Donors warn aid to graft-prone Tanzania at risk

By Katrina Manson

DAR ES SALAAM (Reuters) - Donors warned aid-reliant Tanzania on Thursday that rising corruption and weak accountability put next year's grants to the country at risk.

For the 2009/10 (July-June) fiscal year, 11.4 percent of its budget, or $831 million, is funded directly by a pool of 14 donors. It is among Africa's highest per capita aid recipients.

But rising concern over the government's weak governance, economic policy and failure to keep to agreements has led donors to disburse below what they pledge for the past few years.

"Weak public finance management as well as corruption continues to hamper economic and social progress," Pieter Dorst, co-chair of the Development Partners Group, said at an annual policy meeting with ministers, donors and civil society.

"Donor partners may inevitably find it hard to maintain high levels of support if concerns about corruption should grow."

Netherlands is withholding 30 million euros in general budget support this financial year.

"My minister has lost confidence in the government of Tanzania's implementation of policy," Dorst told Reuters.

The tourism-dependent country's economy has grown at an annual average of 7 percent over 2001-2008. levels of poverty in the country of 40 million people have barely dropped and Dorst said they fell by only 2 percent between 2001 and 2007.