Evidence from 2010–2025

Fiscal decentralization in Tanzania, pursued through the policy of Decentralization by Devolution (D by D), aims to empower Local Government Authorities (LGAs) with greater financial autonomy to fund and manage local development effectively. A key measure of success is the extent to which LGAs can rely on own-source revenue—locally generated through property rates, fees, licenses, and service levies—rather than central government transfers. The core question is whether this policy has meaningfully improved the financial sustainability of LGAs, enabling them to independently finance the bulk of grassroots projects such as roads, schools, health centers, water supply, and sanitation.

Evidence from LGA revenue data spanning 2010 to 2025 indicates that fiscal decentralization has not significantly enhanced financial sustainability. While own-source revenue has grown substantially in absolute terms—from TZS 13.9 billion in 2010 to TZS 147.8 billion in 2025 (a more than tenfold increase)—this has failed to reduce heavy dependence on central transfers. The own-source share of total LGA revenue averaged only 2.8% over the period (excluding the anomalous 0.5% in 2016), ranging from a low of 1.9% in 2012 to a high of 4.1% in 2025. In recent years, despite own-source collections reaching TZS 121.9 billion in 2024 and TZS 147.8 billion in 2025, the share remained modest at 3–4%. This means central government transfers continued to account for 96–98% of total LGA revenue, which expanded from TZS 609.7 billion in 2010 to TZS 3,570.4 billion in 2025.

This persistently low own-source contribution highlights limited progress toward true fiscal autonomy. LGAs, despite implementing most development projects critical to national goals like the Five-Year Development Plans and Sustainable Development Goals, lack the financial independence needed for proactive, timely, and locally prioritized planning. Delays in project execution and resource inefficiencies often result from this dependency.

Several structural challenges explain the stagnation:

• Inconsistent revenue collection: Sharp fluctuations—such as drops to TZS 17.2 billion in 2012 and TZS 69.1 billion in 2022—reveal weaknesses in administrative systems and enforcement.
• Inadequate tracking and transparency: Incomplete data records, particularly pre-2010 and in certain years, signal systemic monitoring gaps that hinder accountability and mobilization.
• Constrained revenue bases: Outdated property valuations, underutilized levies, and leakages from manual processes limit potential yields.
• Disincentives from transfer reliance: Predetermined central allocations reduce motivation for local revenue innovation.

Recent trends offer cautious optimism, with own-source growth accelerating in 2023–2025 and the share reaching 4.1% in 2025—the highest in the period. However, this remains far below levels needed for genuine sustainability.

To achieve meaningful enhancement through fiscal decentralization, targeted reforms are required. Priorities include digitalizing revenue administration (e.g., electronic billing and mobile payments), conducting regular property revaluations, building staff capacity, and introducing incentives for high-performing LGAs, such as greater autonomy or matching grants. Linking revenue strategies to local economic drivers—like agriculture, tourism, and small industries—could further boost collections organically. A medium-term target of 10–15% own-source share would better align resources with community needs, foster decentralized development, and build resilience against fiscal shocks.

In summary, while absolute own-source revenue has risen impressively, the low and stagnant share over 2010–2025 demonstrates that fiscal decentralization has yet to deliver substantial financial sustainability for Tanzania’s LGAs. Sustained, bold reforms are essential to realize the full potential of devolution.

Note: The 2016 data point shows Own Sources as 0.0B (likely a recording error or missing data, as noted in the document's limitations). It is treated as anomalous in trend calculations. The "Non-Tax Revenue" column does not factor into the LGA Share % and appears unrelated to the core self-reliance metric (possibly national non-tax figures or a separate category). Read More: Local Government Revenue Collections in Tanzania

Data Table (in billions TZS)

Key Trends and Insights

• Absolute Growth in Own Sources — Own-source revenue grew strongly from 13.9B TZS in 2010 to 147.8B TZS in 2025 (over 10x increase). Compound Annual Growth Rate (CAGR, excluding 2016): 18.4%.
• Growth in Total Revenue — Total LGA revenue (largely driven by central transfers) rose from 609.7B to 3,570.4B TZS (about 6x increase). CAGR: 13.5%.
• LGA Share % (Self-Reliance Indicator):
  • Average (2010–2025, excluding 2016): 2.8%.
  • Range: Low of 1.9% (2012) to high of 4.1% (2025).
  • Trend: Mild upward linear trend (+0.08 percentage points per year), explaining about 43% of variation (moderate positive progress).
  • Recent years (2020–2025) show volatility but improvement: Peak at 3.7% (2020), dip to 2.2% (2022), then recovery to 4.1% (2025) — driven by strong own-source growth (+46% in 2023, +21% in 2024–2025) while total revenue slowed or declined in 2025.

Implications for LGA Economic Self-Reliance

The revenue data from 2010 to 2025 clearly illustrates that Tanzania's Local Government Authorities (LGAs) remain heavily dependent on central government transfers, which consistently account for 95–98% of total revenue. Even at the highest point in the period—4.1% own-source share in 2025 (TZS 147.8 billion out of TZS 3,570.4 billion total)—locally generated funds cover only a marginal fraction of budgetary needs. This structural dependency severely constrains fiscal autonomy at the local level, where the majority of development projects are executed, including critical infrastructure such as roads, schools, health centers, and water supply systems.

Positive Developments

Despite the overall low share, several encouraging trends emerge:

• Own-source revenue has grown substantially faster than total revenue, increasing more than tenfold from TZS 13.9 billion in 2010 to TZS 147.8 billion in 2025, compared to total revenue rising approximately sixfold over the same period.
• A notable acceleration in recent years (2023–2025), with own-source collections rising from TZS 100.8 billion (3.2% share) in 2023 to TZS 121.9 billion (3.1%) in 2024 and TZS 147.8 billion (4.1%) in 2025, marking the strongest upward momentum in the dataset.

These gains suggest that, with continued effort, higher levels of self-reliance are achievable.

Persistent Challenges

The data also exposes significant obstacles that hinder progress:

• Volatility in collections: Sharp declines, such as own-source revenue falling to TZS 17.2 billion (1.9% share) in 2012 and TZS 69.1 billion (2.2%) in 2022, indicate inconsistent enforcement and administrative weaknesses.
• Systemic deficiencies in tracking: As highlighted in the dataset limitations, incomplete records and poor monitoring mechanisms undermine accountability and effective revenue mobilization, creating a self-reinforcing barrier to improvement.

Pathways to Greater Economic Self-Reliance

To build on recent progress and reduce reliance on central transfers, LGAs must pursue targeted, sustained reforms that address both administrative and structural constraints:

1. Strengthen Revenue Collection Systems Invest in digital tools—such as electronic billing, mobile money integration, and automated tracking—and provide staff training to minimize leakages and enhance efficiency, directly tackling the poor tracking mechanisms noted in the data.
2. Broaden and Enforce Revenue Bases Prioritize high-yield sources including property rates, business licenses, service levies, and market fees. Implementing regular property revaluations, especially in rapidly growing urban and peri-urban areas, could support sustained annual growth of 15–20% in own-source revenue.
3. Enhance Capacity Building and Incentives Offer targeted technical and financial support to underperforming LGAs while introducing performance-based incentives—such as increased autonomy or matching grants—for those demonstrating strong collection improvements.
4. Link Revenue to Local Economic Growth Promote investments in sector-specific opportunities (e.g., agriculture processing, tourism, and small-scale industries) to organically expand the taxable base and generate higher local returns.
5. Establish Clear Policy Targets Set ambitious yet realistic medium-term goals, such as progressively raising the own-source share to 10–15%, to provide a measurable roadmap for shifting project financing toward locally determined priorities.

In conclusion, while absolute own-source revenue has shown impressive growth and recent trends are promising, true economic self-reliance demands accelerating the own-source share well beyond the current low single digits. Without comprehensive reforms to address volatility, administrative gaps, and narrow revenue bases, LGAs will continue to face limited fiscal space. The upward trajectory since 2020 demonstrates potential, but only deliberate policy action will close the gap and enable LGAs to finance local development more independently and effectively.

An Assessment Based on Revenue-Expenditure Trends (2000–2025)

Analysis of fiscal data from 2000 to 2025 reveals that Tanzania cannot yet fully self-finance its development agenda without external support. Despite significant improvements in domestic revenue mobilization, persistent structural deficits indicate continued dependence on donor financing and concessional loans to bridge the gap between revenues and expenditures.

Persistent Fiscal Deficits

Tanzania has recorded fiscal deficits in 24 out of 26 years between 2000 and 2025, demonstrating that domestic revenues have consistently fallen short of total government expenditure. In the early 2000s, revenues covered only 58–70% of expenditure, creating financing gaps of 30–40% that required external grants, concessional loans, and domestic borrowing. For instance, in 2000, the government collected TZS 859 billion against expenditure of TZS 1,283 billion, resulting in a deficit of TZS 424 billion.

Although revenue performance has improved substantially over the past two decades, the structural imbalance persists. By 2024, total revenue had increased to TZS 33.9 trillion, yet expenditure expanded even faster to TZS 39.9 trillion, producing a record deficit of TZS 6.1 trillion. In recent years, revenues have covered only 84–87% of expenditure on average, meaning that 13–16% of government spending remains unfunded by domestic resources.

The 2018 Anomaly

The only year in which Tanzania achieved full fiscal self-sufficiency was 2018, when a surplus of TZS 853 billion was recorded and revenue coverage reached 105%. However, this outcome proved temporary and non-recurring. Deficits re-emerged immediately afterward due to renewed spending pressures and external shocks, including the COVID-19 pandemic period, demonstrating that the surplus was not indicative of a sustainable structural shift.

2025 Outlook

Preliminary data for January–September 2025 reinforces the conclusion of continued fiscal dependence. Within nine months, the government recorded revenue of TZS 26.3 trillion against expenditure of TZS 31.3 trillion, generating a deficit of TZS 5.0 trillion. Annualized projections indicate that Tanzania will continue to rely on external financing and borrowing to sustain both development projects and recurrent obligations.

Based on current revenue and expenditure dynamics, Tanzania cannot yet fully operate and implement large-scale development projects without external donor support. While domestic revenues—largely driven by tax collections—have grown impressively and now finance the majority of government spending, they remain insufficient to close the fiscal gap consistently. Donor financing, concessional loans, and external support continue to play a critical complementary role, particularly in infrastructure, social services, and development financing.

Tanzania is moving toward greater fiscal self-reliance, but achieving full independence from donor funding will require further expansion of the tax base, improved revenue administration efficiency, tighter expenditure prioritization, and sustained economic growth. Until these structural reforms fully materialize, external support will remain an integral component of financing Tanzania's development agenda. Read More: Overview of Government Budgetary Operations (October 2025)

Historical Analysis of Tanzania's Government Budgetary Operations (2000–2025)

The attached document provides calendar-year data on Tanzania's central government finances (in billions TZS), with deficit/surplus calculated as Total Revenue minus Total Expenditure (before grants and financing). Note that the "Total Expenditure" column shows negative values, so actual expenditure is the absolute value (e.g., -17,037 in 2018 means expenditure of 17,037 billion TZS).

Key trends:

• Persistent Budget Deficits: In 24 out of 26 years (2000–2025), revenues fell short of expenditures, resulting in deficits. The only surplus occurred in 2018 (+853 billion TZS). Deficits indicate reliance on external grants, domestic borrowing, or foreign loans to bridge the gap.
• Revenue Coverage of Expenditure (Revenue as % of Expenditure): This measures how well revenues "closed the budget gap."
  • Early 2000s: Low coverage, often 60–70% (e.g., 2000: 66.9%; 2004: 58.1%).
  • Mid-2000s to early 2010s: Remained low, dipping to ~62% in 2010.
  • Improvement from mid-2010s: Rose to 80–90% range.
    • 2017: 91.2%
    • 2018: 105% (surplus)
    • 2020: 91.7% (strong during early COVID period)
    • Recent years: Stabilized at ~84–87% (2021–2024 average ~85.7%)
    • 2025 (Jan–Sep only, partial year): ~84.1% (revenue 26,332 / expenditure 31,323)
• Absolute Deficit Growth: Deficits widened over time due to expanding government spending on infrastructure, education, and social programs.
  • 2000: -424 billion TZS
  • 2010: -3,162 billion
  • 2024 peak: -6,053 billion
  • 2025 partial: -4,991 billion (likely higher if annualized)
• Revenue Growth: Strong in many years (average ~18% in high-growth periods like 2006–2007), driven largely by tax revenue (typically 80–90% of total revenue). However, expenditure often grew faster, widening gaps.
• Overall Insight: Revenues have progressively covered a larger share of expenditures (from ~60% average in 2000–2010 to ~85–90% in 2020–2024), reflecting improved tax collection and economic growth. However, full coverage remains elusive except in 2018, creating a structural fiscal gap of 10–40% historically (narrower recently).

This gap represents the unfunded portion of the budget, typically financed through debt, leading to rising public debt obligations over time.

Addressing the Budget Gap: Recommended Actions

The persistent deficit is a common challenge in developing economies like Tanzania, driven by ambitious development spending outpacing revenue growth. If left unaddressed, it risks higher debt servicing costs, inflation, or reduced fiscal space for emergencies.

Key recommendations to close the gap:

1. Boost Domestic Revenue Mobilization:
   • Strengthen tax administration (e.g., via Tanzania Revenue Authority digitalization, reducing evasion, and broadening the tax base).
   • Minimize tax exemptions and incentives that erode collections.
   • Introduce fair, progressive reforms (e.g., property taxes, digital economy taxation) without stifling growth.
   • Target: Raise tax-to-GDP ratio (historically ~11–13%) toward 15%+ as seen in peer economies.
2. Improve Expenditure Efficiency:
   • Prioritize high-impact development projects (infrastructure, education, health) over lower-priority recurrent spending.
   • Conduct regular audits to curb waste, corruption, and leakage.
   • Shift toward performance-based budgeting.
3. Promote Economic Growth and Diversification:
   • Attract private investment (FDI) in sectors like mining, tourism, manufacturing, and agriculture to expand the taxable base.
   • Support SME growth and formalization.
4. Prudent Debt Management:
   • Favor concessional borrowing and limit commercial debt.
   • Build fiscal buffers during good years.
5. Institutional Reforms:
   • Enhance transparency and public participation in budgeting.
   • Align with medium-term fiscal frameworks (as Tanzania has done in recent plans).

These steps, if implemented consistently, could achieve sustained surpluses or near-balance, as briefly seen in 2018.

Outlook for 2026 Amid Current Political Situation

Tanzania's fiscal year runs July–June, so calendar 2026 spans the second half of FY 2025/26 and the first half of FY 2026/27.

• Approved FY 2025/26 Budget (presented June 2025, ~56.5–57 trillion TZS total):
  • Targets revenue growth and expenditure control.
  • Aims to reduce fiscal deficit to ~3.0% of GDP (from 3.4% in 2024/25), with tax revenue rising to 13.3% of GDP.
  • Supported by projected 6%+ economic growth and macro stability (per IMF and government projections).
• Positive Factors for 2026:
  • Continued infrastructure push and reforms could support revenue if growth holds.
  • IMF forecasts contained deficits (~2.8–3.0% of GDP) into 2026–2027.

However, the current political situation (as of December 2025) poses significant risks:

• The October 2025 general election saw President Samia Suluhu Hassan (CCM) re-elected with ~97–98% of votes, but results were widely disputed.
• Opposition candidates faced exclusions, leading to post-election protests and a severe government crackdown (reports of hundreds killed, widespread arrests).
• Ongoing tensions include banned protests, heavy security deployments, internet restrictions, and international criticism (UN, Human Rights Watch, Amnesty, potential aid reviews by US/West).
• This instability could:
  • Deter investors and tourism.
  • Disrupt economic activity.
  • Lead to aid/grant suspensions.
  • Increase security-related spending.
  • Cause revenue shortfalls if growth slows.

Expectation for 2026: Official targets suggest a continued narrowing of the deficit (toward 2–3% of GDP) if stability returns and reforms proceed. However, prolonged political turbulence risks higher deficits (potentially wider gaps), slower growth, and strained financing. Much depends on de-escalation and inclusive dialogue in early 2026. Monitoring sources like the Ministry of Finance, Bank of Tanzania, and IMF updates will be key.

Financial data from 2000 to 2025 (in billions TZS)

Note: All values in billions TZS. 2025 data includes Jan-Sep only (9 months). Deficit/Surplus = Revenue - Expenditure (before grants and financing).

1. Macroeconomic Overview

Tanzania’s economy demonstrated robust stability and resilience during October–November 2025, as highlighted in the Bank of Tanzania's (BoT) November 2025 Monthly Economic Review. Key supports included prudent monetary policy anchoring inflation and liquidity, strong export performance (goods & services USD 17.05 billion year-ending October, +15.2% YoY), improved fiscal revenues (tax exceeding targets), and a narrowing external imbalance (current account deficit reduced to 2.4% of GDP from >6% in 2024). GDP growth remained on track for 6.2% in FY2025/26, driven by services (tourism +11.4% arrivals), mining, and agriculture, with foreign reserves at USD 6.17 billion (4.7 months import cover, exceeding EAC/SADC benchmarks of 4.5 months). As of December 14, 2025, preliminary indicators (e.g., stable shilling at TZS 2,463/USD and rebounding interbank volumes) suggest continued momentum into Q4.

Economic Implications: This stability fosters predictable conditions for investment and consumption (private demand +3.5% contribution to growth), supporting poverty reduction (target <25% by 2030) and job creation (200K+ in tourism/mining). Narrowing deficits bolster reserves, mitigating shocks (e.g., global commodity volatility) and enabling AfCFTA integration (USD 1 billion trade potential). Positive fundamentals attract FDI (USD 1.5 billion Q3, +10% YoY), adding 1% to GDP via spillovers, while aligning with IMF's moderate distress outlook. However, food-driven pressures and interest costs (6.5% budget) risk inequality (Gini 40.4)—targeted agri reforms could unlock 0.5-1% additional growth, enhancing medium-term prospects toward upper-middle-income status. Read More: Tanzania Economic Update 2025

2. Inflation Developments

Headline inflation remained firmly anchored within the BoT's 3–5% target and EAC/SADC convergence criteria (<8%), despite upward pressures from food items amid seasonal supply constraints and regional harvests.

Key Inflation Indicators

Interpretation:

• Food-driven pressures: Uptick to 7.4% from maize, rice, sorghum, millet shortages (despite NFRA stocks at 593,485 tonnes).
• Core decline: To 2.1%, signaling no broad demand pressures.
• Energy easing: Sharp drop from 2024 due to global oil ~USD 70/barrel and shilling strength.

November 2025 Update (Preliminary): Headline eased to 3.4%, food to 6.6% (harvest relief), core stable at 2.1%.

Economic Implications: Anchored inflation preserves purchasing power for 60 million consumers (60% budget on food), sustaining consumption-led growth (3.5%) and enabling accommodative policy (CBR 5.75%). Food volatility risks welfare for low-income households, potentially adding 0.3% to poverty if prolonged—NFRA interventions mitigate, supporting rural stability (agri 24% GDP). Energy relief lowers production costs (manufacturing +3.5%), aiding competitiveness, but persistent food issues underscore climate/agri investment needs (irrigation could shave 1pp inflation, +0.5% GDP).

3. Monetary and Credit Conditions

The BoT adopted an accommodative yet cautious stance, maintaining the CBR at 5.75% to balance growth and stability, with liquidity adequate (7-day interbank 6.28%, within ±2% corridor).

Monetary Policy Indicators

Credit Allocation by Fastest Growing Sectors

Interpretation: Strong recovery in export-oriented/productives; personal loans (MSMEs) 36.4% share.

Economic Implications: Robust credit (16.1%, above 15% target) fuels productive sectors, adding 1.5-2% GDP via mining/tourism multipliers and jobs (1 in 5 tourism-linked). M3 +21.5% supports investment without overheating (core low), aligning with 6.2% growth. Sector focus enhances diversification (gold 50% exports), but MSME dominance risks if NPLs rise (3.2%)—credit guarantees could unlock TZS 2 trillion, boosting inclusive growth and youth employment (13.4% unemployment).

4. Interest Rates

Rates stayed stable, with marginal easing in negotiated segments supporting borrowers.

Selected Interest Rates (%)

Interpretation: Lower negotiated rates for prime (e.g., mining/tourism); spread reflects risk/operational costs.

Economic Implications: Stability aids predictability, sustaining credit demand (+16.1%) and consumption/investment (3.5% private). Easing negotiated (12.40%) benefits large firms, adding 0.5% GDP via capex, but high average (15.19%) constrains SMEs—narrowing spread to 5% (via competition) could mobilize TZS 1 trillion, reducing inequality and supporting 7% medium-term growth.

5. Government Budgetary Operations

Fiscal performance strengthened, with revenues buoyant amid activity (September data latest detailed).

Central Government Operations (September 2025, TZS Billion)

Interpretation: Tax +11.4% target (TRA modernization/economic rebound).

October Update (from prior): Revenue TZS 2,328.5 billion (96.1% target), small deficit TZS 15.1 billion.

Economic Implications: Strong revenues (13.1% GDP) fund development (65% FY2025/26 bias), driving infra multipliers (2% GDP). Tax buoyancy reduces aid dependency (5%), enhancing sovereignty, but expenditure under-execution (76.4% October) delays projects—improving absorption to 90% could add 1% growth via jobs/productivity.

6. Debt Developments

Debt managed prudently, with external dip from amortizations.

National Debt Stock (End-Oct 2025)

External Debt Composition

Interpretation: External monthly decline; concessional focus.

Economic Implications: Sustainable level (49.6% GDP) funds growth without distress, with multilateral low-cost aiding reserves. External dip + shilling strength saves servicing (TZS 3 trillion YoY), freeing budget for social (21.5%), but commercial rise risks rate sensitivity—diversification (green bonds) could lower costs 0.5%, supporting 6% growth.

7. External Sector Performance

Significant improvement, with surplus in services offsetting goods.

Current Account Balance

Exports and Imports (Year Ending Oct 2025, USD Billion)

Key Export Drivers: Gold +38.9% (USD 4.6 billion), tourism +11.4%, cashews/tobacco strong.

Reserves: USD 6.17 billion (4.7 months).

Economic Implications: Narrowed deficit (2.4% GDP) + reserves buildup cushion shocks, stabilizing shilling and inflation. Export surge (services 40% share) diversifies (tourism jobs 1 in 5), adding 2% GDP, supporting AfCFTA. Goods deficit moderation eases import bill, but gold reliance risks volatility—diversification to value-added could add USD 1 billion exports, enhancing resilience.

8. Overall Assessment

Late 2025 conditions featured stable inflation, productive credit, improved balances, and strong reserves—signaling positive medium-term prospects (6-7% growth).

Economic Implications: Fundamentals underpin resilience amid global uncertainties, fostering FDI/investment for Vision 2050. Food pressures temporary (harvest relief November), but rising costs warrant vigilance—policy coordination ensures stability, positioning Tanzania as EAC leader, with potential for upper-middle-income by 2030 if agri/reforms accelerated.

Tanzania's total national debt stock (external + domestic) stood at USD 50,932.1 million at end-October 2025, equivalent to approximately TZS 125.3 trillion at the average exchange rate of TZS 2,460 per USD for the month. This marks a marginal 0.1% decline from end-September's USD 50,772.4 million (TZS 124.9 trillion), primarily due to amortization offsets exceeding new disbursements, per the Bank of Tanzania's (BoT) Monthly Economic Review for November 2025 (covering October data). As of December 13, 2025, preliminary estimates from the Ministry of Finance and market sources (e.g., TICGL reports) suggest the stock has stabilized around USD 51,000 million (TZS 125.5 trillion), with no major November auctions altering the trajectory significantly—domestic issuance totaled TZS 764.5 billion in September, but October's TZS 327.7 billion was more subdued. The debt-to-GDP ratio remains at 49.6%, down from 50.8% in September, reflecting 6.3% Q2 GDP growth and prudent management under the FY2025/26 budget (TZS 49.2 trillion total).

Economic Implications: At ~50% of GDP, the debt level is sustainable per IMF benchmarks (moderate risk of distress), enabling concessional financing for Vision 2050 priorities like infrastructure (28% budget allocation, contributing 1.2% to GDP via hydropower/roads) and social sectors (21.5% share, aiding poverty reduction from 26.4%). The slight contraction provides fiscal breathing room, capping service costs at 6.5% of revenues (TZS 3.2 trillion annually) and supporting monetary easing (CBR at 5.75%). However, with tax revenues at 13.1% of GDP (below peers' 17%), reliance on borrowing risks crowding-out private credit (16.1% YoY growth but below 20% target), potentially shaving 0.5% off 6.2% FY2025/26 growth if yields rise amid global tightening. Positively, shilling appreciation (9.5% YoY) has saved TZS 3-4 trillion in external servicing, bolstering reserves (USD 6.17 billion, 4.7 months cover) and inflation anchoring (3.4% in November). Read More: Tanzania’s National Debt October 2025

1.1 Debt-to-GDP and Service Trends (Updated to November 2025)

Source: BoT November Review; preliminary November from TICGL and Trading Economics (government debt USD 15,334M Sep, partial). Trends: November stabilization (est. +0.2% MoM) ties to TZS 750 billion bond auctions (oversubscribed 2.1x), per TICGL.

Economic Implications: Contained ratio (below 55% EAC threshold) enhances credibility, lowering Eurobond spreads (6.8%) and attracting FDI (USD 1.5 billion Q3, +10% YoY). Service stability frees 2% budget for capex (47.2% execution), driving 6% growth, but low revenue elasticity (1.1) heightens vulnerability—Deloitte 2025 recommends digital tax reforms to add TZS 1-2 trillion, mitigating 1% GDP drag from potential arrears.

2. EXTERNAL DEBT (IN TZS)

External debt totaled USD 35,385.5 million at end-October 2025, equivalent to TZS 87.1 trillion (69.5% of total national debt). This reflects a 0.1% MoM decline from September's USD 35,438.3 million (TZS 87.2 trillion), driven by USD 131 million in amortizations outpacing USD 89.9 million in new loans. As of December 13, 2025, estimates peg it at ~USD 35,400 million (TZS 87.2 trillion), with November net disbursements of USD 50 million (mostly multilateral for infra). The portfolio is 66% USD-denominated, with average interest at 3.2% and maturity 12.8 years, ensuring concessionality (grant element 45%).

Economic Implications: External dominance (69.5%) leverages low-cost multilateral funds (57.4% share) for productive investments (e.g., USD 443 million September disbursements to energy/social, adding 0.8% GDP), aligning with AfCFTA (USD 1 billion trade potential). Shilling strength saves TZS 2.5 trillion in servicing (USD 220.5 million October, TZS 0.54 trillion), stabilizing reserves and inflation (non-food 2.1%). However, USD exposure amplifies FX risks—depreciation could add 0.5% to CPI—while private sector rise (18.3%) signals maturity but ties growth to FDI (10% YoY). IMF notes moderate distress risk, but export dependency (gold 50%) warrants hedging to sustain 6.2% growth.

2.1 Breakdown within External Debt

November Update: Service est. USD 210 million (TZS 0.52 trillion, -5% MoM); new loans USD 120 million (TZS 0.30 trillion), per TICGL.

Economic Implications: Public skew (81.7%) channels resources to multipliers (roads/energy +1.2% GDP), but private growth fosters diversification (18.3%, supporting manufacturing 3.5%). Low service (12% exports) aids buffers, yet new loans' concessionality (45% grants) is key—shifts to commercial (35.2%) could raise costs 1%, per World Bank, risking 0.3% growth drag without revenue hikes.

3. DOMESTIC DEBT (IN TZS)

Domestic debt reached TZS 38,114.8 billion (TZS 38.1 trillion) at end-October 2025, up 1.8% from September's TZS 37,459 billion, driven by TZS 327.7 billion issuance. As of December 13, 2025, it stands at ~TZS 38.5 trillion (+1% est. from November bonds TZS 750 billion), comprising 30.5% of total debt. Composition favors long-term instruments (T-bonds 77.5%), with average yield 10.8% and maturity 8.2 years.

Economic Implications: Domestic rise (30.5% share) reduces FX risks (vs. 69.5% external), funding 83.6% of development spend (TZS 137 billion October) for infra (2% GDP boost). Institutional concentration (banks/pensions 51.5%) ensures stability but crowds-out SMEs (credit 16.1% vs. 20% target), per SECO 2025—retail expansion (27% "others") could unlock TZS 1 trillion, enhancing inclusion. Service (TZS 482.4 billion October, 12% revenues) is manageable, but yield sensitivity risks 0.4% budget pressure if liquidity tightens.

3.1 Composition of Domestic Debt

November Update: Banks ~32% (est. TZS 12.3 trillion), others +2% from retail bonds, per TICGL.

3.2 Borrowing Instruments (Domestic Market)

Economic Implications: Bond dominance extends maturities, curbing rollover (25% in 2024), but bill reliance (21.9%) signals short-term bias—shifting to bonds saves 0.5% interest (TZS 1.4 trillion annually). Instruments support 65% development budget, but "others" growth aids inclusion (1 million retail holders), potentially adding 0.5% GDP via multipliers.

4. GOVERNMENT DEBT ISSUANCE & SERVICING

October issuance focused on domestic (TZS 327.7 billion, 100% market-based), with bonds 55% for maturity extension. Servicing totaled TZS 482.4 billion (domestic), consuming 20.7% of revenues but below 25% sustainability threshold.

4.1 Issuance in October 2025

November Update: TZS 750 billion (bonds 80%), oversubscribed 2x, yields stable (10.85% 5-year), per BoT.

4.2 Debt Service (Domestic)

Economic Implications: Modest issuance (TZS 327.7 billion, 14% monthly deficit) maintains discipline, funding capex without monetization, while service (TZS 482.4 billion) pressures revenues—yet concessional terms keep ratio low (12% exports). November surge supports Q4 growth (6.9% est.), but external service (USD 220.5 million October) risks FX drain; hedging via forwards saves 0.3% GDP, per Afreximbank.

5. SUMMARY: TANZANIA NATIONAL DEBT (AS OF OCT 2025)

November Est.: Total ~TZS 125.5T (+0.2%); external stable, domestic +1% (TICGL/Trading Economics).

Overall Economic Implications: Tanzania's TZS 125.3 trillion debt (October) funds resilient growth (6.3% Q2), with balanced external/domestic mix (69.5/30.5%) and concessional terms (45% grants) ensuring sustainability—IMF affirms moderate risk, projecting 48% GDP by 2026. It catalyzes infra/social multipliers (2% GDP), reserves (4.7 months), and FDI, but low revenues (13.1% GDP) and USD exposure (66%) pose risks: potential 1% service hike could crowd-out 0.5% growth. Policy focus on tax digitalization and exports (gold/tourism +15%) will unlock USD 10 billion AfCFTA potential, per World Bank, sustaining upper-middle-income trajectory by 2050.

Tanzania's government domestic debt stock reached TZS 38,114.8 billion in October 2025, marking a 1.8% increase from September 2025 (TZS 37,459 billion), according to the Bank of Tanzania's (BoT) Monthly Economic Review for November 2025. This represents approximately 17% of GDP, stabilizing from prior years and aligning with IMF projections for medium-term sustainability at around 17% of GDP. The debt is held by several domestic creditors, dominated by the banking system, reflecting a diversified yet institutionally concentrated investor base. This structure supports fiscal financing for infrastructure and social programs under the FY2025/26 budget (TZS 49.2 trillion), but raises concerns over potential crowding-out of private credit amid rising borrowing needs.

Economic Implications: The modest expansion in domestic debt underscores proactive fiscal management, funding key investments like the USD 3.5 billion Julius Nyerere Hydropower Project and road networks, which contributed 1.2% to Q3 2025 GDP growth. By relying on domestic sources (83% of development spending financed locally), Tanzania mitigates external vulnerabilities—such as USD appreciation or global rate hikes—while keeping public debt-to-GDP at a manageable 49.6% (below the 55% EAC benchmark). However, heavy financial sector exposure (over 70% held by banks, BoT, and pensions) could amplify liquidity risks during downturns, potentially transmitting fiscal pressures to monetary policy and constraining private sector lending, as evidenced by a 2025 study on crowding-out effects. Overall, this portfolio enhances debt sustainability but necessitates deeper retail participation to broaden the market and reduce systemic risks. Read More: Tanzania Domestic Debt Reaches TZS 37.46 Trillion

2. Domestic Debt by Creditor Category — Table

The breakdown highlights the financial sector's dominance, with commercial banks and the BoT as top holders. Data is from Table 2.6.6 in the BoT review, excluding liquidity papers for comparability.

Source: Ministry of Finance and Bank of Tanzania computations (provisional data). Key Trends: Commercial banks' share rose slightly from 28.7% in September 2025, driven by auctions yielding TZS 327.7 billion (TZS 179 billion in bonds, TZS 148.7 billion in bills). BoT holdings include monetary operations, while "others" encompass growing retail bonds via mobile platforms.

Economic Implications: This creditor mix ensures stable demand for government securities, with risk-free yields (10-12% on bonds) attracting liquidity amid 21.5% M3 growth. However, banks' 35% exposure ties their balance sheets to sovereign risk, potentially slowing credit to SMEs (private sector credit at 16.1% YoY but below potential). Pension and insurance holdings (23.4% combined) match long-term liabilities, supporting financial inclusion, but over-reliance could hinder diversification if yields compress under tighter BoT policy (CBR at 5.75%).

3. Interpretation of Domestic Debt Structure

The structure reveals a maturing domestic market, with institutional investors providing a reliable funding base. In October 2025, debt servicing totaled TZS 482.4 billion (TZS 204.5 billion principal, TZS 277.9 billion interest), consuming 12% of revenues but remaining below 20% threshold for sustainability.

1. Commercial Banks — Largest Holders (35%) Commercial banks hold the largest share, reflecting high investment in government securities for stable, risk-free returns (e.g., 15-year bonds at 11.5%). This surged post-September auctions, where oversubscription hit 150%. Economic Implications: Banks' preference for sovereign paper over private lending (crowding-out effect) limits SME financing, contributing to manufacturing's subdued 5.2% credit growth. Per a 2025 analysis, this dampens monetary transmission, as rising government borrowing could push lending rates 1-2% higher, constraining 6% GDP targets. Positively, it bolsters bank capital adequacy (CAR at 18.5%), enhancing systemic stability.
2. Bank of Tanzania — Nearly 30% Includes Treasury bonds for liquidity management and special facilities like overdrafts (TZS 5,493.1 billion non-securitized). BoT's role supports fiscal deficits (3.5% of GDP) without direct monetization. Economic Implications: Facilitates counter-cyclical financing, aiding post-COVID recovery (reserves at USD 6.2 billion). However, quasi-fiscal exposure risks policy independence, potentially fueling inflation if uncoordinated with fiscal tightening—though current 3.5% rate remains anchored. IMF notes this aids short-term buffers but advises phasing down to <25% for credibility.
3. Pension Funds — 16.4% Primarily long-term Treasury bonds to match actuarial needs, with allocations up 5% YoY via NSSF reforms. Economic Implications: Secures retirement savings amid 7% population aging, channeling domestic savings (household rate 12%) into productive debt. This deepens capital markets, potentially lowering yields by 50bps and funding infra (e.g., USD 1B rail upgrades), but concentration exposes pensions to interest rate volatility.
4. Insurance Companies — 7% Favor long-dated securities to hedge liabilities, with life insurers leading uptake. Economic Implications: Aligns with growing insurance penetration (2.5% of GDP), fostering risk pooling for climate/agri shocks. Supports financial deepening, but low share signals untapped potential—expanding could mobilize TZS 1 trillion more, reducing aid dependency.
5. Other Creditors — 7.7% Includes retail investors (via M-Auwal bonds) and private firms, up from 5% in 2024 due to digital platforms. Economic Implications: Boosts inclusion (1 million retail holders), democratizing finance and reducing inequality (Gini at 40.4). Encourages savings mobilization, potentially adding 0.5% to GDP via multiplier effects, though scaling needs education to hit 10% share by 2030.

4. Domestic Debt Composition — Additional Notes

The structure favors long-term instruments: Treasury Bonds (59.2%), Treasury Bills (38.2%), Other government securities (2.6%). Government raised TZS 327.7 billion in October, shifting 55% to bonds for maturity extension (average 8.2 years).

Implication: The government continues shifting toward long-term borrowing (bonds) to reduce refinancing pressure and stabilize debt servicing costs (interest at 6.5% of budget). This lowers rollover risks (from 25% in 2024), supporting fiscal space for 34% budget growth in FY2025/26, but higher bond issuance could elevate yields if private demand lags, per Afreximbank analysis.

Economic Implications: Prolongs maturity profile (up from 6.5 years), curbing liquidity squeezes and aiding 4.7-month reserve cover. Enables infra-led growth (2% GDP boost from projects), but if yields rise >12%, it could crowd out investment, slowing non-mining sectors to 5.5%.

5. Key Takeaways

• Total domestic debt: TZS 38.1 trillion, up 1.8% MoM, financing 40% of budget amid 13.1% tax-to-GDP (low vs. peers).
• Major creditors: Commercial Banks (35%), Bank of Tanzania (29.9%), Pension Funds (16.4%)—financial sector holds 81.3%.
• Domestic debt remains dominated by the financial sector: Stable but exposed; banking balance sheets 25% tied to sovereigns.

Broader Economic Implications: This composition ensures low-cost funding (average rate 10.8%), underpinning 6% GDP growth and single-digit inflation, per World Bank. It mitigates FX risks (69.5% external debt) and supports Vision 2050 via infra (roads, energy adding 1.5% growth). Yet, crowding-out risks private credit (16.1% YoY vs. 20% target), impacting jobs (youth unemployment 13.4%)—policy responses like credit guarantees could unlock TZS 2 trillion for SMEs. Sustained at 17% GDP, it signals resilience, but diversification (e.g., green bonds) is key to avoid transmission lags to lending rates.

Tanzania's external debt stock totaled USD 35,385.5 million at the end of October 2025, reflecting a modest 0.7% monthly decrease from September's USD 35,438.3 million, primarily due to net amortizations exceeding new disbursements (USD 220.5 million service vs. USD 89.9 million loans). As of December 14, 2025, this remains the latest detailed breakdown available from the Bank of Tanzania's (BoT) November 2025 Monthly Economic Review; preliminary November estimates suggest stability around USD 35,400 million (minor +0.04% from multilateral inflows), with no significant shifts reported in subsequent updates. The portfolio is predominantly concessional (average grant element ~45%, interest 3.2%), supporting moderate debt distress risk per IMF assessments.

Economic Implications: The contained stock (69.5% of total national debt, ~25% of GDP) leverages low-cost financing for productive investments, contributing 1-2% to annual GDP growth via infrastructure and social multipliers while preserving fiscal space (service at 12% of exports). Government dominance ensures public goods alignment with Vision 2050 (upper-middle-income by 2050), but private sector growth (18.3%) signals FDI maturity—potentially adding 0.5% GDP via spillovers in trade/manufacturing. Negligible public corporations share minimizes quasi-fiscal risks, enhancing stability amid 6.2% projected growth, though reliance on external funds exposes to global rate cycles (Fed policy impacts commercial 35.2%). Read More: Tanzania External Debt at USD 35.44 Billion

1.1 Table — External Debt by Borrower

Source: BoT November 2025 Review; provisional data.

Interpretation:

• The Government holds the largest portion (over 80%): Reflects strategic borrowing for budget support and projects (e.g., USD 443 million net disbursements YTD for infra/social).
• The private sector covers 18.3%: Mostly trade credits and bank loans, up ~12% YoY, tied to FDI in mining/tourism.
• Public entities account for a negligible share: Minimal parastatal borrowing post-reforms.

Economic Implications: Government skew (81.7%) channels funds to high-multiplier sectors (e.g., social services boosting human capital, +0.8% long-term GDP per World Bank models), fostering inclusive growth and poverty reduction (26.4% rate). Private rise diversifies risks, supporting non-gold exports (+15.2%) and jobs (200K in services), but concentrates fiscal contingency—revenue shortfalls (13.1% GDP tax ratio) could elevate service (USD 2.1 billion annually), crowding out 0.3-0.5% private investment if guarantees called.

2. Disbursed Outstanding Debt by User of Funds

The Disbursed Outstanding External (DOE) debt—excluding undisbursed commitments—stood at USD 31,385.5 million (88.7% of total external), allocated across sectors to prioritize development goals. This portion represents actively utilized funds, with social services leading due to multilateral priorities (e.g., IDA/World Bank health/education loans).

2.1 Table — External Debt by User of Funds

Source: BoT November 2025 Review; DOE focus.

Interpretation:

• Social services absorb the largest share (34.7%): Prioritizes human capital (e.g., water/education projects).
• Heavy investment in energy/mining (22.1%) and transport (17.8%): Supports industrialization and connectivity.
• Agriculture’s share is small (5.4%): Despite 24% GDP contribution, reflecting underinvestment relative to potential.

Economic Implications: Allocation to social (34.7%) enhances human development (HDI gains, +1-2% long-term productivity), reducing inequality (Gini 40.4) and poverty via education/health spillovers. Productive sectors (energy/mining/transport ~60%) drive multipliers: energy adds 1.2% GDP (hydropower), transport boosts trade (+15.2% exports under AfCFTA, USD 1 billion potential). Low agriculture share risks food security (inflation driver 7.4% October) and rural jobs (65% employment)—increasing to 10% could add 0.5-1% GDP via value chains, per Deloitte 2025. Overall, productive use sustains moderate distress risk, aligning with 6% growth, but sector imbalances highlight diversification needs amid climate vulnerabilities (1% GDP annual losses).

3. Currency Composition of External Debt (October 2025)

The portfolio is heavily USD-tilted, with diversification to EUR/SDR for multilateral exposure; no major shifts reported through November.

3.1 Table — External Debt by Currency

Source: BoT November 2025 Review.

Interpretation:

• USD dominance (65.7%): Ties to global markets; sensitive to USD strength.
• EUR/SDR (26.3% combined): Multilateral buffer.
• Appreciation of the Tanzanian shilling in 2025: Reduces TZS equivalent (~9.5% savings YoY).

Economic Implications: High USD exposure (65.7%) amplifies shilling gains (TZS 2,463/USD Dec 14), saving TZS 2.5-3 trillion in servicing and easing non-food inflation (2.1%). Diversification (EUR/SDR/CNY ~30%) hedges risks, supporting reserves (4.7 months) amid Fed easing. However, USD volatility could add 0.5% to CPI/debt service if reversing—BoT forwards mitigate, preserving 3.4% inflation and 6% growth, but full hedging (to 50% USD) could enhance resilience, per Afreximbank.

4. Summary of Key Insights

4.1 Debt Stock by Borrower

• Government: 81.7% (public investment focus).
• Private sector: 18.3% (FDI-linked growth).
• Public corporations: ~0% (reform success).

4.2 Debt Use by Sector

• Largest: Social services (34.7%), Energy & mining (22.1%), Transport & telecom (17.8%).
• Agri low (5.4%): Underinvestment risk.

4.3 Currency Composition

• USD two-thirds (65.7%); EUR/SDR key diversifiers (26.3%).

Overall Economic Implications: October's USD 35.4 billion external debt (stable through November) is productively allocated (social/productive ~75%), fueling human capital and infra for 6.2% growth and reserves buildup. Government/private balance supports inclusivity/FDI, while currency mix + shilling strength curbs costs/inflation—sustaining moderate risk (IMF). Yet, USD dominance and agri lag pose vulnerabilities (climate/FX shocks ~1% GDP); prioritizing agri (to 10%) and hedging could unlock 0.5-1% additional growth, aligning with AfCFTA/USD 10 billion potential by 2030 (World Bank 2025).

The Tanzania shilling (TZS) exhibited strong stability and net appreciation throughout 2025, bolstered by robust foreign exchange (FX) inflows from gold exports (USD 2.8 billion YTD through October, +38.9% YoY), tourism receipts (USD 2.8 billion, +28% arrivals), cash crops (cashews +15%), and Bank of Tanzania (BoT) interventions, including forward contracts and reserve accumulation (net FX reserves at USD 6.17 billion as of October 2025, covering 4.7 months of imports). As of December 13, 2025, the shilling traded at approximately TZS 2,463 per USD (mid-market rate), reflecting a slight 0.5% depreciation from November's end-month rate of TZS 2,455 but maintaining a cumulative 8.5% appreciation from October 2024's TZS 2,693. This resilience contrasts with the 8.9% depreciation in the prior year, aligning with EAC convergence goals and supporting monetary policy transmission.

Economic Implications: The shilling's firmness enhances import affordability (e.g., fuel and machinery costs down 10-15%), curbing non-food inflation at ~2.1% in November 2025 and preserving household purchasing power amid 3.4% headline inflation. This stability bolsters reserves (up 14% YoY), reducing external vulnerability and facilitating 6.2% GDP growth projections for FY2025/26 by lowering production costs in import-dependent sectors like manufacturing (3.5% expansion). Investor confidence has surged, with FDI inflows at USD 1.5 billion in Q3 2025 (+10% YoY), but prolonged appreciation pressures non-gold exporters (e.g., 4-6% margin erosion in horticulture), underscoring diversification needs to sustain 7% medium-term growth and mitigate Dutch disease risks, per IMF's 2025 Article IV consultation. Read More: Tanzania Shilling Strengthens 0.75% Monthly as National Debt Reaches USD 50.77 Billion

1.1 Monthly Exchange Rate (TZS/USD)

(End-month values, updated through December 13, 2025)

Source: BoT data through October; updated November-December from market sources (Xe.com, Wise, exchange-rates.org). Key Point: In October 2025, the shilling averaged TZS 2,460.54/USD, appreciating 9.5% annually—a strong recovery from 2024's depreciation. By December 13, 2025, the rate stabilized at TZS 2,463/USD, with minor Q4 volatility tied to seasonal imports but overall firmness amid USD 1.2 billion in November inflows (tourism +30.6%).

Economic Implications: Monthly trends reveal a V-shaped recovery post-January dip, driven by export peaks (gold in Q3), which cushioned 15% of imports (energy/capital goods) and supported 21.5% M3 growth. This pattern enhances trade balances (current account deficit at 2.4% GDP), but Q4 depreciation risks (0.3%) could add 0.2-0.3% to inflation if sustained, per BoT models—mitigable via continued interventions to preserve 4.7-month reserve adequacy.

Tanzania National Debt Levels (October 2025)

Tanzania's total national debt stock (domestic + external) stood at USD 50,932.1 million as of end-October 2025, a marginal 0.1% decline from September's USD 51,000 million, reflecting amortization offsets to new disbursements. External debt dominated at USD 35,385.5 million (69.5% share), while domestic debt rose 1.8% to TZS 38,114.8 billion (equivalent to USD 15,546.6 million at October's average rate). No official November data is available as of December 13, 2025 (December BoT review pending), but preliminary estimates suggest stability, with external at ~USD 35,400 million (modest +0.04% from October disbursements) and domestic at TZS 38,500 billion (+1% from bond auctions), per market reports. Debt-to-GDP remains at 49.6%, below the 55% EAC threshold.

Economic Implications: The slight contraction signals prudent management amid 6% GDP growth, freeing fiscal space for social spending (21.5% of budget) and infrastructure (e.g., USD 3.5 billion hydropower adding 1.2% to growth). Rising domestic reliance (30.5% share) reduces FX exposure, stabilizing reserves and the shilling, but overall expansion (+15.8% YoY) heightens servicing costs (6.5% of budget), potentially crowding out private credit (16.1% YoY) by 1-2% if yields rise. IMF projects sustainability through 2026, but ties it to export buoyancy—gold/tourism inflows could lower debt service ratio to 12% of exports, enhancing buffers against shocks like climate events (1% GDP annual cost).

Total National Debt Stock

Source: BoT Monthly Economic Review (November 2025); preliminary November estimates from TICGL and Trading Economics. Trends: Domestic surge from TZS 327.7 billion October auctions (55% bonds); external dip from USD 131 million amortizations.

Economic Implications: Balanced composition (69.5% external) leverages concessional multilateral funding (57.4%) for infra (28% allocation), boosting productivity and 2% GDP via multipliers, but USD-denominated share (66%) amplifies appreciation benefits—saving TZS 2-3 trillion in servicing annually. Domestic growth supports budget deficits (3.5% GDP) without FX strain, but institutional concentration (banks 35%) risks liquidity spillovers, per World Bank CPF 2025-29.

External Debt Breakdown (October 2025)

External debt, primarily concessional, funds growth priorities like energy and transport, with low interest (3.2% average) and long maturities aiding sustainability.

External Debt Stock by Borrower

Source: BoT (Table 2.6.3). Details: Government focus: USD 443 million net disbursements in October for infra/social sectors.

External Debt by Creditor Type

Source: BoT . Trends: Multilateral dominance (e.g., IDA/World Bank) ensures low-cost funding; commercial rise from Eurobonds.

Economic Implications: Borrower skew to government (81.7%) channels resources to public goods (e.g., roads adding 0.8% GDP), while private sector growth (18.3%, +12% YoY) signals FDI maturity. Creditor mix (57.4% multilateral) minimizes costs (debt service USD 2.1 billion annually), supporting 4.7-month reserves, but commercial exposure (35.2%) ties to global rates—Fed easing could save 0.5% of budget, per Afreximbank. Overall, it fosters inclusive growth but risks if exports falter (service receipts cover 80% of debt service).

Relationship Between Shilling Stability and National Debt

The shilling's appreciation directly alleviates external debt burdens, as 66% is USD-denominated, converting to fewer TZS for repayments.

Comparative Table — Shilling vs Debt Trends

*Government securities proxy. Source: BoT; updated December rate TZS 2,463/USD implies continued relief.

Economic Implications: 9.5% appreciation saves TZS 3-4 trillion in external servicing (6.5% budget share), enabling reallocation to education/health (21.5% boost), per Deloitte 2025. Debt rise funds capex (47.2% execution), driving 6% growth, but without FX buffers, +11.6% external could add 1% to deficit—shilling firmness preserves 3% target, enhancing credibility for green bonds (USD 1B potential).

Interpretation of Findings

• Shilling Stability Helps Manage Debt Costs

Stronger TZS lowers external servicing (USD 2.1 billion annually) by 9%, providing fiscal space.

Economic Implications: Reduces rollover risks (maturity 8.2 years), supporting M3 growth (21.5%) and private credit (16.1%), but ties sustainability to inflows—tourism/gold volatility could reverse gains, risking 0.5% GDP drag.

• National Debt Levels Continue Rising

External +11.6% from multilateral/commercial; domestic +36.6% via bonds.

Economic Implications: Funds infra (28% allocation, +1.2% GDP), but elevates exposure—debt/GDP at 49.6% sustainable, yet IMF urges <45% for buffers, freeing TZS 2T for SMEs.

• Strong FX Reserves Support Shilling Stability

USD 6.17 billion (4.7 months cover) bolsters confidence.

Economic Implications: Mitigates shocks, enabling CBR at 5.75% for 3.5% inflation; supports AfCFTA (USD 1B trade uplift).

• Low Inflation and Export Growth Also Support Stability

3-5% target and exports (+15.2%) anchor FX.

Economic Implications: Lowers yields (10.8% bonds), crowding-in FDI; export boom adds 2% GDP, but diversification needed.

Summary

Overall Outlook: Shilling-debt interplay fortifies resilience, positioning Tanzania for 7% growth via infra/FDI, but monitoring Q4 volatility and diversification is crucial amid global uncertainties (World Bank 2025).

The Tanzania shilling (TZS) demonstrated remarkable resilience throughout 2025, appreciating by 9.5% year-on-year against the USD from October 2024 to October 2025, and sustaining firmness into December amid robust foreign exchange (FX) inflows. Key drivers included record gold exports (up 38.9% YoY to USD 2.8 billion in the first 10 months), tourism receipts (USD 2.8 billion YTD, +28% arrivals), cash crop surges (cashews +15%, tobacco +12%), and proactive Bank of Tanzania (BoT) interventions via forward sales and reserve management (net FX reserves at USD 6.2 billion, covering 4.7 months of imports). As of December 13, 2025, the shilling traded at approximately TZS 2,463 per USD, reflecting a further 0.5% monthly appreciation from November's average of TZS 2,455, per recent market data. This marks a stark reversal from the 8.9% depreciation in the prior year, aligning with EAC convergence criteria and bolstering Tanzania's external position.

Economic Implications: The shilling's strength enhances import affordability, curbing imported inflation (e.g., fuel costs down 12.5%) and supporting 3.4% headline inflation in November 2025, well within the BoT's 3-5% target. This stability fosters investor confidence, evidenced by FDI inflows of USD 1.5 billion in Q3 2025 (up 10% YoY), and facilitates lower borrowing costs (Eurobond yields at 6.8%). For the broader economy, it underpins 6.2% GDP growth projections for FY2025/26 by easing production costs in manufacturing (3.5% sector expansion) and agriculture (25.6% credit growth), while amplifying export competitiveness under AfCFTA—potentially adding USD 1 billion in intra-regional trade. However, prolonged appreciation risks eroding non-gold export margins (e.g., horticulture down 5%), highlighting needs for diversification to sustain 7% medium-term growth, per IMF's 2025 Article IV. Read More: What's Next for Tanzania's Economy? Shilling Stability in 2026 Amid Post-Election Turbulence

1.1 Exchange Rate – Month-End Values

Month-end rates show consistent firmness, with a cumulative 9.0% appreciation from October 2024 through December 2025.

Source: BoT and market data (Xe.com for Dec). Trends: The shilling peaked at TZS 2,442.8 in September 2025 amid gold surges, with minor volatility in Q4 tied to seasonal imports.

1.2 Monthly Average Exchange Rate (Oct 2025)

• TZS 2,460.54 per USD (October 2025 average), appreciating 0.5% from September's TZS 2,471.69.
• Updated December 2025 (YTD average): TZS 2,480 per USD, reflecting sustained inflows (tourism +30.6% in November).

Annual Performance:

• 9.5% appreciation (October 2024 to October 2025), extending to ~9.0% through December.
• BIG reversal from 8.9% depreciation a year earlier, driven by current account surplus narrowing to 2.4% of GDP.

Economic Implications: This appreciation reduces external vulnerabilities, stabilizing reserves (up 14% YoY) and supporting monetary easing (CBR at 5.75%). It lowers input costs for 70% import-dependent industries, boosting manufacturing productivity and contributing 0.8% to GDP via cost savings, per World Bank 2025 estimates. Yet, it pressures exporters (e.g., 5% margin squeeze in cashews), potentially slowing rural incomes (agri 24% of GDP) unless offset by value addition.

2. Tanzania Inflation Performance (2024–2025)

Inflation remained anchored within the 3-5% target throughout 2025, averaging 3.3% year-to-date through November, supported by ample food stocks (NFRA maize reserves at 593,485 tonnes in October), stable global energy prices (Brent at USD 70/barrel), and the shilling's firmness curbing pass-through effects. Headline eased to 3.4% in November 2025 from 3.5% in October, with core at 2.3% (up slightly from 2.1%), reflecting domestic supply dynamics rather than external pressures. Preliminary December data suggests stability at ~3.4%, per NBS trends.

Economic Implications: Low inflation preserves purchasing power for 60 million consumers, sustaining 3.5% private consumption growth and aligning with EAC/SADC benchmarks for regional integration. It enables BoT's accommodative stance, facilitating 16.1% private credit expansion and 6% GDP momentum. Positively, it mitigates poverty risks (26.4% rate), but food volatility (7.4% in October) underscores agri-reform needs—e.g., irrigation investments could shave 1-2pp off inflation, unlocking 0.5% additional growth via stable supplies, as noted in Deloitte's 2025 Outlook.

2.1 Headline Inflation Trends

Source: NBS and BoT; November easing from food moderation.

2.2 Food & Non-Food Inflation (Oct 2025)

Updated November 2025: Food 6.6% (down from 7.4%), non-food 2.1% (slight rise to 2.1%).

Economic Implications: Food's dominance (28.2% CPI weight) amplifies rural-urban linkages, but easing to 6.6% in November supports harvest-led recovery, adding 1% to agri GDP. Non-food stability aids urban manufacturing (e.g., cheaper inputs), but persistent food pressures risk 0.5% welfare loss for low-income households (60% budget on food).

3. Tanzania Shilling vs Inflation – Combined Table

This table illustrates the symbiotic relationship: Shilling strength offsets potential inflationary spillovers.

Source: BoT/NBS; updated with November data.

Economic Implications: The inverse dynamic (appreciating TZS vs. subdued non-food CPI) shields 40% of imports from passthrough, stabilizing energy/transport costs and contributing 0.7% to GDP via lower logistics expenses. This convergence supports fiscal space (deficit at 3.5% GDP), but food-exchange disconnect highlights supply-side vulnerabilities—addressable via USD 500M agri-investments for 1pp inflation reduction.

4. How the Shilling Affected Inflation

4.1 Stronger Shilling Helped Reduce Imported Inflation

The shilling's 9.5% appreciation in 2025 made imports 8-10% cheaper in local terms, particularly fuel (down 20%), machinery (-15%), fertilizers (-10%), and transport equipment, keeping non-food inflation at ~2.4%.

Evidence: BoT notes: “The shilling appreciated … and remained firm against other currencies,” aiding energy stability. Updated: November non-food at 2.1%, per NBS.

Economic Implications: Cheaper imports lower production costs, boosting competitiveness (exports +15.2%) and manufacturing margins (5.2% credit growth). This eases 15% of CPI (energy/utilities), supporting urban consumption and 2% GDP from services, but risks Dutch disease in non-tradables.

4.2 Inflation Remained Within Target Because of Currency Stability

Headline stayed 3-5%, meeting EAC/SADC criteria, with BoT's policy anchoring expectations.

Quote: “Inflation remained stable … supported by prudent monetary policy and stable exchange rate.”

Economic Implications: Anchored expectations reduce volatility premiums, lowering lending rates (15.19%) and enabling 21.5% M3 growth. Aligns with 6% GDP, per IMF, by fostering savings (household rate +1pp) and investment.

4.3 October 2025 Inflation Rise Was Not Due to Currency Weakness

Uptick to 3.5% from food staples (maize/rice +10-15% in pockets), not FX; November eased to 3.4% with supplies.

Economic Implications: Isolates inflation to domestic factors, allowing targeted interventions (e.g., NFRA releases), preserving FX buffers for reserves (USD 6.2B). Mitigates 0.3% growth drag from food shocks, but underscores climate resilience needs (droughts cost 1% GDP annually).

5. Key Insights

(1) The shilling appreciated strongly in 2025: Helped keep inflation low (3.4% Nov) by cheapening imports. Implication: Bolsters reserves, funding infra (1.2% GDP boost from hydropower).

(2) Inflation rose slightly due to food prices—not currency weakness: 7.4% in Oct, easing to 6.6% Nov. Implication: Highlights agri-supply focus; reforms could add 0.5% growth via stability.

(3) Non-food inflation remained low because a stronger shilling reduced import costs: Fuel/construction/pharma/transport inputs down 10-20%. Implication: Enhances industrial efficiency, supporting 16.1% credit and job creation (200K in manufacturing).

(4) Monetary and fiscal coordination supported both shilling stability and low inflation: CBR 5.75% ensured liquidity/FX. Implication: Deepens integration (AfCFTA USD 1B potential), but requires diversification to counter gold dependency (50% exports).

6. Summary Narrative

The Tanzania shilling strengthened notably in 2025, appreciating by 9.5% annually through October and holding firm at ~TZS 2,463/USD in mid-December, fueled by FX inflows from gold, tourism, and crops alongside BoT interventions. This exchange rate stability was pivotal in maintaining inflation within the 3-5% target, with headline easing to 3.4% in November from October's 3.5% peak. While food inflation (6.6% in November) drove mild pressures from domestic supplies, non-food components stayed subdued (~2.1%) thanks to cheaper imports, exemplifying a favorable exchange-rate–inflation interplay. Economically, this dynamic underpins 6%+ growth by stabilizing costs, enhancing reserves, and fostering investment, though agri-diversification remains key to long-term resilience amid global uncertainties.

In October 2025, Tanzania’s government securities market demonstrated high activity and liquidity, with Treasury bills (T-bills) and Treasury bonds (T-bonds) auctions attracting strong oversubscription amid ample banking sector liquidity (M3 growth at 21.5% YoY). Total issuance reached TZS 359.4 billion (TZS 128 billion in T-bills, TZS 231.4 billion in T-bonds), financing 15% of the monthly budget deficit and supporting domestic debt at TZS 38,114.8 billion. Investor participation was led by commercial banks (35% holdings) and pension funds (16.4%), reflecting confidence in sovereign paper amid stable inflation (3.5%) and shilling appreciation (9.5% YoY). As of December 13, 2025, the market remains robust, with November auctions (e.g., T-bill No. 1188 on Nov 19 yielding ~6.35%, up slightly from October's 6.27%) continuing oversubscription trends, per BoT data. This activity aligns with the FY2025/26 issuance calendar, targeting TZS 20-25 trillion in bonds to fund infrastructure (28% budget share).

Economic Implications: The liquid market enables low-cost fiscal financing (average yields 6-12%), keeping debt service at 6.5% of budget and public debt-to-GDP at 49.6%—below EAC's 55% threshold—thus preserving space for growth-oriented spending (e.g., USD 3.5 billion hydropower adding 1.2% to GDP). Strong demand signals financial deepening (market size ~15% GDP), crowding-in private investment via benchmark yields, but heavy bank exposure (70% holdings) risks transmission of liquidity shocks to credit (16.1% YoY growth), potentially slowing SME lending and 0.5% of projected 6.2% GDP expansion if yields spike, per IMF 2025 analysis. Overall, it bolsters monetary-fiscal coordination, anchoring inflation and supporting 4.7-month reserve cover. Read More: Tanzania Liquidity Strengthens Markets

1.1 Treasury Bills (T-Bills)

Two T-bill auctions were conducted in October 2025 (Nos. 1185 and 1186 on Oct 8 and 22), with 364-day maturities dominating (70% allocation). Oversubscription reflected liquidity surplus from remittances (USD 579 million YoY) and exports.

Observation: Auctions oversubscribed by 84% (bids 1.84x offer), driven by banks seeking short-term, risk-free assets amid 7-day interbank rates at 6.28%. Yield uptick (24 bps) tied to seasonal demand, not stress.

November 2025 Update: Auctions 1187 (Nov 5) and 1188 (Nov 19) raised TZS 250 billion combined, with oversubscription at 78% and WAY at 6.35% (mild rise), per BoT results. December auction (No. 1189, Dec 3) targeted TZS 180 billion, yielding ~6.40%.

Economic Implications: T-bill liquidity (38.2% of domestic debt) facilitates short-term deficit funding (TZS 15.1 billion October gap), stabilizing reserves (USD 6.17 billion) and shilling (TZS 2,463/USD as of Dec 13). Low yields support transmission to lending rates (15.19%), boosting private credit and 1% GDP from consumption, but persistent oversubscription signals crowding-out—banks allocate 25% balance sheets to securities, limiting SME loans and risking 0.3% growth drag in manufacturing (5.2% credit), per World Bank 2025 CPF.

1.2 Treasury Bonds (T-Bonds)

Two auctions: 2-year (Oct 15, coupon 10.00%) and 10-year (Oct 1, coupon 13.5%), with re-openings emphasizing long-term funding (59.2% debt composition).

Interpretation: Bids 2.54x offer signal confidence; yields stable (10-12.55%), attracting pensions/insurers for liability matching. 2-year focus aids rollover (maturity 8.2 years).

November 2025 Update: Auctions included 15-year (No. 688, Nov 12, coupon 12.75%, raised TZS 140.7 billion at 12.80% yield) and 5-year (No. 689, Nov 26, coupon 10.75%, oversubscribed 2.1x at 10.85%). Upcoming: 20-year re-opening (Dec 17, coupon 13.00%).

Economic Implications: Bond appetite (TZS 670.5 billion bids) extends maturities, reducing refinancing risks (25% rollover in 2024) and costs (interest TZS 277.9 billion October), freeing 2% budget for social sectors (21.5% allocation). This deepens capital markets (TZS 22.5 trillion outstanding), lowering spreads (6.28 pp) and FDI (USD 1.5 billion Q3), but yield sensitivity to global rates (Fed easing) could add 0.4% to debt service if rising, constraining 6% growth—mitigable via green bonds (USD 1 billion potential), per Afreximbank.

2. Interbank Cash Market (IBCM)

The IBCM facilitates short-term liquidity among 32 banks, with October volumes at TZS 2,255.4 billion (down 31% MoM but +12% YoY), dominated by 7-day trades (75.4%). Rates eased to 6.38% overall, within CBR corridor (3.75-7.75%), aided by BoT's TZS 1.2 trillion reverse repos.

2.1 IBCM Trading Volumes

Breakdown by Tenor (October 2025):

Interpretation: Volume dip from seasonal factors (harvest remittances), but activity signals efficient redistribution; 7-day dominance reflects working capital needs.

November 2025 Update: Volumes rebounded to TZS 2,800 billion (+24% MoM), with 7-day at 76%, per preliminary BoT data amid November export peaks. Rates averaged 6.40%, slight uptick from liquidity absorption.

Economic Implications: Declining volumes indicate surplus liquidity (interbank below corridor), supporting 25.8% M2 growth and easing funding stress—key for 16.1% private credit, adding 1.5% to GDP via investment. Short-term bias aids daily operations but limits long-term allocation; rebound in November underscores resilience, but volatility could transmit to lending (15.19%), risking 0.2% drag in trade (21.8% credit growth) if tightening.

2.2 IBCM Interest Rates

Analysis: Easing (7 bps) reflects BoT operations; proximity to CBR signals policy effectiveness.

November 2025 Update: Overall at 6.40% (mild rise), 7-day stable at 6.30%, per TICGL report.

Economic Implications: Low rates (within corridor) enhance transmission, keeping inflation at 3.4% (November) and supporting consumption (3.5% contribution to growth). Adequate liquidity buffers shocks (e.g., election volatility), but easing trend risks moral hazard in lending—BoT's repos ensure stability, fostering 6.2% GDP via efficient intermediation (ROA 2.5%).

3. Summary Table – Government Securities & Interbank Market

Sources: BoT November Review; updates from TICGL and BoT auctions.

Economic Implications: Metrics highlight a resilient system, with oversubscription funding deficits without yield spikes, sustaining 3.5% inflation and 6% growth. November rebound signals post-harvest liquidity, but short-term focus (75%+) limits capex—policy shifts (e.g., longer repos) could unlock 0.5% additional GDP via deeper markets.

4. Interpretation and Insights

Government Securities Market:

• Oversubscription (84% T-bills, 154% bonds) from banks/pensions reflects confidence amid 3.4% inflation.
• Rising yields (24 bps T-bills) normalizes without stress; long-term demand (10-year at 12.55%) aids maturity extension.

Interbank Market:

• Volume drop (-31%) but rate easing (6.38%) implies surplus liquidity; BoT repos (TZS 1.2T) effective.
• 7-day dominance (75.4%) suits trade cycles.

Economic Implications: Active markets ensure fiscal-monetary synergy, financing TZS 49.2 trillion budget (65% development) at low cost, driving infra multipliers (2% GDP) and reserves (USD 6.17B). Stability anchors expectations, boosting FDI (10% YoY), but bank dominance risks crowding-out—diversifying to retail (7.7% holdings) could mobilize TZS 1T, enhancing inclusion and 7% growth potential, per Deloitte 2025 Outlook. November trends confirm momentum, positioning Tanzania resiliently amid global easing.

Tanzania's fiscal operations in October 2025 reflected disciplined execution amid a challenging global environment, with domestic revenues achieving 96.1% of target (TZS 2,328.5 billion) and total expenditures at 76.4% of target (TZS 2,343.6 billion), resulting in a modest deficit of TZS 15.1 billion. This performance marks a YoY revenue growth of 9.4%, outpacing the 6% national GDP expansion for FY2024/25, while under-execution in development spending (47.2% of target) highlights absorption challenges in project implementation. Per the Bank of Tanzania's (BoT) Monthly Economic Review for November 2025, this aligns with the FY2025/26 budget's focus on revenue mobilization (targeting 16.5% of GDP) and expenditure prioritization, supporting Vision 2050 goals of upper-middle-income status by 2050.

Economic Implications: The controlled deficit (0.2% of monthly GDP estimate) reinforces fiscal sustainability, keeping public debt at ~50% of GDP (below the 55% EAC threshold) and enabling monetary policy flexibility (CBR at 5.75%). This cushions against external shocks like oil price volatility, sustaining 3.5% inflation and 6% growth projections for 2025. However, low development absorption risks delaying infrastructure multipliers (e.g., 1.5% GDP boost from energy projects), potentially constraining private investment and job creation (youth unemployment at 13.4%). Enhanced TRA digitalization could lift tax buoyancy, adding TZS 1-2 trillion annually to fund social spending, per World Bank estimates, fostering inclusive growth and poverty reduction (from 26.4% in 2024). Read More: Tanzania Government Revenue at 87.2% of Target, Spending at 71.9%

CENTRAL GOVERNMENT REVENUES (OCTOBER 2025)

Central government revenues totaled TZS 2,328.5 billion, comprising tax (90.3%), non-tax (9.7%), and LGA own-source (2.8%) collections. This exceeded October 2024 levels by 9.4%, driven by trade recovery and administrative reforms, but missed targets due to seasonal VAT lags and LGA inefficiencies.

Revenue Performance Table

Source: BoT computations (provisional). Additional Details: Tax breakdown: Income tax +12% YoY (TZS 850B), import duties +15% (TZS 450B), fuel levies +8% (TZS 120B). Non-tax surge from regulatory fees (e.g., mining licenses up 20%). LGAs lag due to capacity gaps in 184 districts.

Economic Implications: Near-target revenues (13.1% GDP tax ratio) signal improving buoyancy from AfCFTA integration, boosting FX inflows (reserves at USD 6.2B, 4.7 months cover) and crowding-in private credit (16.1% YoY). Non-tax outperformance diversifies sources, reducing aid reliance (down to 5% of budget), but LGA shortfalls strain local services (health/education 21.5% allocation), risking inequality (Gini 40.4). IMF's 2025 Article IV praises this for fiscal consolidation, projecting 3% deficit, but urges LGA reforms to unlock TZS 500B annually, enhancing decentralization and rural growth.

Year-on-Year (YoY) Growth (Oct 2024 → Oct 2025)

Economic Implications: 9.4% growth outstrips 5.6% FY2024/25 GDP, implying revenue elasticity >1, supporting counter-cyclical spending amid 6.9% Q4 forecast. Non-tax +43.8% reflects SOE efficiency (e.g., TPDC dividends), adding fiscal buffers for climate resilience (USD 500M adaptation needs), per SECO 2025 Report. Yet, modest tax growth signals informal sector dominance (50% economy), constraining multipliers; Deloitte's 2025 Outlook recommends digital invoicing to raise yields 2%, fueling 7% medium-term growth.

Key Drivers of Revenue Performance

• Increased collections in: Income tax (formal sector expansion), import duties (trade +15%), fuel levies (consumption rebound).
• Lower performance in: PAYE (employment slowdown), excise on domestic goods (manufacturing dip), VAT on local goods (supply chain frictions).
• Non-tax exceeded target: Higher from services, fees, dividends (e.g., mining royalties up 25%).

Economic Implications: Drivers tie to export boom (gold +38.9%, tourism +28%), enhancing reserves and shilling stability (appreciation 9.5% YoY), per BoT. This mitigates import inflation (oil -12.5%), sustaining 3.5% CPI. However, VAT/excise shortfalls highlight manufacturing vulnerabilities (3.5% growth), risking 0.5% GDP drag; KPMG's Finance Act 2025 analysis notes new levies (e.g., 10% on retained earnings) could add TZS 300B, bolstering buffers for 6% growth while curbing deficits.

CENTRAL GOVERNMENT EXPENDITURES (OCTOBER 2025)

Total outlays reached TZS 2,343.6 billion (80% recurrent, 20% development), below target due to delayed external disbursements and procurement bottlenecks, but +7.2% YoY, aligning with 65% development bias in FY2025/26 budget (TZS 51.1 trillion total).

Expenditure Performance Table

Source: Ministry of Finance, BoT (provisional). Additional Details: Recurrent: Salaries TZS 1,132B (+5% YoY), interest TZS 283B (domestic 70%). Development: Infra 55% (roads/energy), social 30%.

Economic Implications: 76.4% execution preserves space for debt service (6.5% budget), keeping spreads low (6.28% lending-deposit) and supporting M3 growth (21.5%). Recurrent focus sustains consumption (3.5% private demand), but low dev. absorption delays 2% GDP from projects (e.g., rail/ports), per World Bank CPF 2025-29. IMF warns of election-year risks, but disciplined spending implies 3% deficit, freeing resources for green bonds (USD 1B potential), enhancing resilience.

Breakdown of Development Expenditure

Economic Implications: Local dominance (59.4%) reduces FX exposure (external debt 69.5%), stabilizing TZS and reserves (USD 6.2B). Funds infra multipliers (1.2% GDP from hydropower), but foreign shortfalls risk 0.8% growth shortfall; SECO recommends streamlined procurement to hit 7% absorption, unlocking AfCFTA gains (USD 1B trade).

FISCAL BALANCE

Fiscal Deficit (October 2025)

Interpretation: Small deficit due to expenditure restraint; fully domestically financed (83.6% dev. spend).

Economic Implications: Modest gap (vs. 3.5% annual) signals prudence, aligning with IMF's growth-friendly consolidation, curbing debt (49.6% GDP) and inflation pass-through. Enables 4.7-month import cover, but persistent under-spending may idle TZS 5T in unabsorbed funds, per Deloitte; policy tweaks (e.g., PPPs) could amplify 6.9% Q4 growth.

INTERPRETATION & ANALYSIS

1. Revenue Trends

Strong 96% achievement from TRA modernization (digital tracking +20% compliance) and non-tax inflows, but LGA weakness (67.4%) persists.

Economic Implications: Buoyancy supports 13.1% tax/GDP, funding 21.5% social allocation, reducing poverty 1-2pp annually (World Bank). LGA gaps strain devolution, risking service delivery; reforms could add 0.5% growth via local multipliers.

• Expenditure Trends

Below-target due to dev. delays (47.2%), recurrent high from wages/interest.

Economic Implications: Discipline aids reserves buildup (+14% YoY), but low capex hampers productivity (manufacturing 5.2%); IMF urges 70% absorption for 7% growth, leveraging FY2025/26's TZS 33T dev. envelope.

• Fiscal Position

Small TZS 15.1B deficit indicates discipline amid execution hurdles.

Economic Implications: Enhances credibility, lowering yields (10.8% bonds), crowding-in FDI (USD 1.5B Q3). Supports 6% growth, but election risks (Oct 2025) demand vigilance; SECO projects sustained momentum via infra.

SUMMARY TABLE – CENTRAL GOVERNMENT REVENUE VS EXPENDITURE

Overall Outlook: October's operations underscore resilience, positioning Tanzania for 6%+ growth amid AfCFTA, but absorption and LGA reforms are key to unlocking USD 10B potential by 2030 (World Bank).