Today in Dodoma, all eyes are set on the Minister for Finance and Planning, Dr. Mwigulu Nchemba, as he unveils the government's budget estimates for the 2023/24 financial year. The government plans to increase spending by seven percent, reaching 44.38 trillion Tanzanian shillings, up from 41.48 trillion in the current financial year, in order to meet the growing development needs.
The budget ceiling for the upcoming financial year indicates that 44.38 trillion will be sourced from domestic revenue, estimated to reach 31.38 trillion, which accounts for approximately 71 percent of the total budget. Additionally, grants and concessional loans from development partners are expected to contribute about 5.46 trillion or 12.3 percent of the total budget, while non-concessional loans from domestic and foreign sources are projected to reach 7.54 trillion, equivalent to 16.98 percent of the budget.
Compared to the previous estimates presented in the guidelines for the preparation of the government budget for the 2023/24 financial year, the budget ceiling has increased following discussions with the World Bank and the African Development Bank. The World Bank has pledged to provide 1.16 billion, and the African Development Bank has committed to 247.4 billion.
This budget will mark the third implementation of the Third-Five Year National Development Plan (2021/22-2025/26), aligning with the National Development Vision 2025, CCM Election Manifesto 2020, East African Development Vision 2050, Africa Agenda 2063, The 2030 Agenda for Sustainable Development Goals, Development Cooperation Framework, and other regional and international agreements ratified by Tanzania.
The budget is based on the trend of domestic revenue collection and the actual financing of development projects, including the construction of the 2,115 MW Hydroelectricity Project – Julius Nyerere, the construction of the International Standard Railway (Standard Gauge Railway- SGR), salary payments, government debt repayment, and other essential government expenditures.
A significant portion of the budget, around a quarter, will be allocated to servicing government debt, with 12.77 trillion or 28.7 percent earmarked for this purpose. In the current fiscal year, the government allocated 9.1 trillion or 21.9 percent of the budget for debt servicing.
Economic projections indicate a real growth rate of 5.3 percent in 2023, surpassing the expected 4.7 percent in 2022 as the economy rebounds from the impact of the Covid-19 pandemic. Sectors like tourism and the rise in commodity prices due to the war in Ukraine, affecting commodities such as wheat and oil, have experienced significant setbacks.
The government aims to implement measures to contain inflation within a single-digit range, with an average of three to seven percent in the medium term. Domestic revenue, including local government revenue, is projected to reach 14.9 percent of GDP in 2023/24, and tax revenue collection is expected to reach 12.1 percent of the total economy, up from the projected 11.5 percent in the 2022/23 financial year.
The budget deficit is expected to remain below three percent of GDP, and the government intends to maintain foreign reserves sufficient to cover at least four months of imports of goods and services.