In March 2025, Tanzania’s government budgetary operations showcased robust fiscal performance, with total revenue of TZS 3,090.8 billion, falling 3.1% short of the TZS 3,190 billion target due to non-tax revenue underperformance (TZS 350.5 billion vs. TZS 522.4 billion). Tax revenue excelled at TZS 2,603.3 billion, 2% above target, driven by strong income tax collections (11.6% above target). Total expenditure reached TZS 3,375.1 billion, with 58.3% (TZS 1,968.4 billion) allocated to recurrent costs and 41.7% (TZS 1,406.7 billion) to development projects, resulting in a modest deficit of TZS 284.3 billion. The following table summarizes these key figures.
1. Central Government Revenues – March 2025
Central government revenues are critical for financing public expenditure and achieving fiscal objectives. The data for March 2025 highlights strong tax revenue performance despite a shortfall in total collections.
Key Figures:
Total Revenue Collected: TZS 3,090.8 billion
Performance vs. Target: 3.1% below the target of ~TZS 3,190 billion (calculated as 3,090.8 / 0.969 ≈ 3,190).
Breakdown of Revenues:
Revenue Component
Amount (TZS Billion)
Performance vs. Target
Total Revenue
3,090.8
96.9% of target
Central Government Revenue
2,953.8
95.6% of total revenue
Tax Revenue
2,603.3
2% above target
Non-tax Revenue
350.5
Below target of 522.4
Key Tax Revenue Component:
Income tax exceeded its target by 11.6%, indicating robust collection efforts.
Analysis:
Overall Revenue Performance: The total revenue of TZS 3,090.8 billion, while 3.1% below the target, reflects strong fiscal discipline, particularly in tax collection. The Monthly Economic Review notes sustained tax administration initiatives (e.g., February 2025 revenue of TZS 2,697.8 billion, 98.3% of target,), suggesting that March’s 96.9% performance continues a trend of near-target collections. The shortfall is primarily due to non-tax revenue underperforming at TZS 350.5 billion against a target of TZS 522.4 billion (67.1% of target, calculated as 350.5 / 522.4 × 100).
Tax Revenue Strength: The tax revenue of TZS 2,603.3 billion, 2% above target, aligns with TICGL indicating improved tax collection efficiency, with the tax-to-GDP ratio rising to 11.8% in 2022/23 (). The strong performance of income tax (11.6% above target) likely reflects enhanced compliance and economic activity, supported by a projected GDP growth of 5.4%–6.0% in 2025 (,).
Non-tax Revenue Shortfall: Non-tax revenue (e.g., licenses, fees, dividends) at TZS 350.5 billion fell short of the TZS 522.4 billion target, a 32.9% underperformance. This could be due to lower-than-expected dividends from public enterprises or reduced fees, possibly linked to seasonal factors or administrative inefficiencies. The Monthly Economic Review does not specify non-tax revenue details but notes the use of Electronic Fiscal Devices (EFDs) to improve revenue administration, which may have been less effective for non-tax TICGL.
Interpretation:
The strong tax revenue performance (2% above target) indicates effective tax administration, likely driven by initiatives like EFDs and a focus on progressive taxes (e.g., income tax, VAT) as recommended by the World Bank (). The 11.6% outperformance in income tax suggests robust private sector activity, consistent with a 13.2% growth in private sector credit in February 2025.
The non-tax revenue shortfall (TZS 350.5 billion vs. TZS 522.4 billion) highlights a need for improved collection mechanisms for fees and dividends, as non-tax revenue is a smaller but critical component (11.3% of total revenue, calculated as 350.5 / 3,090.8 × 100).
The overall revenue collection of TZS 3,090.8 billion supports the government’s fiscal target of raising domestic revenue to 15.8% of GDP in 2024/25 (), contributing to fiscal sustainability.
Source Context:
TICGL confirm Tanzania’s focus on expanding the tax base, with domestic revenue projected at TZS 34.61 trillion (15.7% of GDP) for 2024/25 (). The March 2025 tax revenue performance aligns with this trajectory, though non-tax revenue challenges persist, as seen in earlier reports (e.g., TZS 347.8 billion in February 2025 vs. a target of TZS 413.9 billion).
2. Central Government Expenditures – March 2025
Expenditures reflect the government’s priorities in operational costs and development projects, critical for economic growth and public service delivery.
Key Figures:
Total Expenditure: TZS 3,375.1 billion
Expenditure Breakdown:
Expenditure Type
Amount (TZS Billion)
Recurrent Expenditure
1,968.4
– Wages and Salaries
~833.3
– Interest Payments
~300.0
– Other Recurrent Spending
~835.1
Development Expenditure
1,406.7
Proportions:
Recurrent expenditure: 58.3% of total (1,968.4 / 3,375.1 × 100).
Development expenditure: 41.7% of total (1,406.7 / 3,375.1 × 100).
Analysis:
Recurrent Expenditure: At TZS 1,968.4 billion, recurrent spending (wages, interest, and other operational costs) constitutes the majority of expenditure. Wages and salaries (~TZS 833.3 billion) reflect significant public sector employment costs, consistent with the 35.1% minimum wage increase announced for July 2025. Interest payments (~TZS 300.0 billion) align with debt servicing obligations, as Tanzania’s external debt stood at USD 32.89 billion in September 2024. Other recurrent spending (~TZS 835.1 billion) likely includes administrative costs and social services, such as health and education, which are priorities in the 2024/25 budget.
Development Expenditure: At TZS 1,406.7 billion, development spending (41.7% of total) emphasizes infrastructure and social projects, such as the Standard Gauge Railway (SGR), Julius Nyerere Hydropower Project, and health initiatives. This aligns with the Monthly Economic Review’s focus on flagship projects (e.g., food stock management) and the 2024/25 budget’s allocation of TZS 16.4 trillion for development.
Fiscal Discipline: The close alignment of expenditure (TZS 3,375.1 billion) with revenue (TZS 3,090.8 billion) indicates disciplined fiscal management, as the deficit is relatively modest (see below). The Monthly Economic Review notes a fiscal deficit target below 3% of GDP, supported by TICGL projecting a 2.5% deficit in 2024/25.
Interpretation:
The 58.3% share of recurrent expenditure reflects ongoing operational needs, particularly wages and debt servicing, which are critical for maintaining public sector stability. The Monthly Economic Review’s stable CBR at 6% supports manageable interest payments.
The 41.7% share for development expenditure highlights Tanzania’s commitment to infrastructure and human capital, aligning with the Third Five-Year Development Plan (2021/22–2025/26) goals of 8% GDP growth by 2026 and job creation.
The balance between recurrent and development spending supports inclusive growth, as noted in the World Bank’s focus on enhancing human capital and private sector-led growth.
3. Revenue vs. Expenditure Snapshot and Budget Deficit
The comparison between revenue and expenditure provides insight into fiscal balance and financing needs.
Budget Deficit: The deficit of TZS 284.3 billion (approximately 8.4% of expenditure, calculated as 284.3 / 3,375.1 × 100) indicates a financing gap, likely covered by domestic borrowing (e.g., Treasury bills and bonds, as seen in the Government Securities Market with TZS 519.6 billion in successful bond bids, previous responses) or external borrowing (e.g., IMF’s USD 440.8 million under the ECF,). The Monthey Economic Review notes the use of domestic and external borrowing to finance deficits.
Year-on-Year Trends:
Revenue Decline: Total revenue fell from ~TZS 3,279.6 billion in March 2024 to TZS 3,090.8 billion in March 2025 (down 5.8%), driven by a 6.4% drop in non-tax revenue (374.3 to 350.5 billion). Tax revenue, however, increased by 2% (2,553.2 to 2,603.3 billion), reflecting improved tax administration.
Expenditure Increase: Total expenditure rose slightly from ~TZS 3,349.0 billion to TZS 3,375.1 billion (up 0.8%), with development expenditure growing significantly by 10.4% (1,274.8 to 1,406.7 billion), underscoring infrastructure priorities.
Fiscal Context: The Monthly Economic Review highlights a fiscal deficit target below 3% of GDP, and TICGL note a projected 2.5% deficit in 2024/25 (). The March 2025 deficit of TZS 284.3 billion is modest relative to the 2024/25 budget of TZS 49.35 trillion (), suggesting fiscal prudence.
Interpretation:
The increase in tax revenue (2% above target) and development expenditure (10.4% year-on-year growth) reflects alignment with the 2024/25 budget priorities of infrastructure and human capital development.
The non-tax revenue shortfall and slight revenue decline indicate challenges in diversifying revenue TICGL, as noted in the World Bank’s call for broadening the tax base.
The modest deficit suggests effective fiscal management, supported by strong domestic revenue mobilization (15.7% of GDP in 2024/25,) and external financing options.
Conclusion
In March 2025, Tanzania’s government budgetary operations demonstrated robust fiscal performance, with tax revenue (TZS 2,603.3 billion) exceeding targets by 2%, driven by a strong income tax performance (11.6% above target). Total revenue of TZS 3,090.8 billion fell 3.1% short of the TZS 3,190 billion target due to non-tax revenue underperformance (TZS 350.5 billion vs. TZS 522.4 billion). Expenditure of TZS 3,375.1 billion was balanced between recurrent (58.3%, TZS 1,968.4 billion) and development spending (41.7%, TZS 1,406.7 billion), reflecting priorities in wages, debt servicing, and infrastructure. The resulting TZS 284.3 billion deficit indicates fiscal discipline, likely financed through domestic securities or external loans, aligning with the Monthly Economic Review’s stable macroeconomic framework (inflation at 3.2%, CBR at 6%).
