This is the central question of the report. Tanzania's government has always spent more than it earns, but the composition of that spending has transformed almost beyond recognition since 2000 — moving decisively away from routine operating costs and toward development investment and debt service.

Source: TICGL/TERI analysis of Ministry of Finance, Government Budgetary Operations data (IMF format).

Wages and salaries

The wage bill's share of the budget rose from 20.7% (2000-2004) to a peak of 32.2% (2015-2019), before easing to 27.3% (2020-2024) — though in nominal terms it kept growing throughout. The rise tracks large-scale recruitment of teachers and health workers, minimum-wage increases across the public service, and the expansion of social services (free basic education, expanded health coverage) that required more staff. The modest easing after 2019 likely reflects other budget lines — especially development spending and interest — growing even faster than the wage bill, not a real-terms cut to public employment costs.

Interest on debt — the fastest-growing category

Interest payments' share of the budget has more than doubled, from 6.4% to 10.9% between the earliest and latest periods studied, and reached 13.1% in 2024 alone before easing slightly to 12.0% in 2025. This is a direct consequence of the scale of borrowing — domestic and external — used to finance major infrastructure (the Julius Nyerere Hydropower Project, the Standard Gauge Railway, roads and bridges) from roughly 2015/16 onward, including a larger share of non-concessional and domestic Treasury-bond financing carrying higher interest costs than earlier, more concessional borrowing. Because interest is a fixed, largely unavoidable obligation, its continued rise is the item in this dataset most worth monitoring closely: every additional shilling of interest is a shilling unavailable for anything else.

Development spending — now the largest category

Development expenditure's share of the budget rose from 27.2% to 41.8% between the first and last periods studied — the single biggest structural change in the entire dataset, and it is now the largest individual category of government spending, ahead of wages, interest, or routine operating costs on their own. This tracks Tanzania's "Big Infrastructure Projects" era, which gathered pace from around 2015/16 and has continued since — including the SGR, JNHPP, port expansion, airports and rural roads. It is, in principle, a positive signal for long-run growth (investment in productive capacity), though its ultimate payoff depends heavily on how efficiently those projects are executed and maintained.

Other goods, services and transfers — the squeezed category

Routine recurrent spending outside wages and interest — procurement, maintenance, subsidies, and ordinary office operations — has been squeezed hardest of all, falling from 45.7% to 20.1% of the budget between 2000-2004 and 2020-2024. Rather than cutting wages or interest (both difficult to reduce quickly), government appears to have absorbed the pressure of growing development and debt-service obligations primarily by compressing this category — a pattern worth watching, since chronic under-funding of routine operations and maintenance can eventually undermine the very infrastructure development spending is meant to build.

While spending priorities have shifted dramatically, the way government raises money has changed far more modestly. Tax revenue remains the overwhelming source of funds in every period studied, even as non-tax revenue has grown its share.

Source: TICGL/TERI analysis of Ministry of Finance, Government Budgetary Operations data (IMF format). Customs, VAT/excise and income tax are shown as % of tax revenue.

Tax revenue's share of total government income slipped from 90.5% to 82.6% between 2000-2004 and 2020-2024, while non-tax revenue — local-government own sources, dividends from public enterprises, natural-resource royalties, and administrative fees — nearly doubled its share, from 9.5% to 17.3%. This is a genuine, if modest, diversification of the revenue base, likely reflecting deliberate efforts to reduce reliance on taxation alone.

Within tax revenue itself, the mix has shifted too. Customs/import duty's share fell steadily from 37.9% (2000-2004) to as low as 26.0% (2015-2019), before ticking back up to 30.0% (2020-2024) — plausibly reflecting East African Community customs-union harmonisation lowering some intra-regional tariffs, alongside growing domestic production reducing reliance on imported goods. Income tax's share, meanwhile, climbed from 23.3% to a peak of 33.4% (2010-2014) and has since settled around 30%, consistent with the formalisation of employment and TRA's expansion of taxpayer registration (TIN) and electronic systems (EFD) over the period.

Tanzania has run a budget deficit in every one of the 26 years studied — spending has exceeded domestically-generated revenue every single year since at least 2000. What has changed is the size of that gap relative to the budget it is financing.

The deficit averaged 36.1% of total expenditure in 2000-2004 and 37.7% in 2005-2009 — meaning more than a third of all government spending in those years was financed by borrowing or grants rather than domestic revenue. By 2015-2019 and 2020-2024, that figure had fallen to 19.4% in both periods, and to 16.3% in 2025 alone. The year-by-year picture is not perfectly smooth — 2021 saw a temporary spike to 30.0%, likely reflecting a combination of pandemic-era revenue pressure and a jump in development spending (47.9% of the budget that year, the highest in the series) — but the multi-decade direction of travel is unambiguous.

The most recent five months of data offer an early, provisional read on where 2026 might be heading — useful as an early-warning signal, though five months is not enough to declare a firm new annual trend.

Source: TICGL/TERI analysis of Ministry of Finance, Government Budgetary Operations data (IMF format), January-May 2025 vs. January-May 2026.

Revenue grew 16.7% year-on-year in the first five months of 2026 — comfortably outpacing total expenditure growth of 6.1% — continuing the multi-year pattern of revenue collection strengthening faster than spending. The more notable shift is within expenditure itself: development spending fell 16.1% year-on-year, while wages and salaries grew 18.6%, faster than revenue itself. Interest payments grew a more modest 6.2%, roughly in line with overall spending growth.

Plausible explanations for the development-spending dip include the maturing or completion of some flagship projects (reducing near-term capital financing needs), a shift in the timing of project disbursements toward later in the fiscal year, or a deliberate reprioritisation toward recurrent obligations. Five months is too short a window to distinguish between these explanations with confidence — the coming months of 2026 data will be the real test of whether this is a genuine reprioritisation or a timing effect.