Central Government Revenues and Expenditure - December 2025
Central government revenue performance remained exceptionally strong, exceeding budgetary targets due to improved tax administration, economic activity expansion, and enhanced compliance mechanisms. Total revenue collection reached TZS 2,534.6 billion, with tax revenue contributing the dominant share at 83.8%, while non-tax revenue accounted for 16.2% of total collections.
| Revenue Category | Amount (TZS Billion) | Share (%) |
|---|---|---|
| Tax Revenue | 2,123.8 | 83.8 |
| Non-Tax Revenue | 410.8 | 16.2 |
| Total Revenue | 2,534.6 | 100.0 |
Tax revenue continued to dominate total government revenue collections, confirming that government financing relies primarily on domestic tax mobilization rather than volatile non-tax sources. The 83.8% tax revenue share indicates a stable and predictable revenue base, which is critical for fiscal planning and budget execution. This performance reflects improved tax administration efficiency, broadened tax base coverage, and enhanced compliance enforcement by the Tanzania Revenue Authority (TRA).
| Tax Type | Amount (TZS Billion) | Share of Tax Revenue (%) |
|---|---|---|
| Income Tax | 833.2 | 39.2 |
| Value Added Tax (VAT) | 702.5 | 33.1 |
| Import Duties | 296.7 | 14.0 |
| Excise Duties | 210.6 | 9.9 |
| Other Taxes | 80.8 | 3.8 |
| Total Tax Revenue | 2,123.8 | 100.0 |
Income tax and VAT together accounted for over 70% of tax revenue, indicating broad-based domestic economic activity and formalization of the economy. The significant contribution from income tax (39.2%) reflects growing employment in the formal sector and improved corporate tax compliance. VAT's 33.1% share demonstrates robust consumption patterns and domestic trade activity. Import duties contributing 14.0% highlight Tanzania's continued reliance on international trade, while excise duties (9.9%) target specific consumption goods for both revenue and regulatory purposes.
Government spending during December 2025 totaled TZS 3,129.4 billion, demonstrating strategic alignment with priority sectors including wages, social services, and infrastructure development. The expenditure structure reveals a dominant focus on recurrent obligations while maintaining significant investment in development projects critical for economic growth and social advancement.
| Expenditure Category | Amount (TZS Billion) | Share (%) |
|---|---|---|
| Recurrent Expenditure | 2,048.7 | 65.5 |
| Development Expenditure | 1,080.7 | 34.5 |
| Total Expenditure | 3,129.4 | 100.0 |
Recurrent spending remained dominant at 65.5% of total expenditure, reflecting the substantial cost of running government operations, servicing debt, and maintaining public services. This recurrent-heavy expenditure structure is characteristic of developing economies where wage bills, interest payments, and essential service delivery consume the majority of government budgets. However, the 34.5% allocation to development expenditure demonstrates the government's continued commitment to infrastructure development, capital projects, and long-term economic transformation initiatives.
| Component | Amount (TZS Billion) | Share of Recurrent (%) |
|---|---|---|
| Wages and Salaries | 826.3 | 40.3 |
| Interest Payments | 603.4 | 29.5 |
| Goods and Services | 618.9 | 30.2 |
| Total Recurrent Expenditure | 2,048.7 | 100.0 |
Interest payments formed a significant recurrent burden at TZS 603.4 billion (29.5%), highlighting the fiscal impact of accumulated public debt. When combined with wages and salaries (40.3%), these two obligatory components consume nearly 70% of recurrent expenditure, leaving limited fiscal space for discretionary spending on goods and services (30.2%). This structural constraint emphasizes the critical need for debt sustainability management and revenue mobilization enhancement to create greater fiscal flexibility.
| Financing Source | Amount (TZS Billion) | Share (%) |
|---|---|---|
| Foreign Financing | 654.8 | 60.6 |
| Domestic Financing | 425.9 | 39.4 |
| Total Development Expenditure | 1,080.7 | 100.0 |
Development spending remained predominantly externally financed at 60.6%, indicating continued reliance on foreign loans, grants, and concessional financing from development partners. This external dependency increases exposure to exchange rate risks, foreign debt accumulation, and potential vulnerability to external financing conditions. The domestic financing component of 39.4% represents local resource mobilization through domestic borrowing and budgetary allocations, which, while lower, demonstrates some capacity for self-financed development initiatives.
The fiscal balance for December 2025 reflected higher expenditure relative to revenue collections, resulting in a deficit that requires strategic financing mechanisms. This deficit position is typical for developing economies pursuing aggressive development agendas while building fiscal capacity.
| Indicator | Amount (TZS Billion) |
|---|---|
| Total Revenue | 2,534.6 |
| Total Expenditure | 3,129.4 |
| Overall Fiscal Deficit | -594.8 |
The fiscal deficit of TZS 594.8 billion represents approximately 19.0% of total revenue or 23.5% of expenditure. This deficit was financed primarily through external borrowing (concessional loans and development financing) and domestic securities (treasury bills and bonds). The deficit level, while substantial, remains within manageable bounds for a developing economy with Tanzania's growth trajectory and debt sustainability indicators. However, persistent deficits require careful monitoring to ensure long-term fiscal sustainability and prevent excessive debt accumulation.
The government's ability to finance the deficit through a combination of external concessional financing and domestic capital markets demonstrates fiscal credibility and access to diverse funding sources. The preference for external financing in development projects helps preserve domestic liquidity for private sector credit growth. However, maintaining fiscal discipline through enhanced revenue mobilization and expenditure efficiency will be crucial for long-term sustainability, particularly as interest payment obligations continue to consume a significant portion of recurrent budgets.
The budgetary operations of December 2025 demonstrate Tanzania's fiscal resilience amid competing pressures. While revenue performance remained robust and tax-driven, persistent expenditure obligations—particularly from wages and debt servicing—continue to constrain fiscal flexibility. This section provides a multi-dimensional assessment of Tanzania's fiscal position, contextualizes performance within broader economic trends, and offers policy-oriented perspectives for sustainable fiscal management.
| Dimension | Assessment | Status Indicator |
|---|---|---|
| Revenue Performance | Strong and tax-driven with 83.8% tax revenue share | ✓ Strong |
| Expenditure Structure | Recurrent-heavy (65.5%) with limited fiscal space | ⚠ Moderate |
| Interest Burden | Rising at 29.5% of recurrent expenditure | ⚠ Rising Concern |
| Development Spending | Externally financed (60.6%) with FX exposure | ⚠ Moderate |
| Fiscal Sustainability | Manageable but sensitive to external shocks | ✓ Manageable |
Tanzania's economy in 2025 continued its resilient performance, supporting robust fiscal operations amid strong domestic resource mobilization. The broader economic fundamentals provided a solid foundation for government budgetary operations:
Key Economic Drivers:
These fundamentals enabled robust revenue performance in late 2025, with the Tanzania Revenue Authority (TRA) achieving a record TZS 4.13 trillion collection in December 2025, exceeding targets by 2.9%. The half-year performance reached TZS 18.77 trillion against a target of TZS 18.10 trillion, supporting the 2025/26 annual revenue goal of TZS 36.06 trillion.
Tanzania's central government budgetary operations in December 2025 showcased strong revenue mobilization but persistent expenditure pressures, particularly from wages and debt servicing. While the fiscal deficit remains manageable, continued reliance on external financing for development spending underscores the critical importance of export growth and debt prudence.
In December 2025, central government operations featured robust revenue (TZS 2,534.6 billion, tax-led) but persistent pressures from recurrent spending, with wages and interest payments at TZS 603.4 billion representing a significant fiscal burden. The TZS 594.8 billion deficit remains manageable, supported by:
Strategic Priorities: Continued emphasis on domestic revenue mobilization, export-led growth, and prudent borrowing practices will sustain development financing while reducing external vulnerabilities. Enhancing budget execution efficiency and implementing the Medium-Term Revenue Strategy will further bolster fiscal resilience and support Tanzania's development objectives under the Fifth Five-Year Development Plan (FYDP III).
Based on the comprehensive analysis of December 2025 budgetary operations, the following policy recommendations are proposed to enhance fiscal sustainability, improve budget efficiency, and support Tanzania's long-term development objectives:
Strengthen tax administration capacity, broaden the tax base through formalization initiatives, and implement digital tax collection systems to sustain revenue growth and reduce dependency on external financing.
Implement cost-efficiency measures in public service delivery, rationalize wage bill growth through productivity improvements, and prioritize high-impact goods and services spending to create fiscal space.
Pursue debt restructuring opportunities for expensive commercial loans, prioritize concessional financing sources, and implement robust debt sustainability monitoring frameworks to manage the rising interest burden.
Increase domestic resource allocation for development projects, explore innovative financing mechanisms (PPPs, green bonds), and strengthen project implementation capacity to reduce external financing dependency.
Improve quarterly budget release schedules, enhance procurement efficiency, and implement results-based budgeting to ensure development expenditure translates into tangible economic and social outcomes.
Support export-oriented sectors through targeted incentives, infrastructure development, and trade facilitation to generate foreign exchange earnings and reduce current account pressures supporting fiscal stability.