Prepared by TERI for research purposes only; not investment, legal or financial advice, and not the position of the Government of Tanzania or the Bank of Tanzania. "Budget" means the approved 2025/26 budget; "Estimate" is the revised profile in Table A2. Where revised estimates appear to reclassify lines, this is flagged as a TICGL reading.
01 - OVERVIEWExecutive Summary
Tax administration gains lifted collections above target in a year when the macro environment turned harder: oil prices rose, the shilling weakened and the Bank of Tanzania tightened policy in July. Revenue strength allowed spending to be maintained while borrowing came in below plan.
The outturn is better than the budget on the bottom line, but the quality of the improvement is mixed. Roughly TZS 1.1 trillion of the deficit improvement came from lower interest and under-spent development, while the revenue beat was concentrated in two tax heads. Weak local VAT and a rising wage-plus-interest bill (45.0% of revenue, TICGL calc.) narrow the room for development spending.
02 - REVENUECentral Government Revenue, FY2025/26
Total revenue including local government own sources reached TZS 41,930.4bn against a budget of 40,466.1bn. Central government revenue was TZS 40,323.7bn (+9.4% vs budget), of which tax was TZS 34,579.2bn (82.5% of total revenue, TICGL calc.) and non-tax TZS 5,744.5bn.
Revenue by Source: Budget vs Actual
Composition of Tax Revenue
| Tax head | Share of tax |
|---|---|
| Income taxes | 38.2% |
| Taxes on imports | 36.3% |
| VAT & excise (local) | 18.8% |
| Other taxes | 6.7% |
| Total tax | 100% |
| Revenue line (TZS bn) | Budget | Estimate | Actual | vs Budget |
|---|---|---|---|---|
| Total revenue (incl. LGAs) | 40,466.1 | 40,466.1 | 41,930.4 | +3.6% |
| Central government revenue | 36,857.7 | 38,785.6 | 40,323.7 | +9.4% |
| Tax revenue | 32,176.0 | 32,176.0 | 34,579.2 | +7.5% |
| Taxes on imports | 11,563.0 | 11,563.0 | 12,559.2 | +8.6% |
| VAT & excise on local goods | 7,016.5 | 7,016.5 | 6,492.3 | -7.5% |
| Income taxes | 11,367.9 | 11,268.6 | 13,220.6 | +16.3% |
| Other taxes | 4,887.7 | 2,328.0 | 2,307.2 | -52.8% |
| Non-tax revenue | 4,681.7 | 6,609.6 | 5,744.5 | +22.7% |
| LGA own sources | 1,680.5 | 1,680.5 | 1,606.7 | -4.4% |
The "Other taxes" budget falls from 4,887.7 to 2,328.0 in the revised estimate while non-tax rises from 4,681.7 to 6,609.6, which suggests a reclassification between the two lines (TICGL reading). Compare against the Estimate column for those two items. Non-tax actual was 13.1% below its revised estimate.
03 - JUNE 2026June Revenue: Strongest Month, Non-Tax Lagging
June collections reached TZS 4,658.2bn, 5.4% above the monthly target. Central government collected TZS 4,512.1bn (96.9% of the total). Tax revenue of TZS 3,733.2bn was 12.5% above target and about 20% above June 2025 (TICGL calc.). Non-tax revenue of TZS 778.9bn missed its 953.8bn target by 18.3%.
June Revenue: 2025 Actual vs 2026 Estimate vs 2026 Actual
| June (TZS bn) | 2025 actual | 2026 est. | 2026 actual | y/y |
|---|---|---|---|---|
| Taxes on imports | 1,012.1 | 995.6 | 1,213.3 | +19.9% |
| Income tax | 1,441.8 | 1,436.4 | 1,702.9 | +18.1% |
| Local VAT & excise | 490.9 | 684.6 | 587.5 | +19.7% |
| Other taxes | 164.0 | 203.2 | 229.5 | +40.0% |
| Non-tax revenue | 470.4 | 953.8 | 778.9 | +65.6% |
| Grants | 53.0 | 188.8 | 118.7 | +124.0% |
Local VAT grew 19.7% y/y in June but still ran 14.2% below its monthly estimate (TICGL calc.), consistent with the full-year VAT shortfall.
04 - EXPENDITURECentral Government Expenditure, FY2025/26
Total spending was TZS 48,451.0bn, 0.7% under budget. Recurrent expenditure was TZS 31,393.7bn (64.8%) and development expenditure TZS 17,057.2bn (35.2%), 97.5% of the budgeted 17,493.7bn (TICGL calc.).
Expenditure by Category: Budget vs Actual
| Expenditure line (TZS bn) | Budget | Estimate | Actual | vs Budget |
|---|---|---|---|---|
| Total expenditure | 48,775.0 | 48,775.0 | 48,451.0 | -0.7% |
| Recurrent expenditure | 31,281.3 | 31,169.6 | 31,393.7 | +0.4% |
| Wages and salaries | 10,917.5 | 13,121.5 | 13,279.3 | +21.6% |
| Interest payments | 6,493.7 | 6,938.9 | 5,605.3 | -13.7% |
| Domestic interest | 3,697.3 | 3,856.4 | 3,690.6 | -0.2% |
| Foreign interest | 2,796.4 | 3,082.5 | 1,914.7 | -31.5% |
| Other goods, services & transfers | 7,088.6 | 11,109.2 | 12,509.2 | +76.5% |
| Development & net lending | 17,493.7 | 17,605.4 | 17,057.2 | -2.5% |
| Locally financed | 12,117.8 | 12,253.0 | 13,044.2 | +7.6% |
| Foreign financed | 5,375.9 | 5,352.4 | 4,013.0 | -25.4% |
The wage and "other goods" budget lines were revised sharply upward (10,917.5 to 13,121.5 and 7,088.6 to 11,109.2), again suggesting reclassification; against the revised estimate, wages were 1.2% above and other goods 12.6% above.
05 - JUNE 2026June Spending: Development Outlays Double
In June the Government aligned spending with available resources: TZS 4,720.1bn in total, of which TZS 2,797.9bn was recurrent and TZS 1,922.2bn development, 5.2% below the TZS 4,979.8bn estimate. Development spending was 2.1 times its June 2025 level (TZS 909.4bn), reflecting year-end project payments (TICGL calc.).
June Expenditure: 2025 Actual vs 2026 Estimate vs 2026 Actual
| June (TZS bn) | 2025 actual | 2026 est. | 2026 actual | y/y |
|---|---|---|---|---|
| Wages and salaries | 970.7 | 1,119.8 | 1,163.1 | +19.8% |
| Interest costs | 571.3 | 644.0 | 597.4 | +4.6% |
| Other recurrent | 898.6 | 1,201.6 | 1,037.5 | +15.5% |
| Development | 909.4 | 2,014.4 | 1,922.1 | +111.4% |
Read alongside TICGL/TERI's shilling and debt analysis
Interest costs, foreign-financed projects and external borrowing connect the budget directly to the exchange rate.
Shilling Stability vs National Debt →06 - FINANCINGDeficit and How It Was Financed
The balance before grants was TZS -6,520.6bn (budget -8,308.9bn) and the overall deficit TZS -6,147.7bn (budget -7,239.0bn). Grants were TZS 917.6bn, below the 1,069.9bn plan. Net foreign financing was TZS 2,705.9bn (44%) against 4,286.3bn planned; net domestic financing was TZS 3,441.7bn (56%) against 2,952.6bn planned.
Fiscal Balance and Financing: Budget vs Actual
| Financing (TZS bn) | Budget | Actual |
|---|---|---|
| Foreign loans (gross) | 5,966.4 | 6,064.5 |
| Foreign amortization | -4,389.7 | -3,427.5 |
| Foreign financing (net) | 4,286.3 | 2,705.9 |
| Bank borrowing | 2,466.1 | 1,544.0 |
| Non-bank (net of amortization) | 486.5 | 1,897.8 |
| Domestic financing (net) | 2,952.6 | 3,441.7 |
| Overall financing | 7,239.0 | 6,147.7 |
June alone showed a primary-style surplus: balance after grants of +TZS 56.9bn, and overall deficit of TZS 362.6bn after adjustments of -419.5bn. Zanzibar (August 2026): resources TZS 251.3bn (+10.4% vs target) and spending TZS 459.0bn, 73.3% on development.
07 - OUTLOOKRisks and Recommendations
- Weak local VAT: a 7.5% annual shortfall and 14.2% June miss point to refund pressure, compliance gaps or soft domestic demand; verify before relying on 2026/27 VAT targets.
- Rigid recurrent bill: wages and interest absorb 45% of revenue, limiting fiscal space for capital projects.
- Foreign project execution: only 74.6% of foreign-financed development spending was delivered, delaying growth-supporting infrastructure.
- Non-tax revenue: 18.3% below target in June, with delivery on institution collections still uneven.
- Income tax (+16.3%) and import taxes (+8.6%) show improved administration and a larger tax base.
- Borrowing came in below plan, with the deficit TZS 1.09tn narrower than budgeted.
- Domestic financing leans increasingly on non-bank investors (TZS 1,897.8bn), easing bank crowding-out.
Recommendations
- Audit VAT refunds and e-invoicing coverage to recover the local VAT gap.
- Publish a reconciled budget-to-estimate bridge so reclassifications between "other taxes", non-tax, wages and other goods are transparent.
- Speed up disbursement of foreign-financed projects by clearing procurement and counterpart-fund bottlenecks.
- Cap wage-bill growth through payroll audits while protecting priority-sector hiring.
"A budget beat is not the same as a budget at ease. When wages and interest take 45 cents of every shilling collected, the test of fiscal strength is how much is left to build."
- TICGL / Tanzania Economic Research Institute (TERI)08 - FAQFrequently Asked Questions
How much revenue did Tanzania collect in FY2025/26?
TZS 41,930.4bn including LGAs (+3.6% vs budget); central government revenue was TZS 40,323.7bn, with tax of TZS 34,579.2bn.
Which taxes beat and missed targets?
Income taxes (+16.3%) and import taxes (+8.6%) beat budget; local VAT and excise missed by 7.5%.
What was the fiscal deficit?
TZS 6,147.7bn against 7,239.0bn budgeted, financed 44% foreign and 56% domestic.
What drove spending?
Development TZS 17,057.2bn (35%), wages TZS 13,279.3bn, other goods and services TZS 12,509.2bn and interest TZS 5,605.3bn.
Built from BoT Monthly Economic Review, September 2026: Section 2.5, Charts 2.5.1-2.5.2, Table A2 (Central Government Operations, cheques issued, Tanzania Mainland) and Section 3.2 (Zanzibar). Variances are computed against the approved budget unless stated; 2026 actuals are provisional.
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✉️ economist@ticgl.com →Muhtasari kwa Kiswahili
Mapato na Matumizi ya Serikali Kuu, Mwaka wa Fedha 2025/26 - Serikali ilikusanya TZS trilioni 41.93, asilimia 3.6 juu ya bajeti. Matumizi yalikuwa TZS trilioni 48.45 (asilimia 0.7 chini ya bajeti) na nnakisi ya jumla TZS trilioni 6.15 badala ya 7.24 iliyopangwa.
Mapato: Kodi ya mapato (+16.3%) na kodi ya uagizaji (+8.6%) zilizidi malengo, lakini VAT na ushuru wa ndani ulipungua kwa asilimia 7.5. Mwezi Juni, kodi ilizidi lengo kwa asilimia 12.5 na mapato yasiyo ya kodi yalipungua kwa asilimia 18.3.
Matumizi: Mishahara TZS bilioni 13,279.3 (+21.6% juu ya bajeti), riba TZS bilioni 5,605.3 (-13.7%), na maendeleo TZS bilioni 17,057.2. Mishahara na riba pamoja vinatumia asilimia 45 ya mapato.
Ufadhili: Nakisi ilifidiwa kwa mikopo ya nje (TZS bilioni 2,705.9) na ya ndani (TZS bilioni 3,441.7). Miradi ya maendeleo inayofadhiliwa na nje ilitekelezwa kwa asilimia 74.6 tu.
Mapendekezo: Kuboresha makusanyo ya VAT, kudhibiti ukuaji wa mishahara, kuharakisha miradi ya nje, na kuchapisha maelezo ya mabadiliko ya uainishaji wa bajeti.
Chanzo: Benki Kuu ya Tanzania, Monthly Economic Review, Septemba 2026. Mawasiliano: economist@ticgl.com.