In September 2025, Tanzania’s fiscal landscape showed a mix of resilient revenue mobilization and slower-than-planned expenditure execution, shaping an overall moderate fiscal deficit of TZS 618.5 billion. Total revenue reached TZS 2,728.1 billion—equivalent to 87.2% of the target—supported largely by tax collections amounting to TZS 2,571.4 billion. However, performance fell short due to weaker import duties, lower corporate taxes from mining companies, and delayed recruitment reducing PAYE inflows. On the expenditure side, total spending stood at TZS 3,346.6 billion, representing 71.9% of the target, with recurrent spending dominating but development spending constrained by slow disbursements and reduced donor flows. This revenue–expenditure pattern reflects a government attempting to maintain fiscal discipline amid external uncertainties and domestic structural inefficiencies, while financing the shortfall through domestic borrowing and concessional foreign loans to support ongoing economic expansion.
1. Central Government Revenues
Key Figures (September 2025)
Total domestic revenue collected: TZS 2,728.1 billion
Breakdown:
Tax revenue: TZS 2,571.4 billion
Non-tax revenue: TZS 156.7 billion
Performance Against Target:
Actual: TZS 2,728.1 billion
Target: TZS 3,126.3 billion
Performance: 87.2% of target
Reasons for Underperformance
Lower-than-expected import duty collection
Decline in corporate tax from mining firms
Lower PAYE due to delays in recruitment
Reduced revenue from oil marketing firms due to stabilized fuel prices
2. Central Government Expenditures
Key Figures (September 2025)
Total government expenditure: TZS 3,346.6 billion
Breakdown:
Recurrent expenditure: TZS 2,073.7 billion
Development expenditure: TZS 1,272.9 billion
Development Expenditure Breakdown:
Locally financed development spending: TZS 590.9 billion
Foreign financed development spending: TZS 682.0 billion
Summary Table — Central Government Revenue & Expenditure (September 2025)
Category
Actual (TZS Billion)
Target (TZS Billion)
Performance (%)
Total Revenue
2,728.1
3,126.3
87.2%
└ Tax revenue
2,571.4
—
—
└ Non-tax revenue
156.7
—
—
Total Expenditure
3,346.6
4,656.3
71.9%
└ Recurrent expenditure
2,073.7
—
—
└ Development expenditure
1,272.9
—
—
└ Local financing
590.9
—
—
└ Foreign financing
682.0
—
—
Fiscal deficit
618.5
—
—
Implications of Central Government Budgetary Operations in September 2025
The data on Tanzania's central government budgetary operations for September 2025, drawn from the Bank of Tanzania's (BOT) Monthly Economic Review (October 2025), reveals a fiscal environment characterized by resilient revenue mobilization amid execution challenges on the spending side. This occurs within a context of robust economic growth (6.3% real GDP in Q2 2025), low inflation (3.4%, within 3–5% target), and accommodative monetary policy (CBR at 5.75%, with M3 growth at 20.8% y/y driven by private credit; Section 2.3). The resulting TZS 618.5 billion fiscal deficit (financed via domestic securities and external concessional loans) underscores prudent management but highlights vulnerabilities tied to external factors like commodity prices (mixed trends, e.g., declining oil offsetting rising coffee). Below, I break down the implications across key areas, integrating broader economic ties.
1. Revenue Performance: Resilience with Structural Vulnerabilities
87.2% Achievement (TZS 2,728.1 bn vs. TZS 3,126.3 bn Target): This below-target collection still marks improvement over prior months (as noted in the Review's narrative), buoyed by strong domestic tax streams like VAT on local goods, excise duties, and direct taxes (e.g., income and corporate). Tax revenue dominated at TZS 2,571.4 bn (94% of total), reflecting effective administration and economic activity in growth drivers like agriculture and mining (contributing 1.8% and 1.5% to Q2 GDP, respectively).
Underperformance Drivers: Shortfalls in import duties (linked to stabilized global oil prices, reducing fuel import values; Chart 2.2.5 shows domestic petrol/diesel declines), mining corporate taxes (despite sector growth, possibly due to profit repatriation or lower global metal prices), PAYE (recruitment delays amid labor market tightness), and oil marketing revenues (tied to subdued demand) signal over-reliance on volatile external and commodity-linked sources. Non-tax revenue (TZS 156.7 bn) remained marginal and stable, underscoring the need for diversification (e.g., via fees from services or assets).
Broader Implications:
Positive: Bolsters fiscal sustainability, aligning with EAC/SADC criteria (deficits below thresholds). Supports exchange rate stability (shilling +9.4% y/y appreciation, aiding import competitiveness) and low inflation by avoiding excessive money printing.
Risks: Exposure to global shocks (e.g., renewed trade protectionism) could widen shortfalls, pressuring future collections. Encourages policy focus on broadening the tax base (e.g., digital economy or informal sector) to sustain 6% full-year GDP projection.
71.9% Achievement (TZS 3,346.6 bn vs. TZS 4,656.3 bn Target): Recurrent spending (TZS 2,073.7 bn) held steady, covering essentials like wages, subsidies, and operations—critical for social stability and public service delivery in a low-inflation environment (core inflation at 2.2%). Development outlays (TZS 1,272.9 bn) were robust despite shortfalls, split between local (TZS 590.9 bn) and foreign-financed (TZS 682.0 bn) projects, emphasizing infrastructure in construction (1.1% GDP contribution) and energy (reliable supply as a growth enabler).
Underperformance Drivers: Delays in project execution (procurement bottlenecks), slow fund disbursements, and reduced donor inflows (possibly due to global fiscal tightening; IMF notes widening deficits as risks) hampered full rollout. This echoes broader challenges in capital spending absorption, common in emerging economies.
Broader Implications:
Positive: Balanced composition (recurrent ~62% of total) prevents overheating while directing ~38% to growth-enhancing investments, supporting sectors like mining/quarrying (up due to exports; Section 2.8 preview). Foreign financing (51% of dev spend) leverages concessional terms, keeping debt sustainable.
Risks: Lagged infrastructure could bottleneck long-term growth (e.g., slowing construction momentum) and exacerbate regional disparities (e.g., Zanzibar's external performance). Calls for streamlined procurement and donor coordination to hit annual targets.
3. Fiscal Balance and Financing: Manageable Deficit with Borrowing Pressures
Deficit of TZS 618.5 bn (Commitment Basis): The revenue-expenditure gap reflects fiscal expansion to underpin 6% growth, but at 87.2% revenue vs. 71.9% spending utilization, it highlights absorption inefficiencies rather than profligacy.
Financing Mix: Domestic borrowing (via Treasury bonds/bills) and external concessional loans provide flexibility, avoiding high-cost commercial debt. This aligns with monetary policy's liquidity management (reverse repos absorbing surpluses), preventing spillover to inflation.
Broader Implications:
Positive: Deficit remains "manageable" (as per Review), financed sustainably to complement private credit growth (16.1% y/y). Supports external sector strength (e.g., export-led current account surplus).
Risks: Rising domestic borrowing could elevate yields, feeding into higher lending rates (overall at 15.18% in September, up 0.11 pp; prior analysis). External loans expose to currency risks, though shilling stability mitigates this. Cumulative deficits may strain debt metrics if revenues falter (e.g., from oil price volatility).
4. Macroeconomic and Policy Context from the Review
Synergies with Growth and Stability: These operations reinforce fiscal prudence alongside monetary easing, enabling 6.3% Q2 GDP (agriculture/mining-led) and food stock buildup (570,519 tonnes by NFRA), which curbs food inflation (down to 7.0%). In Zanzibar (Section 3), similar patterns likely aid tourism recovery.
Outlook: Projections for stable inflation (3–5%) and 6% growth assume improved execution. Policy recommendations: Enhance revenue forecasting (e.g., via digital tools), accelerate dev spending, and diversify exports to insulate against shocks.
Category
Actual (TZS bn)
Target (TZS bn)
% Achieved
Key Implication
Total Revenue
2,728.1
3,126.3
87.2%
Resilient tax base supports stability; diversify from commodities.
└ Tax
2,571.4
—
—
Strong VAT/excise/direct; vulnerable to mining/oil fluctuations.
└ Non-Tax
156.7
—
—
Stable but low; potential for growth via fees/dividends.
Total Expenditure
3,346.6
4,656.3
71.9%
Prioritizes recurrent needs; dev delays risk growth drag.
└ Recurrent
2,073.7
—
—
Ensures social spending amid low inflation.
└ Development
1,272.9
—
—
Infra focus aids GDP; foreign aid key but donor-dependent.
Fiscal Deficit
618.5
—
—
Manageable; monitor borrowing to avoid rate pressures.
In conclusion, September 2025's budgetary dynamics imply a fiscally disciplined stance that underpins Tanzania's growth trajectory while navigating execution and external headwinds. Revenue robustness signals economic vitality, but addressing spending delays and revenue volatility is crucial for sustaining momentum into 2026. This balanced approach—echoing the Review's emphasis on prudent policies—positions the economy resiliently against global uncertainties.
In March 2025, Tanzania’s central government collected a total of TZS 2,465.8 billion in revenue, which was 98.9% of the monthly target. Of this, TZS 2,387.5 billion came from the central government, including TZS 2,055.2 billion in tax revenue—driven by income taxes (TZS 676.1 billion), taxes on imports (TZS 755.3 billion), and local goods and services (TZS 490.6 billion). Non-tax revenue reached TZS 332.3 billion, meeting 99.4% of its target. On the expenditure side, the government spent TZS 3,658.3 billion, with TZS 2,372.0 billion allocated to recurrent expenses—including TZS 937.6 billion for wages and salaries—and TZS 1,286.3 billion for development projects. This spending reflects the government's commitment to public service delivery and infrastructure investment, despite operating a short-term fiscal gap of over TZS 1.19 trillion.
1. Central Government Revenue (March 2025)
Total revenue collected: TZS 2,465.8 billion, which was just 1.1% below the target.
Central government share: TZS 2,387.5 billion, which is 96.8% of total revenue.
Development expenditure: TZS 1,286.3 billion (Target exceeded slightly)
The government maintained a fiscal discipline approach, focusing on key social services and infrastructure despite a slight revenue shortfall.
Summary Table: Government Budget Operations (March 2025)
Category
Amount (TZS Billion)
Performance
Total Revenue
2,465.8
98.9% of target
└ Central Government Revenue
2,387.5
96.8% of total revenue
└ Tax Revenue
2,055.2
Met target
└ Non-Tax Revenue
332.3
99.4% of target
Total Expenditure
3,658.3
└ Recurrent Expenditure
2,372.0
64.8% of total expenditure
└ Wages and Salaries
937.6
└ Interest Payments (Total)
366.4
└ Development Expenditure
1,286.3
35.2% of total expenditure
In March 2025, Tanzania’s central government demonstrated strong revenue performance, collecting over TZS 2.4 trillion, primarily through taxes. Despite revenue being slightly below target, government expenditure reached TZS 3.7 trillion, focusing on development and essential services, supported by prudent fiscal management.
Key Takeaways
1. trong Revenue Performance
The government collected TZS 2,465.8 billion, just 1.1% below target, showing strong tax collection efficiency.
Tax revenue (TZS 2,055.2 billion) hit its target, indicating:
Good tax administration,
Broadening tax base,
Resilient economic activity.
Non-tax revenue (TZS 332.3 billion) also performed well at 99.4% of target, reflecting enhanced collection from fees, licenses, and dividends.
What it tells: The revenue system is functioning effectively, even under economic pressure.
2. High Government Spending
Total expenditure reached TZS 3,658.3 billion, led by:
Development spending: TZS 1,286.3 billion (35%) — invested in infrastructure, education, and health.
What it tells: The government is committed to balancing service delivery and long-term development, even if it means running a short-term fiscal deficit.
3. Fiscal Gap Suggests Borrowing
With revenue at TZS 2.5 trillion and spending at TZS 3.7 trillion, there's a fiscal gap of about TZS 1.2 trillion.
This likely requires borrowing (domestic and/or external) to bridge the deficit.
What it tells: The fiscal policy is slightly expansionary, prioritizing development, but managed under a disciplined framework.
Conclusion
The March 2025 budget performance shows a resilient fiscal system, with strong revenue collection and strategic spending priorities. Although the government is spending more than it earns in the short term, this is controlled and focused on growth-oriented sectors, supported by good tax performance and financial management.
