00 - OVERVIEWExecutive Summary: Strong External Position, Tighter Fiscal Room
Prices are easing. Headline inflation fell to 4.3% from 5.6% in August (3.5% a year ago), inside the 5% medium-term target, as food inflation dropped from 9.8% to 6.9%.
The external position is strong, and tourism carries it. Service receipts reached USD 1,799.4M, 96.5% of all exports, turning a USD 768.5M goods deficit into a USD 986.8M current account surplus.
The budget is stretched. September resources were TZS 210.4B (92.8% of target, 12% below a year ago) against spending of TZS 494.5B, up 18%, with TZS 355.9B on development projects.
Imports signal investment. Capital goods imports almost tripled to USD 228.3M, but goods exports depend on cloves (58%), a cyclical crop.
Headline Inflation vs the 5% Target
| Test | Evidence | Reading |
|---|---|---|
| Prices | 4.3% vs 5% target; food 6.9% | Anchored, volatile food |
| Fiscal | Resources 92.8% of target; spending +18% y/y | Pressure |
| External | CA surplus +18.7%; services USD 1.80B | Strong |
| Structure | 96.5% services; cloves 58% of goods exports | Concentrated |
01 - INFLATIONFood Drove the 2026 Spike and the September Relief
Headline inflation moderated to 4.3% in September 2026 from 5.6% in August, attributable to lower prices of food and non-alcoholic beverages, which weigh 41.9% of the CPI basket. It remains above the 3.5% of September 2025. Month-on-month, prices fell 1.0% (Table 3.1.1).
Headline, Food and Non-Food Inflation
Annual Inflation by Group
| Group (annual %) | Weight | Sep-25 | Aug-26 | Sep-26 |
|---|---|---|---|---|
| Food and non-alcoholic beverages | 41.9 | 4.7 | 9.6 | 6.8 |
| Housing, water, electricity, gas | 25.8 | 1.1 | 1.0 | 1.3 |
| Transport | 9.1 | 2.2 | 5.2 | 4.7 |
| Clothing and footwear | 6.3 | 5.6 | 1.5 | 1.5 |
| Furnishings and household | 4.8 | 3.7 | 4.3 | 4.8 |
| Restaurants and accommodation | 1.4 | 1.6 | 6.2 | 6.2 |
| Headline (all items) | 100.0 | 3.5 | 5.6 | 4.3 |
Table 1.1. Source: Office of the Chief Government Statistician; BoT. Base: July 2022 = 100.
02 - GOVERNMENT BUDGETRevenue Below Target While Development Spending Surges
In September 2026 the resource envelope was TZS 210.4B (92.8% of the monthly target). Domestic revenue was TZS 200.9B (95.5% of the envelope; 92.9% of target); tax revenue TZS 173.7B (91.6% of target) with VAT, local excise and income tax strong; non-tax revenue TZS 27.3B (2.4% above target). Expenditure was TZS 494.5B.
Resources by Source, September
Expenditure by Type, September
Resources vs Expenditure and the Implied Gap
| TZS billion | Sep-25 | Sep-26 est. | Sep-26 actual | y/y |
|---|---|---|---|---|
| Tax on imports | 36.3 | 43.8 | 29.3 | -19.3% |
| VAT and excise (local) | 66.6 | 54.8 | 65.2 | -2.1% |
| Income tax | 38.7 | 49.0 | 50.4 | +30.2% |
| Other taxes | 44.7 | 42.0 | 28.8 | -35.6% |
| Non-tax revenue | 17.8 | 26.6 | 27.3 | +53.4% |
| Grants | 36.1 | 10.4 | 9.4 | -74.0% |
| Total resources | 240.2 | 226.6 | 210.4 | -12.4% |
| Total expenditure | 420.1 | 446.8 | 494.5 | +17.7% |
- Development spending (72% of the total) was 77.8% domestically financed, a sign of reliance on local resources as grants fell 74%.
- Wages (TZS 68.6B) and other recurrent costs (TZS 70.0B) are only 28% of spending, so the cost base is investment-heavy.
03 - CURRENT ACCOUNTServices Pay for a Goods Deficit
In the year to September 2026 the current account surplus expanded 18.7% to USD 986.8M. Exports of goods and services rose 15.9% to USD 1,864.4M; imports rose 34.0% to USD 899.4M. Service receipts reached USD 1,799.4M (+14.3%), mainly tourism, while service payments fell 36.5%.
Current Account Components, Year to September
| USD million | Yr to Sep-25 | Yr to Sep-26p | Change |
|---|---|---|---|
| Goods account (net) | -532.2 | -768.5 | 44.4% wider |
| Services account (net) | 1,470.1 | 1,733.6 | +17.9% |
| Service receipts | 1,573.8 | 1,799.4 | +14.3% |
| Exports of goods and services | 1,609.0 | 1,864.4 | +15.9% |
| Imports of goods and services | 671.1 | 899.4 | +34.0% |
| Primary income (net) | 9.4 | 17.1 | +82.8% |
| Current account balance | 831.4 | 986.8 | +18.7% |
04 - EXPORTS & IMPORTSCloves Rebound; Imports Turn Towards Capital Goods
Goods Exports by Product
Goods Imports by Use
Capital Goods Imports by Type
| Import (USD M) | 2025 | 2026p | Change |
|---|---|---|---|
| Capital goods | 81.2 | 228.3 | +181% |
| Intermediate goods | 409.6 | 494.2 | +20.7% |
| o/w industrial supplies | 148.1 | 254.7 | +72.0% |
| o/w fuel and lubricants | 134.3 | 120.1 | -10.5% |
| Consumer goods | 76.5 | 111.0 | +45.0% |
| Total (f.o.b.) | 567.4 | 833.5 | +46.9% |
- Cloves: USD 6.2M to USD 38.0M (volume 1.1 to 6.5 thousand tonnes at about USD 4,050 a tonne): a cyclical harvest, now 58.4% of goods exports. Excluding cloves, goods exports fell.
- Manufactured goods fell 36.1% and seaweed 54.1%; fish (+62.8%) and other exports (+78.7%) grew.
- Imports point to investment: iron and steel, machinery and transport equipment all rose; fuel imports fell 10.5%.
05 - OUTLOOK & ACTIONWhat to Watch and What to Do
| Risk / driver | Why it matters | Indicator |
|---|---|---|
| Tourism concentration | 96.5% of exports are services; a shock hits the surplus | Travel receipts |
| Clove cycle | Goods exports swing with harvests | Clove volume and price |
| Food price volatility | Food is 41.9% of CPI; peaked at 9.8% | Food inflation |
| Revenue shortfall | 92.8% of target while spending is +18% | Tax collections vs estimate |
| Grants decline | Down 74% y/y; domestic financing 77.8% | Grants, development financing |
- Policymakers: widen the tax base beyond imports and VAT, secure financing for the TZS 284.1B monthly gap, and track project completion.
- Investors: tourism-linked services, hotels and logistics have the strongest demand; capital-goods imports signal construction activity.
- Diversification: raise value addition in cloves, seaweed, fish and manufacturing to reduce reliance on one crop and one sector.
06 - SOURCESSources & Data Notes
- Bank of Tanzania, Monthly Economic Review, October 2026, Section 3 and Tables 3.1.1, 3.3.1, 3.3.2, 3.3.3, Charts 3.1.1, 3.2.1, 3.2.2.
- TICGL/TERI arithmetic: shares, y/y changes, resource gap (expenditure minus resources), import use shares, services coverage of goods deficit. Monthly points of Chart 3.1.1 other than Sep-25, Aug-26 and Sep-26 are read from the chart and approximate. The BoT text gives September month-on-month headline inflation as 1 percent, while Table 3.1.1 shows -1.0; the table is used because annual inflation fell. Data are provisional (p). This page is research information, not financial advice.
07 - QUICK ANSWERSFrequently Asked Questions
What is Zanzibar's inflation rate in September 2026?
4.3%, down from 5.6% in August and below the 5% target but above 3.5% a year earlier; food inflation fell to 6.9% from 9.8%.
Is Zanzibar's current account in surplus?
Yes, USD 986.8 million in the year to September 2026 (+18.7%), as service receipts of USD 1,799.4 million, mainly tourism, exceeded a USD 768.5 million goods deficit.
How did Zanzibar's government perform fiscally in September 2026?
Resources were TZS 210.4 billion (92.8% of target) against spending of TZS 494.5 billion, of which TZS 355.9 billion (72%) was development spending.
What does Zanzibar export?
Mostly services (96.5%). Among goods, cloves reached USD 38.0 million, about 58% of goods exports, up from USD 6.2 million.
Muhtasari kwa Kiswahili
Uchumi wa Zanzibar unaendeleaje? Kwa mujibu wa Mapitio ya Kila Mwezi ya Uchumi ya Benki Kuu (Oktoba 2026): mfumuko wa bei ulishuka hadi asilimia 4.3 Septemba 2026 kutoka 5.6 Agosti, chini ya lengo la asilimia 5, kutokana na kushuka kwa bei za chakula (asilimia 9.8 hadi 6.9).
- Bajeti: rasilimali za serikali Septemba zilikuwa TZS bilioni 210.4 (asilimia 92.8 ya lengo); matumizi TZS bilioni 494.5, ambapo miradi ya maendeleo ni bilioni 355.9 (asilimia 72), asilimia 77.8 ikigharamiwa ndani. Ruzuku zimeshuka asilimia 74.
- Akaunti ya sasa: ziada ya USD milioni 986.8 (ongezeko la asilimia 18.7), ikichochewa na mapato ya huduma za utalii (USD milioni 1,799.4) yanayofidia nakisi ya bidhaa ya USD milioni 768.5.
- Biashara: asilimia 96.5 ya mauzo nje ni huduma. Karafuu zilipanda hadi USD milioni 38 (asilimia 58 ya bidhaa), uagizaji wa mitaji (mashine na vifaa) karibu mara tatu.
- Mtazamo: hatari ni utegemezi wa utalii na karafuu, mapato kupungua dhidi ya lengo, na bei za chakula. Mapendekezo: kupanua wigo wa kodi na kuongeza thamani ya mazao (karafuu, mwani, samaki).
Chanzo: BoT Monthly Economic Review, Oktoba 2026; mahesabu ya TICGL/TERI. Maelezo zaidi: economist@ticgl.com.