1. Central Government Revenues

• Overview: Central government revenues in Tanzania include tax revenue (e.g., income tax, VAT, import duties) and non-tax revenue (e.g., dividends, fees, fines). These funds finance recurrent and development expenditures, with a focus on achieving fiscal targets outlined in the 2024/25 budget of TZS 49.35 trillion (USD 18.85 billion). The Tanzania Revenue Authority (TRA) and other agencies collect these revenues, aiming for 15.8% of GDP in 2024/25.
• April 2025 Performance:
  • Total Revenue: TZS 2,544.1 billion, achieving 99.6% of the monthly target (a shortfall of 0.4% or approximately TZS 10.2 billion, based on an inferred target of TZS 2,554.3 billion).
  • Revenue Breakdown:
    • Central Government Revenue: TZS 2,432.0 billion (95.6% of total revenue, implying local government collections of TZS 112.1 billion).
    • Tax Revenue: TZS 2,105.3 billion, exceeding the target by 1.5% (target approximately TZS 2,073.9 billion).
    • Non-Tax Revenue: TZS 326.6 billion, underperforming at 86.5% of the target (target of TZS 377.8 billion).
• Context and Analysis:
  • Strong Tax Performance: The 101.5% achievement in tax revenue reflects robust tax administration, driven by TRA’s digitalization efforts (e.g., e-filing, fiscalized receipts) and economic growth (5.5% GDP growth in 2024, projected 6.0% in 2025,). Key contributors include income tax (TZS 1,573.8 billion in January 2025) and import taxes (TZS 962.2 billion in January 2025), supported by export growth (16.8% in April 2025) and business activity in sectors like agriculture and manufacturing.
  • Non-Tax Revenue Shortfall: The 86.5% performance (TZS 326.6 billion vs. TZS 377.8 billion target) indicates challenges in collecting dividends, fees, and fines, possibly due to lower-than-expected returns from public enterprises or administrative inefficiencies. Non-tax revenue (TZS 602.6 billion in January 2025,) is critical for diversifying revenue but remains volatile compared to tax collections.
  • Economic Drivers: The marginal shortfall (0.4%) in total revenue aligns with earlier trends, as January 2025 collections reached TZS 3,877.4 billion, surpassing targets by 8.6% (). The strong tax performance reflects improved compliance and economic resilience, despite global challenges (e.g., geopolitical tensions). However, weaker domestic demand (noted by lower taxes on local goods,) may have contributed to the non-tax shortfall.
  • Implications: The robust tax revenue (101.5% of target) supports fiscal stability, aligning with the 2024/25 goal of raising TZS 34.61 trillion in domestic revenues (70.1% of the budget,). The non-tax shortfall (13.5% below target) highlights the need for stronger collection mechanisms, such as improving public enterprise efficiency or expanding fee-based services. Sustained revenue growth is critical to finance the TZS 56.49 trillion 2025/26 budget, which aims for 6% GDP growth.

2. Central Government Expenditures

• Overview: Central government expenditures in Tanzania are divided into recurrent (e.g., wages, interest, goods/services) and development (e.g., infrastructure, social projects) spending. The 2024/25 budget allocates TZS 49.35 trillion, with 59.6% for recurrent expenditure and 40.4% for development. Expenditures support flagship projects like the Julius Nyerere Hydropower Plant and Standard Gauge Railway (SGR).
• April 2025 Performance:
  • Total Expenditure: TZS 3,287.3 billion.
  • Expenditure Composition:
    • Recurrent Expenditure: TZS 2,005.6 billion (~61% of total).
      • Wages & Salaries: TZS 958.8 billion.
      • Interest Costs: TZS 172.0 billion.
      • Other Recurrent Expenses: TZS 874.8 billion.
    • Development Expenditure: TZS 1,281.6 billion (~39% of total).
• Context and Analysis:
  • Recurrent Expenditure Dominance: Recurrent spending (TZS 2,005.6 billion, ~61%) reflects high fixed costs, with wages and salaries (TZS 958.8 billion) as the largest component, supporting public sector employment (e.g., 28,000 health workers trained in 2025/26,). Interest costs (TZS 172.0 billion) indicate rising debt obligations, with domestic debt at TZS 34.26 trillion and external debt at USD 34.1 billion in March 2025. Other recurrent expenses (TZS 874.8 billion) cover goods, services, and subsidies, including local government elections and 2025 election preparations.
  • Development Expenditure: Development spending (TZS 1,281.6 billion, ~39%) aligns with January 2025 trends (TZS 1,393.3 billion,), focusing on infrastructure (e.g., SGR, Julius Nyerere Hydropower Plant) and social services (e.g., education, health). The 2024/25 budget prioritizes energy and transport projects, but a slight decline from January 2025 suggests potential reprioritization or funding constraints.
  • Economic Drivers: High recurrent spending (61%) reflects commitments to public sector stability and debt servicing, with interest payments absorbing significant resources (TZS 467.2 billion in January 2025,). Development spending (39%) supports growth targets (6% GDP in 2025,), driven by projects like the John Magufuli Bridge and Bagamoyo Special Economic Zone. However, the 2.6% shilling depreciation and high lending rates (15.18% in May 2025, Document, Page 7) increase debt servicing costs, limiting fiscal space.
  • Implications: The high share of development spending (39%) supports long-term growth through infrastructure and social investments, but recurrent costs (61%) strain fiscal resources. Interest costs (TZS 172.0 billion) highlight the burden of domestic debt (TZS 34.26 trillion, 29% held by banks,), potentially crowding out private sector credit. The 2025/26 budget’s planned 13.4% spending increase to TZS 56.49 trillion will require sustained revenue growth and prudent debt management to avoid widening deficits.

3. Key Observations

• Revenue-Expenditure Gap: The gap between revenue (TZS 2,544.1 billion) and expenditure (TZS 3,287.3 billion) in April 2025 resulted in a fiscal deficit of TZS 743.2 billion. This aligns with January 2025 data showing a low deficit of TZS 30 billion, financed through domestic borrowing (e.g., T-Bills at 8.89% yield, T-Bonds at 15.29%, Document, Page 8). The 2024/25 budget targets a deficit below 3% of GDP, achieved through fiscal discipline.
• Strong Tax Performance: Tax revenue exceeding targets (101.5%) reflects effective tax administration and economic resilience, supported by export growth (16.8% in April 2025, Document, Page 14) and private sector activity. However, the non-tax shortfall (86.5%) underscores the need for diversified revenue sources, as non-tax collections (TZS 6.48 trillion projected for 2025/26,) remain volatile.
• Fiscal Challenges: High spending (TZS 3,287.3 billion) and rising interest costs (TZS 172.0 billion) indicate growing debt obligations, with domestic debt servicing potentially costing TZS 5.31 trillion annually at 15.5% rates. The 2025/26 budget’s focus on revenue mobilization (TZS 40.47 trillion,) and deficit reduction (3.0% of GDP,) aims to address these challenges.
• Economic Context: Tanzania’s fiscal operations align with the Third Five-Year National Development Plan (2021/22–2025/26), emphasizing industrialization and human development (). The April 2025 deficit reflects continued reliance on domestic borrowing (TZS 6.27 trillion projected for 2025/26,), but foreign exchange reserves (USD 5.7 billion, covering 4 months of imports,) and IMF support (USD 441 million,) mitigate external risks.
• Implications: The fiscal deficit (TZS 743.2 billion) underscores the need for enhanced non-tax revenue and expenditure controls to maintain fiscal sustainability. Strong tax performance supports growth targets, but high recurrent spending (61%) and debt servicing costs could limit development investments. The 2025/26 budget’s reforms, including VAT exemptions and mining regulations, aim to boost revenue and investment, but global risks (e.g., sluggish growth,) and domestic demand weakness require vigilant fiscal management.

Summary Table – April 2025

Additional Insights and Outlook

• Fiscal Discipline: The low deficit (TZS 743.2 billion, ~2.5% of monthly GDP based on 2024 GDP of TZS 156.6 trillion,) and strong tax performance align with the 2024/25 target of a 3% GDP deficit. Domestic borrowing (TZS 34.26 trillion debt stock,) finances deficits, but high interest costs (TZS 172.0 billion) highlight the need for concessional loans.
• Revenue Mobilization: The 2025/26 budget’s target of TZS 40.47 trillion in domestic revenue and tax reforms (e.g., VAT exemptions,) aim to reduce reliance on borrowing. Non-tax revenue improvement is critical to address the 13.5% shortfall.
• Risks: High recurrent spending (61%) and debt servicing costs could crowd out private investment, given high lending rates (15.18%). Global risks (e.g., geopolitical tensions,) and shilling depreciation (2.6%,) may increase external debt costs (USD 34.1 billion).
• Outlook: Continued revenue growth (TZS 22.38 trillion by February 2025,) and fiscal reforms will support the TZS 56.49 trillion 2025/26 budget. Investments in infrastructure (TZS 7.72 trillion for capital payments,) and social services will drive 6% GDP growth, provided deficits remain controlled.

Tanzania Government Budget Operations - April 2025: Key Figures

Revenue collections for the fiscal year 2023/24

In the fiscal year 2023/24, Tanzania's Local Government Authorities (LGAs) achieved a remarkable revenue collection of TZS 1,132.1 billion, reaching 94.8% of their target. This performance reflects significant economic activity across different zones, with Dar es Salaam leading with TZS 277.3 billion, accounting for 24.5% of the total revenue. The Lake Zone followed closely, contributing TZS 237.0 billion (20.9%), driven by its robust agricultural and trading sectors. Meanwhile, the Southern Highlands, Northern, and South Eastern Zones collected TZS 182.3 billion (16.1%), TZS 166.9 billion (14.7%), and TZS 165.9 billion (14.7%) respectively, underscoring their reliance on agricultural activities. The Central Zone, however, lagged with only TZS 103.0 billion (9.1%), suggesting a need for economic diversification. The successful implementation of Point-of-Sale (POS) devices and online auctioning through the Tanzania Mercantile Exchange has notably enhanced revenue collection efficiency, pointing to the importance of modern collection strategies and public compliance initiatives in bolstering local government revenues.

1. Total Revenue Collection: The LGAs collected a total of TZS 1,132.1 billion, achieving 94.8% of the target for the year.
2. Zone-Wise Breakdown:
   • Dar es Salaam Zone:
     • Collection: TZS 277.3 billion
     • Share of Total LGA Revenue: 24.5%
     • Dar es Salaam contributed the largest share, highlighting its role as a key economic hub.
   • Lake Zone:
     • Collection: TZS 237.0 billion
     • Share of Total LGA Revenue: 20.9%
     • Significant revenue from the Lake Zone reflects its strong economic activities, including agriculture and trade.
   • Southern Highlands Zone:
     • Collection: TZS 182.3 billion
     • Share of Total LGA Revenue: 16.1%
     • This region’s contribution is supported by agricultural activities and improved collection systems.
   • Northern Zone:
     • Collection: TZS 166.9 billion
     • Share of Total LGA Revenue: 14.7%
     • The Northern Zone’s revenue was enhanced by tourism and agricultural trading.
   • South Eastern Zone:
     • Collection: TZS 165.9 billion
     • Share of Total LGA Revenue: 14.7%
     • Revenue in this zone benefited from the trade of food and cash crops and increased POS device usage.
   • Central Zone:
     • Collection: TZS 103.0 billion
     • Share of Total LGA Revenue: 9.1%
     • The Central Zone contributed the smallest share, possibly due to its smaller economic base relative to other zones.
3. Key Drivers:
   • The use of Point-of-Sale (POS) devices improved efficiency in tax collection.
   • Trading activities, especially in food and cash crops, were boosted by favorable harvests.
   • Online auctions of certain cash crops through the Tanzania Mercantile Exchange also contributed to the revenue increase.

The local government revenue for Tanzania’s fiscal year 2023/24 with key insights about regional economic dynamics and the impact of collection strategies:

1. Economic Disparity Across Zones:
   • Dar es Salaam's dominant contribution (24.5%) underscores its status as Tanzania’s economic hub. This suggests a concentration of commercial activities, services, and higher-value businesses within the city compared to other regions.
   • Regions like the Lake Zone and Southern Highlands also show strong economic activity, likely due to agriculture and trade, contributing significantly to the local government revenue base. However, other zones such as the Central Zone contribute less, possibly indicating limited economic diversity or smaller commercial bases.
2. Effectiveness of Enhanced Collection Systems:
   • The increased use of Point-of-Sale (POS) devices and online platforms for auctioning cash crops has enhanced revenue collection efficiency and compliance. This shows that investments in digital and streamlined collection systems can substantially improve tax performance, even in regions where traditional collection might be challenging.
3. Dependence on Agriculture and Trade:
   • Revenue collection in the Lake, Southern Highlands, and South Eastern zones highlights a reliance on agriculture as a critical source of income for local governments. This reliance suggests that agricultural productivity and favorable crop trading conditions have a direct impact on regional revenue outcomes.
4. Potential for Further Diversification:
   • The substantial revenue contributions from economically active zones like Dar es Salaam and the Lake Zone point to opportunities for other regions to develop their commercial sectors. If similar collection practices and economic incentives were introduced more broadly, other zones could see growth in their contributions.
5. Strategic Role of Public Awareness and Compliance:
   • The collection rates achieved (94.8% of the target) indicate that public awareness campaigns and government efforts to improve compliance are yielding positive results. Enhanced taxpayer education and streamlined processes appear to foster greater adherence to tax obligations, benefiting local revenue streams.

In the fiscal year 2023/24, Tanzania's tax revenue performance was notably strong, reaching TZS 27,138.4 billion, or 97.5% of the budgeted target, largely due to enhanced use of electronic fiscal devices (EFDs) and improved tax compliance stemming from ongoing public awareness campaigns. The Dar es Salaam Zone emerged as the dominant contributor, accounting for 89% of total tax revenue with TZS 24,145.7 billion, highlighting the region's significance as Tanzania's economic hub. In contrast, other zones such as the Northern Zone, Lake Zone, and Southern Highlands contributed significantly less, at 5.7%, 1.8%, and 1.4% respectively. Tax revenue sources showed that local goods and services generated TZS 11,988.5 billion (44.2% of total revenue), while taxes on imports made up TZS 10,518.5 billion (38.8%). Direct taxes represented a smaller share at TZS 4,631.3 billion (17.1%), indicating potential for growth in this area. This fiscal landscape underscores the need for Tanzania to diversify its revenue streams and address regional disparities to ensure sustainable economic growth.

Tax Revenue by Zone:

• Dar es Salaam Zone: Contributed the highest share, accounting for 89% of total tax revenue, with a collection of TZS 24,145.7 billion.
• Other Zones: The Lake Zone collected TZS 495.6 billion (1.8% of total), the Northern Zone TZS 1,550.8 billion (5.7%), and the Southern Highlands Zone TZS 385.0 billion (1.4%).

Tax Revenue by Category:

• Taxes on Local Goods and Services: Reached TZS 11,988.5 billion, representing 44.2% of the total revenue.
• Taxes on Imports: Totaled TZS 10,518.5 billion, making up 38.8% of revenue.
• Direct Tax: Accounted for TZS 4,631.3 billion, or 17.1% of total tax revenue.

Tanzania's tax revenue performance for the fiscal year 2023/24:

1. Overall Tax Performance: Tanzania's tax revenue closely aligned with government targets, reaching 97.5% of the budgeted target. This strong performance suggests that the government’s tax collection initiatives, such as the increased use of Electronic Fiscal Devices (EFDs) and efforts to improve tax compliance, have been effective. Public awareness efforts about tax obligations have likely played a role in encouraging compliance and maintaining steady revenue collection.
2. Regional Disparities in Tax Collection:
   • The Dar es Salaam Zone significantly outperformed other regions, contributing 89% of total tax revenue (TZS 24,145.7 billion). This dominance likely reflects Dar es Salaam’s economic activity, being Tanzania's primary commercial hub.
   • Other regions contributed significantly less: the Northern Zone (5.7%), the Lake Zone (1.8%), and the Southern Highlands Zone (1.4%). These numbers indicate a heavy reliance on Dar es Salaam for tax revenue and may highlight the economic disparity among regions.
3. Tax Revenue by Category:
   • Taxes on Local Goods and Services: Constituted the largest portion, 44.2% of total tax revenue (TZS 11,988.5 billion), indicating a strong domestic consumption base contributing to tax revenue.
   • Taxes on Imports: Accounted for 38.8% (TZS 10,518.5 billion), showing the importance of imports in Tanzania’s tax revenue structure. This dependency also suggests that international trade remains a significant revenue stream for the government.
   • Direct Tax: Made up 17.1% of total tax revenue (TZS 4,631.3 billion), which likely includes income and corporate taxes. This lower share compared to other categories may indicate room for improvement in direct tax collection, potentially through further initiatives to enhance individual and corporate tax compliance.

Implications: The data reflects the government’s reliance on a limited number of revenue sources and zones. The heavy dependency on Dar es Salaam and taxes from imports and consumption suggests that diversifying the tax base across regions and enhancing direct tax collections could strengthen future revenue resilience.