As Tanzania continues its journey toward economic self-reliance, the performance of the Tanzania Revenue Authority (TRA) has taken center stage in the country’s budget operations. With consistent improvements in tax collection and administrative reforms, TRA is emerging as the main engine of domestic revenue mobilization. But the key question remains: Can TRA revenues fully support Tanzania’s budget and eliminate the fiscal deficit?

TRA’s Strong Performance: Numbers Speak

From July 2024 to March 2025, TRA collected TZS 24.05 trillion, exceeding the target of TZS 23.21 trillion by TZS 0.84 trillion. This represents a performance rate of 103.62% and a 17% increase compared to the same period in 2023/24.

Projection: By June 2025, TRA is expected to collect over TZS 32 trillion, positioning it to potentially cover most of Tanzania’s recurrent budget.

In comparison, Tanzania typically receives about TZS 7–8 trillion annually in foreign aid and loans. TRA’s revenue is now 4–5 times greater, proving the growing power of domestic resource mobilization.

January 2025 Snapshot: TRA’s Role in Budget Execution

A closer look at January 2025 reveals the real weight of TRA revenues:

• Total Government Revenue: TZS 2,697.8 billion
• TRA Tax Revenue (part of above): TZS 2,222.3 billion
• Total Government Expenditure: TZS 3,576.1 billion

➤ Resulting Budget Deficit:

Deficit = Expenditure – Revenue
= TZS 3,576.1B – TZS 2,697.8B
= TZS 878.3 billion

Even though TRA slightly exceeded its tax collection target by 0.3%, it could not fully cover government spending. This left a financing gap of TZS 878.3 billion, highlighting ongoing fiscal pressure.

Can TRA Close the Budget Gap?

TRA’s improved performance is helping reduce the budget deficit. For example:

• In Q3 (Jan–Mar 2025), TRA overcollected by TZS 100 billion.
• If this overperformance continues each quarter, it would amount to TZS 400–500 billion annually.
• This could reduce the budget deficit by 50% or more.

Still, to completely eliminate the deficit, either:

• Expenditure must be reduced, or
• Other revenues (like non-tax income or grants) must fill the remaining gap.

From Deficit to Surplus — What’s Required?

Let’s do the math:

• Annual Government Expenditure Estimate (FY 2024/25): TZS 38–40 trillion
• Projected TRA Revenue: TZS 32 trillion
• Remaining gap: TZS 6–8 trillion

So even with TRA’s strong performance, Tanzania still faces a potential shortfall of TZS 6–8 trillion annually, unless:

• Development expenditure is strategically reduced,
• Non-tax revenues improve (e.g., state dividends, fees),
• Or external financing is maintained temporarily.

Only when total revenue exceeds expenditure will Tanzania begin to see a budget surplus.

Key Takeaways

TRA Is Leading, But Not Alone

The Tanzania Revenue Authority has undeniably become the pillar of fiscal sustainability. Its strong revenue performance is reducing Tanzania’s dependence on foreign aid and increasing its ability to fund development locally.

But as January’s numbers show, TRA alone is not yet enough to balance the budget. A comprehensive approach — combining efficient spending, improved non-tax revenues, and sustained tax reforms — is essential.

With smart fiscal management and continued TRA performance, Tanzania can achieve true budget independence — and perhaps, a future surplus.

Tanzania Budget Operations vs TRA Revenue

Summary Insights from the Table

• TRA is Tanzania’s main source of domestic financing, contributing over 80% of total monthly revenues and consistently exceeding targets.
• Despite this strength, budget deficits persist due to high recurrent and development spending.
• If current TRA performance continues, it could reduce the deficit by half, but a surplus requires more than just tax revenue — it needs:
  • Better non-tax revenue collection
  • Spending controls
  • Efficient use of resources

In January 2025, Tanzania's central government recorded total revenue of TZS 2,697.8 billion, achieving 98.3% of the monthly target. Tax revenue reached TZS 2,222.3 billion, slightly exceeding the target by 0.3%, signaling strong tax administration. However, non-tax revenue underperformed at TZS 347.8 billion against a target of TZS 413.9 billion. Total expenditure stood at TZS 3,576.1 billion, with recurrent spending consuming TZS 2,358.0 billion and development expenditure totaling TZS 1,218.1 billion. This created a budget deficit of TZS 878.3 billion, underscoring growing fiscal pressure despite stable revenue performance.

Government Budgetary Operations in Tanzania focusing on Central Government Revenues, Expenditure, and the Budget Deficit

1. Central Government Revenues (January 2025)

• Total Revenue: TZS 2,697.8 billion
  • This was 98.3% of the monthly target.
• Central Government Revenue: TZS 2,570.1 billion
  • 97.7% of the target.
• Tax Revenue: TZS 2,222.3 billion
  • Exceeded the monthly target by 0.3% due to sustained tax administration efforts.
• Non-Tax Revenue: TZS 347.8 billion
  • Lower than the estimated TZS 413.9 billion.

This shows strong tax revenue collection but a shortfall in non-tax revenue.

2. Central Government Expenditure (January 2025)

• Total Expenditure: TZS 3,576.1 billion
  • Recurrent Expenditure: TZS 2,358.0 billion
  • Development Expenditure: TZS 1,218.1 billion
    • Includes infrastructure, social services, and development projects.

The government prioritized development while maintaining high recurrent spending.

3. Budget Deficit

To compute the budget deficit for January 2025:

Deficit = Total Expenditure - Total Revenue
= 3,576.1 billion - 2,697.8 billion
= TZS 878.3 billion

🧮 Budget Deficit: TZS 878.3 billion in January 2025
This suggests the government spent more than it collected, creating a financing gap.

Tanzania’s Government Budget Operation in January 2025:

Key Takeaways & Interpretation

1. Strong Revenue Performance – Especially in Taxes

• The government collected 97.7% of its revenue target, and tax revenue slightly exceeded its goal.
• ✅ This indicates effective tax collection efforts and a stable tax base, which is good for fiscal sustainability.
• ❌ However, non-tax revenues fell short, suggesting issues in collecting fees, dividends from state enterprises, or other sources.

2. High Government Spending

• The government spent TZS 3.6 trillion, higher than its revenue collection.
• A significant portion (TZS 2.36 trillion) went to recurrent expenditure (salaries, interest payments, etc.).
• Development spending was also strong, indicating continued investment in infrastructure and growth-supportive areas.

3. Large Budget Deficit

• The deficit of TZS 878.3 billion shows the government spent significantly more than it earned.
• This implies the need to borrow domestically or externally to cover the gap.

What It Means Overall:

• Positive: Tax administration is working well; government is prioritizing development.
• Risk: Persistent budget deficits, if not carefully managed, can lead to higher debt levels, more interest payments, and reduced room for future development spending.