Strategic Guidelines Based on Comprehensive Evaluation of Past Budget Performance & Economic Trends
This report provides strategic budget recommendations for Tanzania's 2026/2027 fiscal year, grounded in comprehensive evaluation of the 2024/2025 and 2025/2026 budget performance. Through rigorous analysis of actual economic data, sectoral performance, and implementation challenges, we identify key opportunities and provide evidence-based recommendations to strengthen Tanzania's fiscal framework and accelerate sustainable development.
Tanzania's recent economic performance provides a solid foundation for the 2026/2027 budget. GDP reached $87.44 billion in 2025 with 5.9% real growth, exceeding the 5.4% target. Inflation remained controlled at 3.5%, while foreign exchange reserves strengthened to $6.3 billion (4.9 months of imports). The 2025/2026 budget of TZS 56.49 trillion (+11.6%) demonstrates government commitment to development, though execution challenges persist.
Understanding past performance is critical for developing effective budget recommendations. The 2024/2025 budget totaled TZS 49.35 trillion (USD 18.85 billion). This comprehensive analysis of actual results versus targets reveals important lessons for the 2026/2027 budget planning process.
| Indicator | 2024/25 Target | 2024/25 Actual | Variance (%) | Status |
|---|---|---|---|---|
| Total Budget | TZS 49.35 T | TZS 45.07 T | -8.7% | Below Target |
| Total Revenue Collection | TZS 50.29 T | TZS 45.07 T (89.6%) | -10.4% | Needs Improvement |
| Domestic Revenue | TZS 30+ T | TZS 29.83 T (15.0% of GDP) | ~-1% | Nearly Met |
| Tax Revenue (Feb) | TZS 24+ T | TZS 22.38 T | Ongoing | In Progress |
| Development Expenditure | TZS 16.54 T | TZS 15.75 T (95.1%) | -4.8% | Good Performance |
| Recurrent Expenditure | TZS ~33 T | TZS ~29.3 T | ~-11% | Under Budget |
| GDP Growth Rate | 5.4% | 5.5% | +0.1pp | Target Exceeded |
| Inflation Rate | 3-5% | 3.1% | Achieved | Excellent |
| Public Debt (% of GDP) | <55% | 40.3% (TZS 107.7 T) | Safe | Well Managed |
| Foreign Exchange Reserves | >4 months | 4.4 months ($5.7B) | Achieved | Adequate |
Despite the revenue collection shortfall (89.6%), Tanzania successfully exceeded its GDP growth target (5.5% vs. 5.4% projected). This demonstrates efficient utilization of available resources, although tax collection challenges require immediate attention. The government needs to strengthen revenue mobilization strategies to close the gap between targets and actual collections.
| Quarter | GDP Growth (%) | Key Contributors | GDP Value (TZS T) | Performance |
|---|---|---|---|---|
| Q1 (Jan-Mar) | 5.4% | Mining 16.6%, Electricity 19%, Finance 15.4% | 54.2 | ✓ |
| Q2 (Apr-Jun) | 6.3% | Mining 19%, Finance 14.8%, Electricity 14% | 59.6 | ✓✓ |
| Q3 (Jul-Sep) | >6.0% (est.) | Agriculture, Mining, Construction | N/A | ✓✓ |
| Q4 (Oct-Dec) | ~5.9% (est.) | Tourism, Manufacturing | N/A | ✓ |
| Full Year 2025 | 5.9% | Agriculture, Mining, Construction, Tourism | N/A | ✓✓ |
The 2025/2026 budget represents an 11.6% increase to TZS 56.49 trillion, targeting 6.0% GDP growth and domestic revenue of TZS 38.9 trillion (16.7% of GDP). Understanding this current budget structure is essential for formulating improved recommendations for 2026/2027.
| Component | 2024/25 Actual | 2025/26 Target | Details |
|---|---|---|---|
| Total Budget | TZS 49.35 T | TZS 56.49 T (+11.6%) | USD 22.07 billion |
| Domestic Revenue | TZS 29.83 T (15%) | TZS 38.9 T (16.7%) | 30.4% increase required |
| Tax Collection | TZS 22.38 T (Feb) | TZS 29.17 T (13.3%) | Ambitious target increase |
| Recurrent Expenditure | ~TZS 32.8 T | TZS 38.6 T (68.3%) | Salaries, Debt, Elections |
| Development Expenditure | TZS 15.75 T | TZS 16.4 T (29%) | SGR, JNHPP, Infrastructure |
| Domestic Borrowing | --- | TZS ~9.4 T | Commercial loans |
| External Borrowing | --- | TZS 5.6 T | Concessional loans |
| External Grants | --- | TZS 1.02 T | Aid/Development assistance |
| GDP Growth Target | 5.4% (actual: 5.5%) | 6.0% | IMF projection: 6.0-6.3% |
| Inflation Target | 3-5% (actual: 3.1%) | 3.0-5.0% | Well controlled |
| Foreign Reserves | >4 months | >4 months | Target maintained |
| Expenditure Type | Amount (TZS T) | % of Budget | Trend |
|---|---|---|---|
| RECURRENT EXPENDITURE | |||
| Salaries and Allowances | ~TZS 12-15 T | ~25% | Growing |
| Debt Service (Interest & Principal) | ~TZS 8-10 T | ~17% | Heavy Burden |
| Other Government Services | ~TZS 10 T | ~18% | Normal |
| Recurrent Subtotal | TZS 38.6 T | 68.3% | Too High |
| DEVELOPMENT EXPENDITURE | |||
| Transport (SGR, Roads, Ports) | TZS 2.75 T | 4.9% | Critical |
| Energy (JNHPP, Rural Electrification) | TZS 2.2 T | 3.9% | Very Critical |
| Education (Universities, Loans) | ~TZS 1.5 T | ~2.7% | Important |
| Health (Medicine, Hospitals) | ~TZS 0.8 T | ~1.4% | Insufficient |
| Tourism Development | TZS 0.36 T | 0.6% | Too Small |
| Development Subtotal | TZS 16.4 T | 29.0% | Should be 35%+ |
| SPECIAL EXPENDITURE | |||
| Elections & Other Special Items | ~TZS 1.5 T | ~2.7% | One-time |
Understanding Tanzania's economic trajectory is fundamental to budget planning. These comprehensive indicators reveal strong momentum while highlighting areas requiring strategic intervention for the 2026/2027 budget cycle.
| Year | GDP (Billion USD) | GDP PPP (Billion USD) | Growth Rate (%) | Status |
|---|---|---|---|---|
| 2020 | $63.37 | --- | --- | Baseline |
| 2021 | $67.96 | --- | +7.2% | COVID Recovery |
| 2022 | $74.17 | --- | +9.1% | Strong Recovery |
| 2023 | $78.37 | --- | +5.7% | Stabilized |
| 2024 | $79.24 | ~$260 B | +1.1% | Estimate |
| 2025 | $87.44 | $293.63 B | +10.3% | Excellent Performance |
| 2026 | $95.35 | --- | +9.0% | Projection |
| 2027 | $104.65 | --- | +9.8% | Projection |
| 2030 | $138.58 | --- | +9.6% | Target |
The 10.3% increase in nominal GDP for 2025 (from $79.24B to $87.44B) is substantial, bringing Tanzania closer to middle-income status. The target of $138.58B by 2030 is achievable if major projects like LNG are implemented on schedule. This growth trajectory provides the fiscal space needed for ambitious development budgets in 2026/2027.
| Indicator | 2024 (Actual) | 2025 (Actual/Est.) | 2026 (Projection) |
|---|---|---|---|
| GDP Growth - Mainland (%) | 5.5% | 5.9% | 6.1% |
| GDP Growth - Zanzibar (%) | ~5% | 6.8% | 7.2% |
| GDP Nominal (Billion USD) | $79.24 | $87.44 | $95.35 |
| GDP PPP (Billion USD) | --- | $293.63 | --- |
| GDP Per Capita (USD) | ~$1,220 | $1,300 | $1,380 |
| Inflation Rate - Average (%) | ~3.5% | 3.5% | 3.5% (target) |
| Food Inflation (%) | --- | 4.5% (average) | ~4.0% |
| Central Bank Rate (%) | 5.75% | 5.75% | 5.75% |
| Current Account Deficit (% GDP) | ~2.8% | 2.2% (5-year low) | 2.7% |
| Public Debt - NPV (% GDP) | ~42% | 40.6% | 48.3% |
| Private Sector Credit Growth (%) | --- | +20.3% | 15-18% (target) |
| Foreign Reserves (Billion USD) | $5.7 | >$6.3 (4.9 months) | >$6.0 (5+ months) |
| Tourism Exports (Billion) | $3.1 | $3.8 (+22.6%) | >$4.3 |
| Gold Mining Exports | ~$3.7 | $4.1 (+11.2%) | ~$4.5 |
| Period | Overall Inflation (%) | Food Inflation (%) | Core Inflation (%) | BoT Rate (%) |
|---|---|---|---|---|
| Q1 2025 | 3.8 | 4.9 | 2.7 | 5.75 |
| Q2 2025 | 3.2 | 4.1 | 2.3 | 5.75 |
| Q3 2025 | 3.4 | 4.3 | 2.5 | 5.75 |
| Q4 2025 | 3.5 | 4.3 | 2.6 | 5.75 |
| 2025 Average | 3.5 | 4.5 | 2.5 | 5.75 |
Tanzania has successfully maintained inflation within the 3-5% target range throughout 2025, despite food inflation being slightly higher at 4.5% on average. This demonstrates the effectiveness of the Bank of Tanzania's monetary policies. The stable 5.75% central bank rate has supported economic growth while controlling price pressures - a balance that should continue into 2026/2027.