February 2026 — A Strong Revenue Month with Development Spending on Track
February 2026 demonstrated Tanzania's improving fiscal management capacity. Revenue administration improvements and enhanced taxpayer compliance drove tax revenue 5.7% above target, partially offsetting a non-tax revenue shortfall of 9%. Total expenditure of TZS 3,550.1 billion reflects the government's development-forward spending priorities under FYDP IV.
Key Fiscal Achievement: Tanzania's revenue administration system continued to deliver. The Tanzania Revenue Authority (TRA) collected TZS 2,417.4 billion in tax revenue in February 2026 — TZS 130.8 billion above the monthly target of TZS 2,286.6 billion. This performance reflects the compound effect of ongoing tax administration reforms, expanded electronic invoicing, improved customs valuation, and a broadening tax base underpinned by 5.7% real GDP growth.
Revenue Performance — All Sources, February 2026
Central government revenue reached TZS 2,841.0 billion in February 2026, surpassing the monthly estimate of TZS 2,752.3 billion by 3.2%. This was driven overwhelmingly by strong tax performance, with non-tax revenue providing the only notable shortfall against budget projections.
Central Government Revenue — Actual vs. Target vs. Prior Year
February 2026 · TZS Billions by revenue stream
Revenue Composition — February 2026 (Actual)
Central government revenue by category · TZS Billions
Revenue Stream — Target Attainment Indicators (February 2026)
The following cards show the performance of each revenue stream against monthly budget estimates, along with year-on-year comparisons to February 2025 actuals.
Tax Revenue — July 2025 to February 2026 Cumulative Performance
Cumulative tax revenue for July 2025 – February 2026 reached TZS 22,720.0 billion against an estimate of TZS 20,804.9 billion — a 9.2% outperformance. Taxes on imports and income taxes were the primary over-performers, reflecting Tanzania's growing import-driven economy and improved PAYE compliance.
Cumulative Tax Revenue — Jul-25 to Feb-26
Estimate vs. Actual by category · TZS Billions
Monthly Tax Revenue — Year-on-Year Comparison
TZS Billions · Feb-26 vs. Feb-25 actuals by stream
Complete Tax Revenue Data — Budget vs. Cumulative Actual vs. Monthly Actual
| Tax Revenue Stream | FY Budget 2025/26 (TZS B) | Cum. Estimate Jul–Feb (TZS B) | Cum. Actual Jul–Feb (TZS B) | Variance (TZS B) | Feb-26 Estimate (TZS B) | Feb-26 Actual (TZS B) | Feb-25 Actual (TZS B) | YoY Growth |
|---|---|---|---|---|---|---|---|---|
| Taxes on Imports | 11,562.97 | 7,757.42 | 8,117.83 | +360.41 | 872.74 | 946.09 | 755.30 | +25.3% |
| Sales/VAT & Excise (Local) | 7,016.47 | 4,441.75 | 4,315.27 | −126.48 | 575.79 | 541.16 | 490.60 | +10.3% |
| Income Taxes (PAYE, CIT, WHT) | 11,367.88 | 7,051.06 | 8,766.19 | +1,715.13 | 672.36 | 762.15 | 676.10 | +12.7% |
| Other Taxes | 4,887.70 | 1,554.63 | 1,520.75 | −33.88 | 165.71 | 168.04 | 133.20 | +26.1% |
| Total Tax Revenue | 32,175.99 | 20,804.85 | 22,720.04 | +1,915.19 | 2,286.61 | 2,417.43 | 2,055.20 | +17.6% |
Income Tax Outstanding Performance: Cumulative income tax collection of TZS 8,766.2 billion through February 2026 exceeded the period estimate of TZS 7,051.1 billion by a remarkable TZS 1,715.1 billion (+24.3%). This reflects improved PAYE compliance in the formal sector, stronger corporate profit performance in mining and financial services, and expanded withholding tax coverage. For FYDP IV financing, this trend is highly significant — income tax is Tanzania's second-largest revenue source and has the most potential for further structural expansion as the formal sector grows.
Non-Tax Revenue — Performance & Composition
Non-tax revenue of TZS 423.6 billion fell TZS 42.1 billion (9.0%) short of the monthly target of TZS 465.7 billion in February 2026. Despite this shortfall, non-tax revenue was still 27.5% higher year-on-year compared to February 2025's TZS 332.3 billion, indicating structural improvement even amid timing-related collection gaps.
Non-Tax Revenue — Budget vs. Cumulative Performance
Jul-25 to Feb-26 · TZS Billions
Total Revenue — Feb-26: Actual vs. Estimate vs. Prior Year
All categories · TZS Billions · Side-by-side comparison
| Revenue Category | FY Budget (TZS B) | Cum. Estimate (TZS B) | Cum. Actual (TZS B) | Feb-26 Estimate | Feb-26 Actual | Feb-25 Actual | YoY Growth | Target Rate |
|---|---|---|---|---|---|---|---|---|
| Central Govt Tax Revenue | 32,176.0 | 20,804.9 | 22,720.0 | 2,286.6 | 2,417.4 | 2,055.2 | +17.6% | +5.7% |
| Central Govt Non-Tax Revenue | 4,681.7 | 4,307.3 | 3,759.5 | 465.7 | 423.6 | 332.3 | +27.5% | −9.0% |
| Total Central Govt Revenue | 36,857.7 | 25,112.2 | 26,479.6 | 2,752.3 | 2,841.0 | 2,387.6 | +19.0% | +3.2% |
| LGA Own-Source Revenue | 1,680.5 | 1,129.3 | 1,089.7 | 127.8 | 131.9 | — | — | +3.2% |
| Total Revenue incl. LGAs | 40,466.1 | 26,241.5 | 27,569.2 | 2,880.2 | 2,972.9 | — | — | +3.2% |
Non-Tax Revenue Gap Analysis: The TZS 42.1 billion non-tax revenue shortfall (9.0% below target) in February 2026 reflects a structural challenge in Tanzania's fiscal architecture. Non-tax revenues — comprising dividends from parastatals, fees, fines, and ministerial receipts — are notoriously harder to forecast and collect consistently. The cumulative shortfall of TZS 547.8 billion (Jul-Feb: TZS 3,759.5B actual vs. TZS 4,307.3B estimate) warrants attention as it creates pressure on overall budget financing. However, the 27.5% year-on-year growth indicates real underlying improvement in collection systems.
Total Expenditure — February 2026 & Cumulative Performance
Total government expenditure reached TZS 3,550.1 billion in February 2026, broadly aligned with the government's resource management strategy. Of this, TZS 2,429.7 billion (68.4%) was recurrent expenditure and TZS 1,120.4 billion (31.6%) was directed toward development projects — reflecting Tanzania's continued commitment to infrastructure investment under FYDP IV.
Central Government Expenditure — Feb-26 vs. Target vs. Feb-25
TZS Billions · By expenditure category
Expenditure Composition — February 2026 (Actual)
% share of total TZS 3,550.1B · By category
Complete Expenditure Data — Budget vs. Cumulative vs. Monthly
| Expenditure Category | FY Budget (TZS B) | Cum. Estimate (TZS B) | Cum. Actual (TZS B) | Variance (TZS B) | Feb-26 Estimate | Feb-26 Actual | Feb-25 Actual | YoY Growth |
|---|---|---|---|---|---|---|---|---|
| RECURRENT EXPENDITURE | ||||||||
| Wages & Salaries | 10,917.5 | 8,680.9 | 8,714.2 | +33.3 | 1,103.5 | 1,123.7 | 937.6 | +19.8% |
| Interest Payments (Total) | 6,493.7 | 4,349.8 | 3,770.2 | −579.6 | 634.1 | 595.3 | 366.4 | +62.5% |
| — Domestic Interest | 3,697.3 | 2,504.6 | 2,482.2 | −22.4 | 351.3 | 332.4 | — | — |
| — Foreign Interest | 2,796.4 | 1,845.2 | 1,288.1 | −557.1 | 282.8 | 262.9 | — | — |
| Other Goods, Services & Transfers | 7,088.6 | 7,287.8 | 7,898.7 | +610.9 | 855.8 | 710.7 | 1,068.0 | −33.5% |
| Total Recurrent Expenditure | 31,281.3 | 20,318.5 | 20,383.1 | +64.6 | 2,593.3 | 2,429.7 | 2,372.0 | +2.4% |
| DEVELOPMENT EXPENDITURE | ||||||||
| Development Exp. (Local-financed) | 12,117.8 | 8,304.9 | 8,580.7 | +275.8 | 760.0 | 929.8 | — | — |
| Development Exp. (Foreign-financed) | 5,375.9 | 3,449.3 | 2,097.6 | −1,351.7 | 375.0 | 190.6 | — | — |
| Total Development Expenditure | 17,493.7 | 11,754.2 | 10,678.3 | −1,075.9 | 1,135.0 | 1,120.4 | 1,461.7 | −23.4% |
| Total Expenditure (excl. amortisation) | 48,775.0 | 32,072.7 | 31,061.4 | −1,011.3 | 3,728.4 | 3,550.1 | 3,833.7 | −7.4% |
Recurrent Expenditure — Wages, Interest & Operations
Recurrent expenditure of TZS 2,429.7 billion in February 2026 was marginally below the monthly estimate of TZS 2,593.3 billion, reflecting lower-than-projected interest payments. Wages and salaries at TZS 1,123.7 billion remain the single largest expenditure item at 31.7% of total spending.
Wages & Salaries — Target vs. Actual vs. Prior Year
February 2026 · TZS Billions
Interest Costs — Domestic vs. Foreign · Feb 2026
TZS Billions · Target vs. Actual · Prior Year Comparison
Recurrent Expenditure — Detailed Analysis
- Wages & Salaries (TZS 1,123.7B, +19.8% YoY): The 19.8% year-on-year increase reflects public sector wage adjustments and headcount growth, particularly in education and health sectors. Wages now consume 31.7% of total expenditure, slightly above the estimate of TZS 1,103.5B — a trend that requires monitoring to ensure it does not crowd out development spending.
- Interest Payments (TZS 595.3B, below TZS 634.1B estimate): Interest costs came in TZS 38.8 billion below target, largely due to lower-than-projected foreign interest costs (TZS 262.9B vs. TZS 282.8B estimate). This reflects the declining Treasury bond and bill yields seen in the government securities market, where the overall Treasury bill WAY fell from 10.10% to 5.21% between March 2025 and March 2026. Lower domestic interest costs are a direct fiscal dividend of the Bank of Tanzania's monetary policy effectiveness.
- Other Goods, Services & Transfers (TZS 710.7B, down 33.5% YoY): The significant year-on-year decline from TZS 1,068.0B in February 2025 to TZS 710.7B reflects improved expenditure controls, elimination of off-budget spending, and rationalisation of transfers to government entities. This is a structurally positive development for Tanzania's fiscal framework.
| Recurrent Category | FY Budget (TZS B) | Feb-26 Estimate | Feb-26 Actual | Feb-25 Actual | Target Rate | YoY Change | Share of Total Exp. |
|---|---|---|---|---|---|---|---|
| Wages & Salaries | 10,917.5 | 1,103.5 | 1,123.7 | 937.6 | +1.8% | +19.8% | 31.7% |
| Interest Payments (Total) | 6,493.7 | 634.1 | 595.3 | 366.4 | −6.1% | +62.5% | 16.8% |
| — Domestic Interest | 3,697.3 | 351.3 | 332.4 | — | −5.4% | — | 9.4% |
| — Foreign Interest | 2,796.4 | 282.8 | 262.9 | — | −7.0% | — | 7.4% |
| Other Goods, Services & Transfers | 7,088.6 | 855.8 | 710.7 | 1,068.0 | −17.0% | −33.5% | 20.0% |
| Total Recurrent | 31,281.3 | 2,593.3 | 2,429.7 | 2,372.0 | −6.3% | +2.4% | 68.4% |
Interest Cost Trajectory: The 62.5% year-on-year increase in interest payments (TZS 366.4B in Feb-25 to TZS 595.3B in Feb-26) is the most concerning expenditure trend in Tanzania's fiscal profile. It reflects the cumulative cost of rising domestic debt (TZS 38.45 trillion) and external commercial borrowing. Interest payments now consume 16.8% of monthly spending — up from approximately 9.5% two years ago. If domestic debt growth continues at 12%+ per year, interest will crowd out development spending increasingly over the FYDP IV implementation period.
Development Expenditure — FYDP IV Investment Pipeline
Development expenditure of TZS 1,120.4 billion in February 2026 was slightly below the monthly estimate of TZS 1,135.0 billion (−1.3%). However, cumulative development spending of TZS 10,678.3 billion through February is running TZS 1,075.9 billion below the period estimate of TZS 11,754.2 billion, mainly reflecting slower foreign-financed project disbursements.
Development Expenditure — Local vs. Foreign Financed
Cumulative Jul-25 to Feb-26 · TZS Billions
Development vs. Recurrent Expenditure Balance
Monthly Feb-26 comparison · TZS Billions
Development Expenditure — Performance Concerns and Outlook
- Foreign-Financed Underperformance: Cumulative foreign-financed development expenditure of TZS 2,097.6 billion is TZS 1,351.7 billion (39.2%) below the period estimate of TZS 3,449.3 billion. This gap reflects delays in project implementation, disbursement conditions from development partners (World Bank, AfDB, bilateral donors), and procurement delays. The February actual of TZS 190.6 billion against an estimate of TZS 375.0 billion (50.8% utilisation rate) is particularly concerning.
- Locally-Financed Development Outperforms: Local-financed development expenditure of TZS 8,580.7 billion slightly exceeded its cumulative estimate of TZS 8,304.9 billion (+3.3%), demonstrating Tanzania's growing capacity to self-finance infrastructure through improved domestic revenue mobilisation. February's actual of TZS 929.8 billion exceeded the estimate of TZS 760.0 billion by 22.3%.
- FYDP IV Financing Gap: With full-year development expenditure budgeted at TZS 17,493.7 billion and cumulative actuals at 61.1% of the annual budget after 8 months, Tanzania would need to accelerate spending significantly in March–June 2026 to achieve the full-year target. This points to a structural pattern of back-loading development spending — common across sub-Saharan African governments — with execution quality risks in Q4.
| Development Category | FY Budget (TZS B) | % FY Budget (8 months) | Cum. Estimate (TZS B) | Cum. Actual (TZS B) | Utilisation Rate | Feb-26 Estimate | Feb-26 Actual | Feb-25 Actual |
|---|---|---|---|---|---|---|---|---|
| Local-Financed Development | 12,117.8 | 68.8% | 8,304.9 | 8,580.7 | 103.3% | 760.0 | 929.8 | — |
| Foreign-Financed Development | 5,375.9 | 39.0% | 3,449.3 | 2,097.6 | 60.8% | 375.0 | 190.6 | — |
| Total Development Expenditure | 17,493.7 | 61.0% | 11,754.2 | 10,678.3 | 90.8% | 1,135.0 | 1,120.4 | 1,461.7 |
FYDP IV Infrastructure Implication: Development expenditure of TZS 17,493.7 billion is budgeted for FY2025/26, representing 6.9% of GDP. The gap between the locally-financed component (on track) and the foreign-financed component (60.8% utilisation after 8 months) suggests that project disbursement efficiency and coordination with development partners remains a critical constraint on FYDP IV infrastructure delivery. Bridging this gap requires not just faster implementation, but systematic improvements in procurement management, environmental clearances, and project readiness at the design stage.
The Fiscal Balance — Financing Tanzania's Budget Gap
Tanzania's budget deficit of TZS 568.7 billion in February 2026 was financed through a combination of domestic and external sources. The financing structure — with growing domestic reliance and declining external disbursements — has important implications for the government securities market, interest rates, and monetary conditions.
Revenue vs. Expenditure vs. Balance — Feb-26
TZS Billions · Actual · February 2026
Deficit Financing — Domestic vs. External
Cumulative Jul-25 to Feb-26 · TZS Billions
| Financing Item | FY Budget (TZS B) | Cum. Estimate (TZS B) | Cum. Actual (TZS B) | Feb-26 Estimate | Feb-26 Actual |
|---|---|---|---|---|---|
| Balance Before Grants (Deficit) | −8,308.9 | −5,831.2 | −3,492.2 | −848.2 | −577.2 |
| Grants (Total) | 1,069.9 | 637.8 | 519.6 | 70.6 | 8.5 |
| — Programme Grants | 113.8 | 0.0 | 0.0 | 0.0 | 0.0 |
| — Project Grants | 847.0 | 523.5 | 470.0 | 65.5 | 8.5 |
| — Basket Funds | 109.1 | 114.2 | 49.6 | 5.1 | 0.0 |
| Balance After Grants (Deficit) | −7,239.0 | −5,193.5 | −3,930.6 | −777.6 | −568.7 |
| Foreign Financing (Net) | 4,286.3 | 2,120.6 | 1,672.8 | −3.6 | −24.6 |
| — External Loans | 5,966.4 | 4,741.8 | 3,679.0 | 304.4 | 182.2 |
| — Amortisation | −4,389.7 | −2,649.5 | −2,026.5 | −308.1 | −206.7 |
| Domestic Net Financing | 2,952.6 | 3,072.8 | 2,257.9 | 781.3 | 412.8 |
| — Bank Borrowing | 2,466.1 | 2,566.5 | 380.1 | 652.5 | 141.2 |
| — Non-Bank (Net of Amortisation) | 486.5 | 506.3 | 1,877.8 | 128.7 | 271.6 |
Domestic Financing Shift: A critical structural development in Tanzania's fiscal financing is the shift from bank borrowing (TZS 141.2B in February) to non-bank domestic borrowing (TZS 271.6B). Non-bank sources — mainly pension funds, insurance companies, and retail investors purchasing Treasury bonds — represent more sustainable, non-inflationary financing compared to direct central bank borrowing. The cumulative non-bank share of TZS 1,877.8 billion versus bank share of TZS 380.1 billion through February 2026 is a positive indicator for Tanzania's capital market deepening objectives.
July 2025 – February 2026 — Eight-Month Cumulative Fiscal Performance
The cumulative fiscal picture through February 2026 shows a government broadly managing its revenue-expenditure balance well — revenue is ahead of estimates while total expenditure is below projections, producing a smaller-than-budgeted financing requirement for the first eight months of FY2025/26.
Cumulative Revenue vs. Expenditure vs. Fiscal Balance — Jul-25 to Feb-26
Estimate vs. Actual · TZS Billions · July 2025 – February 2026
| Key Fiscal Metric | FY2025/26 Annual Budget (TZS B) | Jul–Feb Estimate (TZS B) | Jul–Feb Actual (TZS B) | Variance (TZS B) | Execution Rate (%) | YoY Comparison |
|---|---|---|---|---|---|---|
| Total Revenue incl. LGAs | 40,466.1 | 26,241.5 | 27,569.2 | +1,327.7 | 68.1% | — |
| Central Govt Revenue | 36,857.7 | 25,112.2 | 26,479.6 | +1,367.4 | 71.8% | — |
| Total Expenditure | 48,775.0 | 32,072.7 | 31,061.4 | −1,011.3 | 63.7% | — |
| Recurrent Expenditure | 31,281.3 | 20,318.5 | 20,383.1 | +64.6 | 65.2% | — |
| Development Expenditure | 17,493.7 | 11,754.2 | 10,678.3 | −1,075.9 | 61.0% | — |
| Grants Received | 1,069.9 | 637.8 | 519.6 | −118.2 | 48.6% | — |
| Overall Balance (Deficit) | −7,239.0 | −5,193.5 | −3,930.6 | +1,262.9 smaller | — | Better than planned |
Cumulative Fiscal Outperformance: The cumulative balance of TZS −3,930.6 billion through February 2026 is TZS 1,262.9 billion smaller than the planned deficit of TZS −5,193.5 billion for the same period. This reflects both revenue over-performance and expenditure under-execution. While the latter includes positive fiscal discipline on recurrent items, the under-execution of development spending (90.8% of target) means that some FYDP IV infrastructure investment is being deferred — a trade-off between short-term fiscal prudence and long-term growth investment that policymakers must carefully manage.
Five Key Insights for Tanzania's Fiscal Trajectory
TICGL's research team distils the most policy-significant findings from Tanzania's February 2026 fiscal data for investors, businesses, development partners, and policymakers.
1. Tax Revenue Administration is a Genuine Success Story
Tax revenue outperformance of 5.7% above the monthly target — and cumulative outperformance of 9.2% — is not a one-month phenomenon. The sustained trajectory of above-target collections across imports, income tax, and other taxes reflects structural improvements in TRA's administrative capacity: electronic receipting (EFD machines), enhanced customs valuation, risk-based audit selection, and improved PAYE compliance monitoring. For investors, this signals a government with improving fiscal capacity to fund infrastructure without resorting to inflationary monetisation.
2. The Interest Cost Trajectory is Tanzania's Most Significant Fiscal Risk
Interest payments growing 62.5% year-on-year to TZS 595.3 billion per month represent a genuine structural challenge. As domestic debt grows (12.2% per year) and commercial external debt rolls over at market rates, debt service will consume an increasing share of revenue. TICGL projects that if current trends continue, interest costs could reach 20–22% of total monthly expenditure by March 2027 — at that point crowding out meaningful portions of development spending. The declining domestic yields (Treasury bill WAY from 10.10% to 5.21% over 12 months) partially mitigate this risk by reducing the cost of new borrowing, but the stock effect of historically issued high-yield bonds continues to weigh on the budget.
3. Foreign-Financed Development Spending Underperformance Requires Action
The 60.8% cumulative utilisation rate of foreign-financed development funds — TZS 2,097.6 billion against a target of TZS 3,449.3 billion — points to systemic project implementation challenges: slow procurement, counterpart funding gaps, conditionality misalignments, and coordination failures between line ministries and development partners. For FYDP IV to succeed, Tanzania needs to address these structural bottlenecks systematically. Every TZS of unutilised foreign development financing represents a lost opportunity for productive public investment.
4. Non-Bank Domestic Financing: A Capital Market Deepening Signal
The shift toward non-bank domestic financing — pension funds and retail investors absorbing TZS 1,877.8 billion of cumulative domestic issuance versus TZS 380.1 billion of bank financing — is a structurally healthy development. It deepens Tanzania's domestic capital market, reduces inflationary pressure from monetary financing, and mobilises long-term savings for government investment. The Dar es Salaam Stock Exchange and Tanzania's pension system (NSSF, PPF, GEPF, LAPF) are increasingly functioning as genuine intermediaries of national savings — a prerequisite for a functioning development finance system.
5. The Revenue-GDP Ratio: Room to Grow, but Cautiously
Tanzania's current revenue-to-GDP ratio of approximately 15.6% (FY2024/25) remains below the East African Community's benchmarks and significantly below the revenue mobilisation needed to finance FYDP IV's ambitions. The strong tax performance in 2025/26 suggests the ratio is improving, but doubling infrastructure investment will ultimately require pushing the tax-to-GDP ratio toward 18–20% — achievable only through broadening the tax base into the informal sector, strengthening property taxation, and rationalising tax expenditures (exemptions and incentives). TICGL's research on this theme is ongoing.
TICGL Bottom Line: Tanzania's fiscal framework in FY2025/26 is performing better than budgeted on the revenue side, with the government demonstrating genuine capacity to collect taxes above target. The primary risks are: (1) rising interest costs from growing domestic debt, (2) foreign development financing underutilisation, and (3) the structural challenge of financing FYDP IV's ambitious infrastructure programme within an improving but still constrained fiscal envelope. Tanzania's fiscal sustainability trajectory is positive — but the pace of debt stock growth warrants close attention by policymakers and development partners alike.