Challenges in Implementing Tanzania's 2024/2025 Budget Due to Anticipated Revenue Collection Shortfalls

Tanzania's 2024/2025 budget faces significant challenges due to anticipated revenue collection shortfalls. In 2023/2024, the Ministry of Finance aimed to collect TZS 39.79 trillion but only managed TZS 32.49 trillion (82% of the target). For 2024/2025, the revenue projection is TZS 44.19 trillion, with TZS 29.42 trillion expected from the Tanzania Revenue Authority (TRA). However, given the previous year’s shortfall, meeting these targets may be difficult. The total proposed expenditure is TZS 18.17 trillion, with TZS 13.13 trillion allocated for debt servicing. High debt servicing costs and substantial expenditure requirements further complicate budget implementation.

Revenue Collection Trends:

• In 2023/2024, the Ministry of Finance projected a total revenue collection of TZS 39.79 trillion but only managed to collect TZS 32.49 trillion by April 2024, achieving 82% of the annual target.
• The Tanzania Revenue Authority (TRA) collected TZS 21.31 trillion against a target of TZS 26.73 trillion, and the External Finance Department collected TZS 4.92 trillion against a target of TZS 5.47 trillion.

Projected Revenue for 2024/2025:

• For 2024/2025, the Ministry of Finance expects to collect TZS 44.19 trillion.
• This includes TZS 29.42 trillion from the TRA, TZS 5.13 trillion from grants and concessional loans, TZS 9.60 trillion from commercial loans, and TZS 45.01 billion from non-tax revenue.
• Given the 2023/2024 collection shortfall, achieving these targets may be challenging.

Debt Servicing:

• Debt servicing for 2024/2025 is projected at TZS 13.13 trillion.
• In 2023/2024, TZS 8.48 trillion was spent on debt servicing out of an allocated TZS 10.48 trillion.
• The high cost of debt servicing significantly reduces the funds available for other expenditures.

Expenditure Requirements:

• The total proposed expenditure for 2024/2025 is TZS 18.17 trillion, with TZS 17.63 trillion allocated for recurrent expenditure, including TZS 13.13 trillion for debt servicing and TZS 946.45 billion for salaries.
• Development expenditure is projected at TZS 544.05 billion, which is a modest decrease from TZS 556.38 billion in 2023/2024.

Comparison with Previous Year’s Performance:

• If the revenue collection efficiency of 82% from 2023/2024 continues, the Ministry would only collect approximately TZS 36.24 trillion out of the projected TZS 44.19 trillion for 2024/2025.
• This shortfall would exacerbate the challenges in meeting the proposed expenditure of TZS 18.17 trillion.

Economic Growth and External Factors:

• Economic growth rates influence revenue collection. Any slowdown in Tanzania's economic growth could hinder the ability to meet revenue targets.
• External factors like global commodity prices, inflation, and foreign exchange rates can further impact revenue collection and expenditure.

Institutional Capacity:

• Efficient budget implementation requires strong institutional capacity. Any weaknesses here can lead to inefficiencies and mismanagement of allocated funds.