Economic Overview
Gross domestic production (GDP) growth remained strong at 7% in 2015 due to increased public consumption together with burgeoning construction, communication, financial services and mining sectors. While tourism is the top foreign exchange earner, agriculture, a mainstay of about 70% of households, has continued to post slower growth.
Inflation, at 6.5% in January 2016 due to higher domestic food prices and lagged effects of the Tanzanian shilling’s depreciation, declined to 4.9% in August 2016. Fiscal policy management remains a challenge owing to huge investments in the offing amid ambitious but feasible domestic revenue targets, diminishing aid flows, and volatile global financial markets.
The 2016/17 budget reflects the government’s high priorities in development expenditure in infrastructure while trimming nonessential expenses.
The revenue administration reforms that are in place since November 2015 continue to yield positive impact on monthly revenue collection, which has been on target for each month except a few. Sustaining these efforts remains critical for the government to achieve a revenue target of 16.3% GDP in 2016/17.
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