Dr Shayo: Budget eyes growth, jobs, fiscal discipline

DAR ES SALAAM: THE 2025/26 national budget is set to be presented in Parliament today. In anticipation, Daily News reporter ABDUEL ELINAZA spoke with economist and investment banker Dr HILDEBRAND SHAYO to unpack the expectations that many ordinary Tanzanians or wananchi have for this year’s fiscal plan.

Q: The Minister for Finance, Dr Mwigulu Nchemba, is scheduled to table the 2025/26 national budget today. From your perspective as an economist and investment analyst, what should ordinary ‘wananchi’ realistically expect from this year’s budget?

A: Drawing from Dr Nchemba’s earlier paper on the Budget Framework and Expenditure Ceiling for 2025/26, Tanzanians should expect eight key areas to feature prominently in the budget.

There will be a strong emphasis on domestic revenue mobilisation targeting to raise 70 per cent of revenues internally to reduce dependence on external aid. In that context, the Minister is expected to outline core spending priorities, including debt servicing, the upcoming general election and the public sector wage bill.

Additionally, spending on peace and security is expected to remain a priority, with allocations in the range of 2.06tri/- , in line with recent trends. Given the government’s infrastructure and digital transformation drive, significant allocations are also expected for sectors like energy, with the power sector alone earmarked to receive about 2.2tri/-.

We can expect continuity in digital investments, including the National ICT Broadband Backbone (NICTBB), postcode and smart city initiatives and further build-up of the National Data Centre. In transport and mining, the government will likely continue its focus on projects like the Standard Gauge Railway (SGR), strategic roads and oversight in mineral processing through surveillance technology and service hubs.

Agriculture will also remain a core pillar. An allocation of 393bn/- is anticipated for irrigation projects, alongside subsidies supporting the distribution of over 1.2 million tonnes of fertiliser. Beyond sectoral priorities, the budget will also aim to project macroeconomic stability through fiscal discipline.

With a forecasted budget deficit of 2.7 per cent of GDP, reliance on concessional borrowing is expected to continue providing the necessary breathing room for fiscal planning.

Lastly, there may be proposals to expand publicprivate partnerships (PPPs), positioning the private sector as a key driver in reducing aid dependency and accelerating development. In summary, Tanzanians can expect a development-focused, investment-heavy budget built around self-reliance, infrastructure expansion and sound fiscal management.

Q: What should Tanzanian citizens and the business community anticipate and will the budget be able to meet their expectations?

A: Yes. Judging from previous trends and the government’s vision, I believe the 2025/26 budget will meet many of the public’s expectations. We are likely to see a bigger, more investment-focused budget. For instance, the 2024/25 budget increased by 11 per cent from 44.4tri/- to 49.3tri/-.

So naturally, expectations are high that this year’s budget will at least maintain that momentum particularly in improving service delivery and supporting priority sectors like agriculture, energy and digital infrastructure. Productive sectors are expected to remain central.

Tanzanians are looking for continued financial support for agriculture, tourism, mining and infrastructure, all viewed as economic engines that drive job creation and foreign exchange earnings. Fee-free education and access to healthcare are also high on the list of public expectations.

These sectors are key to reducing inequality and expanding opportunity, especially in rural areas. While growth projections remain positive, institutions like the World Bank point to a narrowing fiscal deficit and controlled inflation suggesting fiscal space remains limited.

That said, Tanzanians expect the government to borrow sustainably, balancing the need for development against longterm debt risk. Overall, the public is looking for a forward-leaning budget that supports inclusive growth, economic stability and meaningful investment in social services.

Q: To what extent do you envision the 2025/26 national budget will be aligned with Tanzania’s National Development Vision 2025 and the Third Five-Year Development Plan (FYDP III)? What will it take to ensure its effectiveness in meeting long-term national goals?

A: Based on the government’s ongoing coordination efforts and with the National Development Vision 2050 on the horizon I believe the 2025/26 budget will show strong alignment with national priorities. In terms of inclusive economic growth, we should see substantial allocations to infrastructure, energy and agriculture.

For human capital development, I expect to see continued funding for fee-free education and healthcare. The budget is also likely to advance tax reforms, promote digital transformation and encourage PPPs all aligned with the goals of FYDP III. Investments will also target election preparedness, good governance and institutional accountability.

Q: Will this alignment be enough to achieve national development goals?

A: Alignment alone is not enough. Meeting long-term goals will depend on several factors. First, revenue realisation. If the 70 per cent domestic revenue target falls short, implementation will be constrained. Second, implementation capacity. Past budgets have underperformed due to procurement inefficiencies, disbursement delays and governance issues. These bottlenecks must be addressed. Third, macroeconomic stability.

Rising debt service costs and inflation could limit development spending. External shocks from global commodity prices to currency swings also present risks. Fourth, private sector involvement. While PPPs are central to the budget strategy, success depends on policy clarity, incentives and reducing bureaucratic hurdles.

Key metrics to track include budget execution rate, GDP growth, job creation (especially for youth and women) and progress on FYDP III milestones. These will determine whether the budget moves beyond alignment to actual delivery. If well-implemented, the 2025/26 budget can provide a foundation for sustained economic transformation one that creates jobs, strengthens the economy and reduces poverty in line with national aspirations.