Tanzania wants to increase its annual budget by 11.6 per cent in the 2025/2026 fiscal year, from Tsh49.35 trillion ($18.98 billion) to Tsh 55.06 trillion ($20.4 billion at current exchange rate), while maintaining the domestic financing ratio at above 70 per cent.
According to Finance Minister Mwigulu Nchemba, internal revenue projections have risen from Tsh34.6 trillion ($12.79 billion) in 2024/2025 to Tsh38.9 trillion ($14.4 billion) while total contributions from external sources are expected to yield Tsh16.02 trillion ($5.93 billion).
Expected aid contributions from development partners have been restricted to just Tsh 1.02 trillion ($377.77 million), concessional loans Tsh5.6 trillion ($2.07 billion) and commercial loans from both domestic and international sources Tsh9.4 trillion ($3.48 billion), Dr Nchemba told the National Assembly in his 2025/2026 budget framework presentation on November 1.
He said the aim was to ensure that domestic revenues continued to fund bigger chunks of annual national budgets going forward based on ongoing measures to enhance collection systems and after factoring in potential changes in macroeconomic fundamentals. “The government will continue implementing a medium-term revenue collection strategy aimed at increasing domestic revenues and reducing reliance on loans,” the minister said.
Tanzania's external debt stood at $32.89 billion in September 2024, up from $32.70 billion in August, according to central bank figures.
But the country remains in good standing in international credit ratings. Moody’s upgraded Tanzania’s long-term issuer ratings from B2 to B1 in March 2024 — ahead of other East African Community (EAC) partner states — and reconfirmed it in September, citing a series of factors including maintaining a “moderate” debt burden.
In June, Fitch Ratings gave Tanzania a B+ rating with a stable outlook, citing “strong GDP growth projections (of 5.4 percent for 2024), ongoing structural reforms and improved fiscal health”. All this points to the possibility of the country becoming recipient to more external aid than projected in 2025/2026.
More than two thirds (67.4 per cent) of the 2024/2025 budget expenditure plan is pegged on domestic revenues, with the Tanzania Revenue Authority given a collection target of Tsh 29.41 trillion ($11.31 billion) for the full fiscal year.
Last month TRA reported collection figures of Tsh 7.79 trillion ($2.88 billion) that surpassed the first quarter target (July to September), indicating that the final goal was well within reach.
However, the agency has also recently come under strong criticism from domestic businesses and foreign investors over various malpractices in tax administration and collection, leading to the formation of a presidential commission to review the entire taxation regime.
The commission began its work on October 4 and it remains unclear when it will conclude its assignment. In Dr Nchemba's budget plan for 2025/2026, recurrent expenditure is projected to total Tsh 38.6 trillion ($14.29 billion) and development expenditure Tsh 16.4 trillion ($6.07 billion).
Priority expenditure areas cited include the conduct of Tanzania's general election scheduled for October 2025, though the framework does not outline any specific allocations for the exercise.
