Tanzania Hikes Spending Despite Aid Cuts, Eyes 6.3% Growth

Tanzania unveiled a 10% increase in the state budget despite a sharp decline in foreign development assistance, even as the government prioritizes infrastructure projects and improving social services.

The government will spend 62.3 trillion shillings ($23.8 billion), three quarters of which will be financed by domestic revenue, Finance Minister Khamis Omar said in his budget speech in the capital, Dodoma on Thursday.

“Grants from development partners are expected to decrease by 39% in 2026-27 compared to 2025-26,” he said, citing changes in donor policies.

Economic output is seen accelerating to 6.3% in 2026 from 5.9% last year, buoyed by agriculture, construction and mining sectors, Omar said.

The East African nation, one of Africa’s biggest aid recipients, has recently been in the spotlight over its human rights record and backsliding on democracy, leading to calls in some western nations for cuts to aid.

The budget deficit is expected to narrow to 2.9% of the gross domestic product, or 7.7 trillion shillings. The government plans to borrow 4.43 trillion shillings from foreign lenders and raise another 3.27 trillion shillings from domestic financing to plug that budget hole.

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