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Tanzania Budget Execution Analysis
April 18, 2026  
Tanzania Budget Execution Analysis 2025/26 | TICGL Economic Research TICGL Research Executive Summary Framework Decade of Data Structural Diagnosis Domestic vs Foreign Policy Reforms FYDP IV Conclusions Related TICGL Economic Research Division  ·  April 2026 Tanzania Budget Execution Analysis:A Decade of Data A comprehensive, data-driven assessment of Tanzania's recurrent versus development spending performance across FY2015/16–FY2025/26 […]
Tanzania Budget Execution Analysis 2025/26 | TICGL Economic Research
TICGL Economic Research Division  ·  April 2026

Tanzania Budget Execution Analysis:
A Decade of Data

A comprehensive, data-driven assessment of Tanzania's recurrent versus development spending performance across FY2015/16–FY2025/26 — including structural diagnostics, reform scorecard, and critical implications for FYDP IV.

📅 Published: April 2026 📊 Fiscal Years: 2015/16 – 2025/26 🏛️ Source: MoF BERs, World Bank, IMF, TICGL 🌐 ticgl.com
Executive Summary

Tanzania's Structural Budget Execution Gap — And the 2024/25 Breakthrough

Drawing on official Ministry of Finance Budget Execution Reports, World Bank Economic Updates, and IMF Article IV consultations across ten fiscal years, TICGL's analysis reveals a structurally embedded gap between approved spending and actual expenditure — most acutely in development spending. FY2024/25 delivered a historic reversal.

Recurrent Execution (10-yr avg.)
~96%
Stable across all phases. Wages, debt service, and mandatory transfers are predictable and protected.
↑ Consistently high
Development Execution (10-yr avg.)
~73%
Volatile. Ranged from ~55% in 2016/17 to a historic 100% in 2024/25. Structurally improving since 2021.
↑ Improving trend
FY2024/25 Development Execution
100%
Historic first. Locally-financed projects achieved 109%. Total approved budget: TZS 50.29 trillion.
🏆 Historic Milestone
Q1 FY2025/26 Overall Execution
108%
Against TZS 56.49 trillion annualised budget. Development Q1 reached 117% of quarterly target.
↑ Momentum continues
Tax-to-GDP Ratio (2024/25)
13.1%
Highest in Tanzania's fiscal history, up from 10% in 2004/05. Key driver of execution improvement.
↑ Record high
Foreign-Financed Execution
~58%
Historical average 2017/18–2023/24. Even in 2024/25 this stood at only 74% — persistent structural gap.
↓ Structural weakness

⚠️ Critical Distinction: A gap exists between disbursement (Treasury releasing funds to MDAs) and absorption (MDAs actually spending those funds). Tanzania's absorption rate once funds are released is generally high (>95%). The primary bottleneck is disbursement — triggered by procurement readiness and financing availability. Targeting the wrong stage of the expenditure chain leads to wrong solutions.

Section 01

Framework: Defining Budget Execution

Understanding what budget execution measures — and what it doesn't — is essential for diagnosing Tanzania's fiscal performance accurately.

Budget Execution Rate (BER) is defined as actual expenditure as a percentage of the approved budget or quarterly disbursement target. In Tanzania's fiscal framework, the overall execution rate is the weighted average of two fundamentally different spending categories.

Recurrent expenditure covers wages and salaries, interest and debt service payments, and operational transfers. These are largely mandatory and non-discretionary — they will be paid regardless of revenue performance.

Development expenditure covers capital investment in infrastructure, social services, and productive sectors — the projects that build Tanzania's long-run productive capacity and deliver visible outcomes for citizens.

⚠️ Analytical Trap

Because recurrent spending constitutes 62–70% of the total budget, a stable recurrent rate (~96%) consistently masks severe development underperformance in the headline "overall execution" figure. Policymakers relying on headline figures alone will systematically misdiagnose Tanzania's fiscal health.

Expenditure CategoryCoverageShare of Budget10-Yr Avg. ExecutionVolatilityPolicy Discretion
RecurrentWages, salaries, debt service, transfers62–70%~96%Very LowLimited — largely mandatory
DevelopmentCapital investment, infrastructure, social services30–38%~73%High (55%–100%)High — discretionary and flexible
Overall (Weighted)Combined average100%~82–87%MediumDominated by recurrent weighting

Table: Budget Execution Framework — Tanzania's Three Expenditure Tiers

Budget Composition: Recurrent vs. Development
Share of total approved budget, FY2015/16–FY2025/26 (%)
Tanzania Approved Budget Growth
Total approved budget in TZS Trillion, FY2015/16–FY2025/26
Section 02

A Decade of Data: FY2015/16 – FY2025/26

Ten years of budget execution performance reveals three distinct structural phases — from systematic underperformance through recovery to the historic 2024/25 breakthrough.

Fiscal YearApproved Budget (TZS Tn)Recurrent ExecutionDevelopment ExecutionOverall ExecutionDev. Budget (% of Total)Key Driver / Note
2015/1629.596%~58%~82%38%FYDP II launch; external financing gap; revenue miss
2016/1729.595%~55%~80%38%Foreign loan procurement delays; domestic arrears build-up
2017/1831.796%~58%~81%38%Dev. under-execution >40%; SGR began; domestic-financed rose
2018/1932.596%~65%~83%39%Domestic dev. improved to 65%; foreign-financed avg. ~58%
2019/2033.195%~70%~85%38%Pre-COVID: Domestic dev. 75%; Julius Nyerere HPP mobilized
2020/2136.096%~85%~90%37%COVID fiscal pressure; Dev. avg. 67% (4-yr WB mean); uptick
2021/2238.597%~75%~86%37%Post-COVID consolidation; SGR Phase 1 acceleration
2022/2340.597%~78%~87%37%Dev. rising; JNHPP progress; tax-to-GDP 11.8%
2023/2444.997%~88%~93%38%Strong revenue (TRA reform); NPMIS project tracking deployed
2024/25 🏆50.397%100%98%31%Historic: dev. execution hit 100%; local dev. 109%; tax/GDP 13.1%
2025/26 (Q1) 📈56.5 (ann.)103% of Q1117% of Q1108% of Q1~35%Elections cycle + social/infra front-loading; strong start

Table 1: Tanzania Budget Execution Rates, FY2015/16–FY2025/26. Sources: MoF BERs; World Bank; IMF; TICGL. 🏆 = Historic first | Color: Red <65%, Amber 65–89%, Green ≥90%

Execution Rate Trend Lines: Recurrent vs. Development
Percentage of approved budget executed, FY2015/16–FY2024/25
Development Execution — 10-Year Journey
Bar chart highlighting structural phases and the 2024/25 breakthrough
Overall vs. Development Execution Gap
The hidden underperformance masked by the headline figure
Approved Budget Growth (TZS Trillion)
Tanzania's budget has nearly doubled in a decade — execution must keep pace
Era Analysis

Three Distinct Phases of Budget Execution Performance

A decade of data resolves into three structurally distinct performance eras, each driven by different forces.

1
Phase 1
The FYDP II Disappointment
FY2015/16 – FY2018/19
Tanzania launched FYDP II with 38–39% of spending allocated to capital projects — but development execution languished at just 55–65%. Three compounding forces: external financing shortfalls (TZS 2,100.9bn borrowing target missed in 2016/17), domestic arrears exceeding 3% of GDP, and persistent procurement dysfunction. The World Bank documented "under-execution of the development budget by more than 40 percent."
2
Phase 2
Gradual Recovery
FY2019/20 – FY2022/23
The infrastructure-first agenda — Standard Gauge Railway (SGR) and Julius Nyerere Hydropower Project (JNHPP) — created a domestic-financing anchor. Domestically financed execution rose from 60% to 85%, even as foreign-financed averaged only 58%. TRA digital reforms lifted tax-to-GDP from 10% toward 12%, creating more stable disbursement linkages. COVID (FY2020/21) paradoxically tightened discipline. Mean development execution 2017/18–2020/21: 67%.
3
Phase 3
The Breakthrough
FY2023/24 – FY2025/26 Q1
FY2024/25 marks a watershed: the first 100% development execution rate in at least a decade. Locally-financed projects achieved 109%, offsetting foreign-financed components at 74%. Tax-to-GDP hit a record 13.1%. Q1 FY2025/26 continues momentum at 108% overall execution. NPMIS deployment and TRA reform are structural — not temporary — drivers. The central question: can this be sustained at FYDP IV scale?
Section 03

Structural Diagnosis: Why Development Execution Lags

The evidence strongly points to structural — not cyclical — causation. Tanzania's development execution gap persisted across boom years, a COVID shock, and post-COVID recovery.

A cyclical problem would resolve with economic recovery or revenue improvement. Tanzania's development execution gap persisted across 7% GDP growth years (2015–2019), the COVID shock (2020), post-COVID recovery (2021–2023), and only meaningfully improved after targeted institutional reforms. The World Bank (2023) attributed underperformance to "strategic planning, budget preparation, and procurement processes" — institutional, not cyclical, factors.

🔑 Key Finding — TICGL Research

Development execution underperformance in Tanzania is predominantly a structural institutional failure — rooted in procurement system design, capacity deficits, foreign-financing architecture, and budget preparation quality — not a temporary revenue shock or cyclical economic factor.

🏗️
Procurement Bottlenecks
Long tendering cycles (6–18 months), land acquisition delays, weak project pipelines. Only ~TZS 1bn/yr budgeted for project preparation vs. TZS 680bn needed — a 68,000% gap.
Reform: PPRA procurement reforms; NPMIS tracking; streamlined pre-qualification processes.
💱
Foreign Financing Dependency
20–30% of the development budget is donor/loan-funded. Foreign-financed execution averaged only ~58% (2017/18–2020/21) vs. 75–85% domestically funded — a persistent 17–27 percentage point gap.
Reform: Diversify to domestic bonds, pension fund financing, PPP mechanisms under 2023 PPP Act.
🏛️
MDA Absorption Capacity
Ministries, Departments, and Agencies face staffing gaps, cash-flow mismanagement, and technical capacity deficits. Non-salary goods/services chronically underspent across all years.
Reform: Strengthen PFM at MDA level; frontline budget execution training; performance-linked disbursements.
⚖️
Recurrent Budget Bias
68–70% of budget is recurrent (wages, debt service). Rigid recurrent obligations crowd out development disbursements whenever revenues miss targets — a mechanical, predictable failure mode.
Reform: Revenue scaling — tax-to-GDP from 10% (2004) to 13.1% (2024/25) creates more predictable development funding.
💸
Domestic Arrears & Cash Management
Estimated arrears stock exceeded 3% of GDP by FY2017/18. Payment arrears delayed contractor performance and demotivated project execution — a self-reinforcing spiral.
Reform: Arrears clearance programme (~TZS 1tn/yr); stricter commitment controls; IFMS upgrade.
📋
Budget Preparation Quality
Overambitious development estimates set execution rates up to fail by design — a phenomenon known as "optimism bias." Insufficient linkage between budget planning and actual project readiness.
Reform: FYDP IV integrated planning frameworks; sector-level project preparation financing (TZS 680bn target).
Structural FactorEvidence / MechanismPolicy / Reform Response
Procurement BottlenecksLong tendering cycles (6–18 months), land acquisition delays, weak project pipelines. Only ~TZS 1bn/yr budgeted for project preparation vs. TZS 680bn needed.PPRA procurement reforms; NPMIS tracking; streamlined pre-qualification processes.
Foreign Financing Dependency20–30% of dev. budget is donor/loan-funded. Foreign-financed execution averaged only ~58% (2017/18–2020/21) vs. 75–85% domestically funded.Diversify to domestic bonds, pension fund financing, PPP mechanisms under 2023 PPP Act.
MDA Absorption CapacityMDAs face staffing gaps, cash-flow mismanagement, and technical capacity deficits. Non-salary goods/services chronically underspent.Strengthen PFM at MDA level; frontline budget execution training; performance-linked disbursements.
Recurrent Budget Bias68–70% of budget is recurrent (wages, debt service). Rigid recurrent obligations crowd out development disbursements when revenues miss targets.Revenue scaling: tax-to-GDP from 10% (2004) to 13.1% (2024/25) creates more predictable development funding.
Domestic Arrears & Cash ManagementEstimated arrears stock exceeded 3% of GDP by 2017/18. Payment arrears delayed contractor performance and demotivated project execution.Arrears clearance programme (~TZS 1tn/yr); stricter commitment controls; IFMS upgrade.
Budget Preparation QualityOverambitious development estimates set execution rates up to fail. Insufficient linkage between budget planning and project readiness.FYDP IV integrated planning frameworks; sector-level project preparation financing (TZS 680bn target).

Table 2: Structural Drivers of Development Budget Under-Execution. Sources: World Bank TEU 2023; IMF CR 2017, 2023; TICGL Research.

Tax-to-GDP Ratio: The Revenue Reform Story
Tanzania's improving domestic revenue mobilisation (%) — the key structural enabler
Domestic vs. Foreign-Financed Development Execution
The persistent execution split by financing source (%)
Section 04

Domestic vs. Foreign-Financed Execution: A Critical Split

The aggregate development execution figure masks a critical internal divergence that explains the bulk of Tanzania's structural execution problem.

Tanzania's development budget has two distinct financing streams with dramatically different execution profiles. Foreign-financed project execution depends on procurement compliance with partner rules (World Bank, AfDB, JICA), satisfaction of disbursement conditions, and project implementation milestones — factors largely outside Treasury's direct control.

The World Bank Senior Economist Emmanuel Mungunasi specifically identified "delays in contracting non-concessional loans" and "delays in project preparation and implementation" as direct causes of foreign-financed under-disbursement. The aggregate 2024/25 result — 74% foreign-financed vs. 109% domestic — confirms this split remains active even as the headline figure reached 100%.

Financing StreamTypical Share of Dev. BudgetAvg. Execution (2017/18–2023/24)FY2024/25 ExecutionPrimary Bottleneck
Domestically Financed70–80%~72–85%109%Cash flow management; TRA revenue gaps mid-year
Foreign-Financed (Loans/Grants)20–30%~55–60%74%Procurement compliance, disbursement conditions, project preparation
Combined (Weighted)100%~73%100%Structural: procurement + financing architecture

Table 3: Domestic vs. Foreign-Financed Development Execution. Source: World Bank TEU 2023; MoF BERs.

⚠️ Structural Vulnerability — Still Active in 2024/25

Even Tanzania's historic 100% development execution in FY2024/25 was achieved through exceptional domestic execution (109%) compensating for still-weak foreign-financed execution (74%). If domestic revenue growth slows under FYDP IV, this structural safety net disappears — and the foreign financing gap becomes fully exposed in headline figures.

Section 05

Policy Reforms & Institutional Responses

A structured scorecard of the reforms driving Tanzania's improved execution performance — and those still needed.

Reform InitiativeExpected ImpactStatusExecution Link
NPMIS — National Project Management Information SystemReal-time project tracking; early warning on stalled contractsActive (2023–)Dev. execution 88%→100% (2023/24→2024/25)
TRA Digital Tax Systems (EFD, mobile money)Tax-to-GDP growth to 13.1%; more predictable revenue = stable dev. disbursementsActiveRevenue predictability ↑ dev. execution stability
PPP Act 2023 AmendmentsPrivate capital mobilisation for FYDP IV; off-balance sheet deliveryActiveReduces pressure on public development budget
PPRC Arrears Clearance ProgrammeClears contractor arrears; restores private sector confidence in government contractsOngoing (~TZS 1tn/yr)Reduces execution drag from contractor stoppages
SOE Restructuring (TEMESA, ATCL)Reduces fiscal transfers to loss-making SOEs; frees recurrent budget spaceOngoingRecurrent execution more stable
FYDP IV Project Preparation BudgetAddresses pipeline gap (target TZS 680bn); pre-identifies bankable projectsProposed / Partially fundedCritical for sustaining 90%+ dev. execution post-2025

Table 4: Budget Execution Reform Scorecard. Sources: MoF; World Bank; TICGL Analysis.

📈 The Tax-to-GDP Lever — Most Consequential Structural Reform

Tanzania's tax-to-GDP ratio rose from 10% in 2004/05 → 11.8% in 2022/23 → 13.1% in FY2024/25 (highest ever recorded). This matters directly for execution: mid-year budget revisions forced by revenue shortfalls have historically been the primary mechanism through which development execution rates collapse. The 2026/27 budget targets 26.5% tax revenue growth — historically unprecedented. A miss would re-activate the revenue-shortfall execution spiral at the critical FYDP IV launch year.

Reform Scorecard — Readiness Assessment
Implementation status and estimated execution impact by reform
Tax-to-GDP Ratio Trajectory
Tanzania's domestic revenue mobilisation journey (%) — with trend projection
Section 06

FYDP IV Implications & Risk Assessment

Tanzania's Fourth Five-Year Development Plan (2026/27–2030/31) requires TZS 477 trillion in total financing — and budget execution performance is the foundational credibility condition for mobilising 70% of that from the private sector.

🎯 FYDP IV Execution Imperative: Sustained 90%+ development execution over FY2026/27–2030/31 is not merely a fiscal performance metric — it is the foundational credibility condition for the TZS 334 trillion private capital mobilisation target. If public development execution remains below 80%, investor confidence in government-backed project timelines collapses, PPP bankability evaporates, and the private capital target becomes unreachable. Budget execution is macroeconomic signalling.

FYDP IV GDP Target
$121B
Target GDP by 2030/31, requiring sustained high execution discipline and private capital mobilisation.
Total FYDP IV Financing
TZS 477Tn
Total financing required over five years across public and private sources.
Private Sector Target Share
70%
TZS 334 trillion expected from private sector — contingent on execution credibility and bankable project pipeline.
Min. Execution for PPP Bankability
90%+
TICGL assessment: development execution must sustain ≥90% for private capital mobilisation to be credible.
FYDP IV Risk Register
Risk FactorDescriptionProbabilityFYDP IV Implication
Revenue Shortfall RiskTax revenue growth target of 26.5% for 2026/27 is historically high. Historical achievement: 89.6% of targets.HIGHCompressed development disbursements; PPP reliance increases
Foreign Financing Under-disbursementForeign development execution historically ~58%; donor alignment and procurement rules create persistent lags.MEDIUM-HIGHFYDP IV foreign-funded projects risk slippage without pipeline reform
MDA Capacity CeilingEven with funds released, some MDAs struggle to absorb. Staffing/technical gaps persistent since 2016.MEDIUMSpending efficiency may plateau without targeted capacity building
Debt Service CrowdingInterest payments rising; external debt 71.3% of total. Currency depreciation raises TZS obligations.MEDIUMRecurrent obligations may crowd out development space in FY2027+
Project Preparation GapOnly ~TZS 1bn/yr allocated for project prep vs. TZS 680bn needed. Thin pipeline = execution gaps.HIGHFYDP IV 70% private sector target impossible without bankable project pipeline

Table 5: FYDP IV Budget Execution Risk Register. Source: TICGL Research.

FYDP IV Risk Probability Matrix
Risk probability vs. FYDP IV impact severity
FYDP IV Financing Structure (TZS 477 Trillion)
Target composition of Tanzania's Fifth Five-Year Plan financing
Section 07

Conclusions & Policy Recommendations

TICGL's data-driven synthesis and six priority recommendations for sustaining Tanzania's 2024/25 execution breakthrough into FYDP IV.

Core Conclusions
#ConclusionConfidence Level
1Development budget execution in Tanzania has been a structural problem for over a decade — averaging ~73% over FY2015/16–2023/24 — driven primarily by procurement bottlenecks, foreign-financing absorption failures, MDA capacity gaps, and budget optimism bias, not purely by revenue shocks.High — Multi-source
2Recurrent execution has been consistently strong (~96%) throughout, reflecting mandatory spending dominance and protecting salaries and debt service at the expense of development disbursements when revenues miss.High — Confirmed
3FY2024/25 represents a genuine structural breakthrough: 100% development execution — the first in at least a decade — driven by NPMIS deployment, TRA revenue improvement, and SGR/JNHPP discipline. This is not a one-year statistical accident.High — Confirmed
4The foreign-financed execution gap (74% in 2024/25 vs. 109% domestically) remains a structural vulnerability requiring pipeline preparation investment — it was not resolved by the 2024/25 breakthrough.Medium-High
5Q1 FY2025/26 at 108% overall execution is a positive leading indicator, though election-cycle front-loading partially inflates this figure. The sustainability test comes in Q3–Q4 FY2025/26.Medium

Policy Recommendations
🛠️
1. Fund the Project Preparation Pipeline
The TZS 680bn annual target for pre-feasibility and project design is non-negotiable for sustaining FYDP IV execution. The current ~TZS 1bn allocation represents a systemic failure in pipeline development.
📊
2. Institutionalise NPMIS
Embed NPMIS as the binding project monitoring standard across all MDAs, with quarterly performance-linked disbursement triggers replacing discretionary release processes.
🌐
3. Foreign Financing Absorption Unit
Establish a dedicated unit within MoF to manage donor procurement compliance and disbursement conditions proactively, reducing the structural 55–60% foreign execution rate toward 85%+.
⚖️
4. Anchor Revenue Targets Conservatively
The 26.5% tax revenue growth target for 2026/27 is historically unprecedentedly high. A miss would re-activate the revenue-shortfall development execution spiral at the critical FYDP IV launch year.
🤝
5. PPP Pipeline as Fiscal Buffer
Where public execution cannot absorb project volumes, structured PPP vehicles (SPVs under the 2023 PPP Act) should be pre-positioned to prevent GDP growth shortfalls at the FYDP IV level.
📋
6. Annual FYDP IV Execution Scorecard
Publish a standardised recurrent/development execution league table by MDA annually — creating accountability pressure and identifying capacity-building investment targets for the following year.
🔬 TICGL Research Note

This analysis is based on official MoF Budget Execution Reports (BER), World Bank Tanzania Economic Updates (2023), IMF Article IV Consultations 2016–2023, IMF Country Reports No. 17/180 and 23/425, Tanzania Agriculture PER (World Bank 2022), TICGL Tanzania Budget Deficit Analysis (February 2026), and publicly available Ministry of Finance budget speech data. Estimates marked '~' are derived from trend analysis where exact official figures are unavailable.

Data Sources & References

  • Ministry of Finance Tanzania — Budget Execution Reports (BER), Q1–Q4 FY2020/21 through FY2025/26 Q1
  • World Bank — 19th Tanzania Economic Update (2023) and related fiscal reviews
  • IMF Article IV Consultations 2016–2023
  • IMF Country Reports No. 17/180 and 23/425
  • Tanzania Agriculture Public Expenditure Review (World Bank, 2022)
  • TICGL Tanzania Budget Deficit Analysis (February 2026)
  • Ministry of Finance Budget Speech Data (FY2015/16–FY2025/26)
  • Tanzania Revenue Authority (TRA) Annual Reports 2020–2025

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