A US embassy statement said the money would go towards supporting the country’s planned socio-economic transformation to middle income status by the year 2025.
"Under the agreement, the US government ... intends to invest $407 million this year in various sectors in Tanzania, including health, agriculture, natural resource management, education, energy, and democratic governance," the statement said.
It added: "This $407 million investment would represent half of the annual budget that the United States government spends on development and other bilateral programmes in Tanzania."
Gas discoveries in Tanzania have made it a hotspot of hydrocarbon exploration activities, with several multinational oil companies operating in the country.
However, the government is still putting in place a legal and regulatory framework to govern the management of future oil and gas revenues.
A new discovery of an additional 2.17 trillion cubic feet (tcf) of possible natural gas deposits in an onshore field was announced in February, raising the country’s total estimated recoverable natural gas reserves to more than 57 tcf.
The US government's Millennium Challenge Corporation (MCC) in March canceled $473 million of funding to Tanzania after a disputed election rerun in Zanzibar which was boycotted by the main opposition Civic United Front (CUF) party.
Washington said at the time that despite the suspension of the MCC programme, other aid commitments to Tanzania would not be affected.
According to University of Dar es Salaam (UDSM) economics professor Haji Semboja, the latest announcement of new assistance from the US is a sign that Washington is satisfied with the government’s reforms.
“Although the MCC initiative and this new funding are two separate programmes, the new aid commitment is a sign that Tanzania is heading in the right direction,” Semboja said when contacted for comment by The Guardian yesterday.
“In its dealings with developing countries such as ourselves, the United States does not have permanent enemies. It only has permanent interests,” he added.
The new aid is part of a five-year strategic assistance agreement signed yesterday between the US Agency for International Development (USAID) and the Ministry of Finance and Planning.