiscal burden of its debt payments to the multilateral financial agencies, thus allowing it to remain "on track" for future debt relief under the HIPC Initiative and maintain its commitment to budget expenditure in the social sectors.
2. Activities / contents
   At the World Bank Consultative Group meeting in December 1997, the Government of Tanzania requested donor support for the establishment of a Multilateral Debt Fund (MDF). A joint Government of Tanzania/Bilateral Donors Mission took place in May 1998 to finalise proposals for the establishment of the MDF and Irish Aid participated in this Mission. Irish Aid is contributing IR£2m to the Fund in 1998, with a further IR£2m in both 1999 and 2000.
3. Expected outcomes / impacts
   The Government of Tanzania will be able to divert scarce resources from servicing debt to maintaining its commitments to expenditure in the priority sectors of health, education, water and roads. Bilateral donor support will enable the Government of Tanzania to service its debts to multilateral agencies, thus allowing it to be considered for inclusion in the second group of countries to be eligible for the HIPC (Highly Indebted Poor Countries) Debt Initiative which is spearheaded by the IMF and the World Bank.
4. Features in line with the Agenda for Action
   Debt Relief in Tanzania is an element of the Tanzania Country Programme which is operated in line with the policies set out in "Challenges and Opportunities Abroad: White Paper on Foreign Policy" published by the Government of Ireland in 1996.

Tanzania Desk, Bilateral Aid Section, Development Cooperation Division, Department of Foreign Affairs, Dublin