DAR ES SALAAM (Reuters) - Donors have agreed to release part of the $500 million of promised budget support to Tanzania that was withheld after an energy sector graft scandal that led to three cabinet ministers resigning.
The donor group, including the World Bank and the African Development Bank, said it would give Tanzania $44 million immediately, leaving a balance of $428 million pledged for Tanzania’s 2014/15 budget year, which ends on June 30.
In October donors said they would delay the payment until Tanzania investigated the alleged corruption and took action.
“In recognition of actions taken, budget support development partners are prepared to proceed with further disbursement of budget support,” the group, which also includes Finland, Germany, Britain, Norway, Sweden, Denmark, the European Commission, Ireland, Canada and Japan, said.
Tanzania, which has made big discoveries of natural gas and hopes to start large-scale production within a decade, has been dogged by allegations of corruption within the energy sector. Investors have long complained graft is one of the main reasons for the high cost of doing business in Tanzania.
The delay in budget support has weighed on the shilling and stalled public spending in Tanzania, one of Africa’s biggest per capita aid recipients.