Tanzania's economic development trajectory

1. Tax/GDP Ratio (%)

• 2021/2022: 11.4%
• 2022/2023: 11.7%
• 2023/2024: 12.1%
• 2024/2025 (projected): 12.5%

This shows the percentage of Gross Domestic Product (GDP) that comes from tax revenue. From 2021/2022 to 2024/2025, this ratio is increasing, indicating an improvement in tax collection or efficiency in revenue generation. Over the four years, the tax/GDP ratio rises by 1.1 percentage points (from 11.4% to 12.5%).

2. GDP (in trillion TZS)

• 2021/2022: 154.8 trillion TZS
• 2022/2023: 176.7 trillion TZS
• 2023/2024: 191.5 trillion TZS
• 2024/2025 (projected): 207.5 trillion TZS

Tanzania’s GDP is growing year by year, with an increase of 52.7 trillion TZS projected over four years, which reflects a healthy economic expansion. From 2021/2022 to 2024/2025, the GDP grows by about 34%.

3. Budget Deficit (% of GDP)

• 2021/2022: -3.2%
• 2022/2023: -3.5%
• 2023/2024: -3.0%
• 2024/2025 (projected): -2.8%

The budget deficit represents how much the government is spending more than it collects in revenue, expressed as a percentage of GDP. The deficit was at its highest in 2022/2023 at -3.5%, but it is projected to decline, showing fiscal consolidation efforts.

4. Public Debt (% of GDP)

• 2021/2022: 39.5%
• 2022/2023: 40.8%
• 2023/2024: 41.2%
• 2024/2025 (projected): 41.5%

Public debt as a percentage of GDP is gradually increasing, indicating that the government's debt levels are rising in proportion to the country's total economic output. However, the increase is modest, only 2 percentage points over four years.

5. Public Debt (in trillion TZS)

• 2021/2022: 61.1 trillion TZS
• 2022/2023: 72.1 trillion TZS
• 2023/2024: 78.9 trillion TZS
• 2024/2025 (projected): 86.1 trillion TZS

The actual public debt in Tanzania is increasing by 25 trillion TZS from 2021/2022 to 2024/2025, showing a steady rise in borrowing. This rise corresponds with the growing economy, and the debt-to-GDP ratio is increasing at a slower pace, meaning that while debt is rising, the economy is growing as well.

A Path Toward Sustainable Economic Growth and Fiscal Stability

1. Tax Revenue Growth (Tax/GDP Ratio)

• The steady increase in the tax-to-GDP ratio from 11.4% in 2021/2022 to 12.5% in 2024/2025 indicates an improving capacity to generate revenue internally. This reflects enhanced tax collection efficiency, better compliance, and possibly a widening tax base.
• Economic Implication: A higher tax-to-GDP ratio strengthens the government’s ability to finance public services, reduce reliance on debt, and invest in development projects such as infrastructure, education, and healthcare.

2. Robust GDP Growth

• The GDP is projected to grow from 154.8 trillion TZS in 2021/2022 to 207.5 trillion TZS in 2024/2025. This signifies that the Tanzanian economy is expanding at a healthy pace, with a growth rate of about 34% over four years.
• Economic Implication: Rising GDP suggests that sectors like agriculture, mining, manufacturing, and services are performing well, contributing to the overall economic growth. This provides opportunities for job creation, increased investments, and poverty reduction efforts.

3. Reduction in Budget Deficit

• The budget deficit narrows from -3.5% in 2022/2023 to -2.8% in 2024/2025. This indicates efforts to bring the government’s spending under control and improve fiscal discipline.
• Economic Implication: A smaller budget deficit reduces the need for external borrowing and creates fiscal space for developmental projects. Controlling the deficit helps maintain macroeconomic stability, which is crucial for sustaining investor confidence and long-term growth.

4. Moderate Rise in Public Debt

• The public debt as a percentage of GDP increases modestly from 39.5% to 41.5% over four years. However, in absolute terms, public debt rises by 25 trillion TZS from 61.1 to 86.1 trillion TZS.
• Economic Implication: Tanzania's debt levels are increasing, but the rise is in line with economic growth. This shows that borrowing is being managed cautiously, likely for infrastructure and development investments rather than unsustainable expenditures. If debt is used effectively to finance growth-enhancing projects, it can contribute positively to long-term economic development.

5. Sustainable Fiscal Management

• The combination of increasing tax revenues, controlled budget deficits, and a modest rise in public debt indicates Tanzania is focusing on sustainable fiscal management. This can help maintain economic stability and resilience against external shocks.

Overall Economic Development Trends:

• Positive Economic Growth: Tanzania is experiencing healthy GDP growth, driven by effective economic policies, investments, and sectoral development.
• Focus on Fiscal Responsibility: The government is working towards reducing deficits while increasing tax revenues, reflecting a commitment to fiscal sustainability.
• Debt Management: Public debt is rising, but within reasonable limits, allowing room for strategic investments in infrastructure and other development projects.

Implication for Development:

• The improvement in tax collection and GDP growth highlights progress towards self-reliance and reducing aid dependence.
• Investments in infrastructure, healthcare, and education can further spur economic growth, job creation, and poverty reduction.
• The stable macroeconomic environment will attract foreign direct investment (FDI), fostering industrialization and technology adoption, key drivers of long-term economic development in Tanzania.