Tanzania plans to finance at least 75 percent of its 2026/27 national budget from domestic revenue sources as it moves to reduce reliance on external funding amid strained relations with some Western partners, officials said.
The government has set a total budget of Tsh62.33 trillion (US$24 billion), with Finance Minister Khamis Mussa Omar outlining a strategy centred on stronger tax collection, economic formalisation, and expanded domestic investment to bridge expected financing gaps.
Under the plan, about Tsh46.8 trillion (US$18 billion) will be raised internally, reflecting what authorities describe as a shift toward greater economic self-reliance.
The move comes as some external partners have reportedly signalled potential reductions in support linked to concerns over governance and political developments following last year’s disputed general election.
Officials say the budget prioritises large-scale infrastructure and development projects, including the standard gauge railway network, road expansion, water systems, and clean energy investments aimed at supporting long-term economic transformation.
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Roughly 30% of the budget equivalent to Tsh20.82 trillion (US$7.9 billion) has been allocated to development spending, while the remainder will cover recurrent expenditure such as salaries and government operations.
To raise domestic revenue, authorities plan to widen the tax base and improve compliance through digital systems designed to enhance efficiency and reduce leakages in tax administration.
The government also intends to formalise informal businesses and reassess tax incentive structures for private investors in a bid to increase fiscal space.
Key sectors expected to support revenue growth include mining, tourism, agriculture, manufacturing, and renewable energy, all of which officials say will play a larger role in stabilising foreign exchange earnings and supporting industrialisation.
The budget also introduces cost-cutting measures across the public sector, including a directive for government agencies to gradually replace diesel and petrol vehicles with electric alternatives, citing rising fuel costs linked to global energy disruptions.
The policy shift reflects broader efforts to reduce operational expenses while aligning with climate and sustainability goals.
Finance Minister Omar presented the budget as central to Tanzania’s long-term development vision, known as Dira 2050, which aims to transform the country into a $1 trillion economy by mid-century.
Separately, Planning and Investment Minister Kitila Mkumbo defended the government’s evolving foreign policy approach, describing it as pragmatic and guided by national interests amid shifting global alliances.
He also addressed scrutiny over Tanzania’s diplomatic posture following recent high-level engagements with non-Western partners, saying policy decisions are guided by economic realities rather than ideological alignment.
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Analysts say the budget underscores Tanzania’s broader ambition to strengthen fiscal sovereignty, though challenges remain in expanding the tax base and maintaining investor confidence amid political and external funding pressures.
