As details of Tanzania’s 2016-17 budget estimates emerge, it is clear that President John Magufuli will not let technocratic advice stand in the way of his vision of a rapidly growing economy fuelled by state-led industrialisation.

The first estimates for the budget issued in February came in at about US$10.5 billion. But the estimates released at the beginning of May are 30% higher, at US$13.5 billion.

The increase has been described by the European Union delegation in an internal analysis seen by East Africa Politics & Security as ‘a high level political trade-off’.

This ambitious and risky plan has most likely been driven by President Magufuli himself. His seemingly impetuous style of governing appears to have overruled that of his more bookish Minister for Finance Dr Philip Mpango.

The expenditure is unlikely to be met, as is usually the case. However, there will be great efforts to increase domestic revenue collection, and to increase commercial borrowing. President Magufuli flagged his willingness to increase revenues by any means when in February he promised the courts a share of tax awards they make to the state.

Arguably the first example of this has been Acacia Mining’s recent troubles with a Withholding Tax award made against it by the Tax Appeals Tribunal. One tax expert, who East Africa Politics & Security spoke to, judges the tribunal’s ruling – that withholding tax be paid in Tanzania on dividends paid in the United Kingdom – as being fundamentally flawed. If the Court if Appeal upholds the ruling, Acacia Mining is likely to go to international arbitration, and win.

This aggressive stance will be of particular concern to the partners in the LNG project, who are hoping to start negotiating a Host Government Agreement (HGA) this year. As it will set the fiscal framework for the project, governments stance on negotiating the HGA is likely to be aggressive.

The second main channel for financing Tanzania’s budget is through borrowing. The government has a domestic borrowing target of TZS 5.4 trillion (US$2.5 billion), and an external borrowing target of TZS 2.1 trillion (US$950 million). Domestic borrowing targets may be met, as banks are eager to lend to government.

External borrowing may be more of a challenge. Tanzania has been unsuccessful in gaining a credit rating, something it has been seeking since at least 2010 with a view to launching a Eurobond. Its US$600 milllion private placement arranged through Standard Bank has of course proved problematic (see East Africa Politics & Security – 19.04.16 for background).