Tanzania Unveil Budget and Macroeconomic Targets for 2020/21

Tanzania’s Minister for Finance and Planning Hon. Philip Mpango just presented to the National Assembly the budget proposal for the fiscal year 2020/21.

This is the fifth national budget under the Fifth Phase Government of President Dr. John Magufuli.

In his presenting speech, Hon. Mpango first reminded that in 2019/20 budget, the Government projected to collect TZS 33.11 trillion from both internal and external sources, and up to April 2020 TZS 26.13 trillion has been collected, equivalent to 92.4% of the annual target.

As of April 2020, the Government had released TZS 7.63 trillion for the implementation of development projects equivalent to 65.9% of the target.

In highlighting the achievement during the four years and seven months of the Fifth Phase Government, Hon. Mpango stressed the macroeconomic performances achieved.

The economy has been growing at an average of 6.9% during President Magufuli’s administration, while inflation remained stable at a single-digit level averaging 4.4% for the entire period and easing to 3.4% in 2019.

2020/21 Macroeconomic Policy Targets

This final year of the implementation of the National Five-Year Development Plan 2016/17–2020/21 comes with the theme: “Nurturing industrialization for economic transformation and human development”, to stimulate the economy, livelihoods, jobs, businesses, and industrial recovery.

(i) Real GDP growth is projected to slow down to 5.5% from the initial projection of 6.9% in 2020 compared to the actual growth of 7.0% in 2019. This decline is due to heavy rainfall which destroyed transport infrastructure and impact of COVID-19 pandemic;
(ii) Containing inflation at a single digit between 3.0 to 5.0% in 2020/21;
(iii) Domestic revenue is projected at 14.7% of GDP in 2020/21 from the likely outturn of 14.0% in 2019/20;
(iv) Tax revenue is estimated at 12.9% of GDP in 2020/21 from the likely outturn of 12.1% in 2019/20;
(v) Government expenditure is projected at 22.1% of GDP in 2020/21;
(vi) Budget deficit (including grants) is estimated at 2.6% of GDP in 2020/21 which is below the target of 3.0% of macroeconomic convergence criteria as agreed in the East AfricaCommunity (EAC); and
(vii) Maintain foreign reserve sufficient to cover at least four months of imports of goods and services.

2020/21 Budget

Consistent with these macroeconomic objectives, in the budget for 2020/21 a total of TZS 34.88 trillion will be mobilized and spent.

Total domestic revenue is estimated at TZS 24.07 trillion, equivalent to 69% of the total budget. Out of that amount, the Government plans to collect tax revenue amounting to TZS 20.33 trillion, nontax revenue TZS 2.92 trillion, and revenue from Local Government Authorities (LGAs) own sources TZS 815.0 billion.

The Government plans to borrow TZS 4.90 trillion shillings from the domestic market. Further, TZS 3.04 trillion is expected to be borrowed from external non-concessional sources in order to speed up the implementation of infrastructure projects. Development Partners are expected to contribute grants and concession loans amounting to TZS 2.87 trillion, equivalent to 8.2% of the Government budget.

Hon. Mpango concluded his speech by reminding that in the second term of the Fifth Phase Government, starting in 2021, there must be a bold decision to allocate significant budgetary resources to invest in modern science and technology and identifying and nurturing talents and expertise to awaken untapped innovative minds of Tanzanians particularly the youth.