Danish direct support to Tanzania’s budget can be traced back to the very beginning of the partnership. However, General Budget Support in its current form began after Tanzania reached international debt release in 2001, where Denmark was among the first development partners to enter into a Poverty Reduction Budget Support (PRBS) programme. The most important objective of this direct budget support is to contribute to economic growth and reduction of poverty by supporting Tanzania’s own Poverty Reduction Strategy. Denmark has since 2011 provided approximately DKK 1.1 billion in general budget support to Tanzania. Another DKK 615 million is committed under the current fourth phase of the Danish GBS programme, which runs from 2011 to 2015. In the current phase, 80% of the Danish funds are given as a fixed annual tranche, while approximately 20% is dependent on fulfilment of performance agreements in selected areas.
The provision of GBS, together with increased tax revenues, has increased the state’s capacity to mobilize resources and increased public expenditures, enabling for significant growth in public services,, particularly in health and education. GBS has also created a structured framework for dialogue between development partners and the Government of Tanzania. In terms of poverty reduction, however, the progress has been disappointing, with a largely stable, high poverty level over the last decade. The great future challenges are to decrease the the transaction costs of aid and to focus the dialogue on the key problem areas, , such as poverty reduction.