Tanzania 2025/2026 budget brief

Despite negative economic growth trends globally, as well as within the SADC and EAC regions over the past three years, Tanzania's economy demonstrated resilience. The national Gross Domestic Product (GDP) increased to TZS 156.6 trillion in 2024, up from TZS 148.5 trillion in 2023. The GDP growth rate of 5.5% in 2024 represents an improvement from the 5.1% growth recorded in 2023. 

This growth is the result of joint efforts from the Government, private sector, and development partners. Key drivers included the start of electricity production at the Julius Nyerere Hydropower Plant, ongoing major projects in energy and transport, increased credit to the private sector, prudent macroeconomic management, growth in the agricultural sector and increased government spending on education, health, water, and social welfare.

The activities that recorded the highest growth in 2024 include arts and entertainment (17.10%), electricity production (14.40%), information and communication (14.30%), finance and insurance (13.80%) and health (10.10%).

The agriculture, construction and mining sectors accounted for 26%, 13% and 10% of the economy controlling about half on national output.

Inflation remained within the government target of less than 5% as well as within the EAC and SADC target range. In 2024, the annual inflation rate decreased to 3.1% compared to 3.8% in 2023. This inflation trend, which has continued over the last three years is attributed to effective monetary and budgetary policies, stabilization of oil prices in the global market, and an improvement in food availability in domestic markets. 

1. Accelerate real GDP growth rate to 6.0 percent in 2025 from 5.5 percent in 2024; 
2. Control inflation rate and ensure it remains within single-digit range of an average of 3.0 - 5.0 percent in the medium term; 
3. Increase domestic revenue to 16.7 percent of GDP in 2025/26 from 15.8 percent in 2024/25; 
4. Increase tax revenue to 13.3 percent of GDP in 2025/26 from 12.8 percent in 2024/25; 
5. Reduce fiscal deficit (including Grants) to 3.0 percent of the GDP in 2025/26 from 3.4 percent in 2024/25; 
6. Maintain foreign exchange reserves sufficient to cover at least four (4) months of imports of goods and services.