Abstract:
This study investigated into the dynamic relationship between fiscal policy and economic growth in
Tanzania, focusing on a time-series analysis spanning the years 1990 to 2020. Emphasizing
government revenue, government expenditure, and GDP as key variables, the research employed
statistical techniques, notably regression analysis, to discern the impact of fiscal policy on the
nation's economic path. The geographical scope is concentrated on Tanzania, considering the
broader macroeconomic and political context. A comprehensive understanding is sought by
incorporating factors such as the country's economic structure, political stability, and institutional
framework. Secondary data from reputable sources like the National Bureau of Statistics, Bank of
Tanzania, and World Bank form the basis of the study, ensuring a strong empirical foundation.
Various indicators, including tax revenue and government spending, were meticulously analyzed to
unravel the intricate relationship between fiscal policy and economic growth in Tanzania. The
examination extends beyond mere correlation, employing statistical rigor to determine the
relationship between fiscal policy and the nation's economic landscape. In addition to assessing the
broader impact of fiscal policy, this study scrutinizes the effectiveness of specific fiscal instruments.
Tax policy, public expenditure management, and debt management are examined individually to
gauge their efficacy in steering economic growth. The study revealed that government expenditure
holds a statistically significant positive relationship with economic growth, on the other hand,
taxation policies were found to have a significant positive impact on economic growth, and finally,
concerning public debt, the study uncovered a significant negative association with economic
growth, highlighting the importance of maintaining prudent debt levels to avoid adverse effects on
the economy. The government and policy makers should implement strong and proper monitoring
and evaluation mechanisms for fiscal policies.
