The global economy entered Q2 2026 with underlying resilience but faced mounting headwinds from geopolitical tensions, energy market volatility, and a slowdown in cross-border trade. According to the IMF's April 2026 World Economic Outlook and the World Bank's May 2026 Economic Prospects Report, global growth is projected to moderate to between 2.5% and 3.1% in 2026 — down from earlier forecasts.

In April 2026, global crude oil prices surged sharply from USD 95.58 per barrel in March 2026 to a monthly average of USD 103.91 per barrel, with the highest single-month price reaching USD 117.80 per barrel. This was primarily driven by geopolitical conflicts in the Middle East and supply-side disruptions. Global inflation projections were also revised upward to 4.4% in 2026, from 3.8% forecast in January 2026.

Headline annual inflation rose to 4.0% in April 2026, up from 3.2% in both March 2026 and April 2025. The Bank of Tanzania attributes this rise to pass-through effects of rising global fuel prices driven by the ongoing geopolitical conflict in the Middle East. Despite this acceleration, inflation remains within Tanzania's national target as well as within SADC and EAC regional benchmarks.

Core inflation — which excludes unprocessed food, energy, and utilities — increased significantly to 3.1% from 2.2% in March 2026 and 2.2% in April 2025, largely driven by higher transportation costs and furnishings/household equipment prices. Annual food inflation reached 5.7% in April 2026, higher than 5.5% in March and 5.3% in April 2025, driven by wheat, rice, and maize price increases.

The NBS Press Release for December 2025 provides the baseline for understanding Tanzania's inflation trajectory. The annual headline inflation rate for December 2025 reached 3.6%, slightly up from 3.4% in November 2025. The overall NCPI rose from 116.87 in December 2024 to 121.11 in December 2025, reflecting modest but steady price level increases throughout the year.

Comparing the full year 2024 and 2025: the annual average headline rate rose from 3.1% to 3.3%. Most notably, food inflation surged from 2.1% to 6.4%, while non-food inflation declined from 3.5% to 2.0%, suggesting that inflationary pressure in 2025 was concentrated in volatile food and non-core components rather than underlying monetary drivers.

At its April 2026 meeting, the Monetary Policy Committee (MPC) resolved to maintain the Central Bank Rate (CBR) at 5.75% for the quarter ending June 2026. This decision balanced the need to manage rising inflationary pressures from fuel prices while supporting Tanzania's economic growth trajectory. Importantly, the MPC also narrowed the CBR corridor from 200 basis points to 150 basis points, intending to strengthen monetary policy effectiveness.

The 7-day IBCM rate averaged 6.15% in April 2026, remaining within the CBR corridor. Banks' demand for reverse repo decreased to TZS 379.7 billion in April 2026, from TZS 585.7 billion in March 2026, reflecting improved liquidity conditions.

Extended broad money supply (M3) grew by 22% in April 2026, broadly consistent with the preceding month's 23.2%, largely driven by sustained growth in credit to the private sector.

The government securities market remained active and robust in April 2026, supported by sustained investor demand and adequate liquidity in the economy. The Bank of Tanzania conducted two Treasury bill auctions with a combined tender size of TZS 429.8 billion. Both auctions were significantly oversubscribed, attracting total bids of TZS 859.5 billion — nearly double the offer — of which TZS 450.4 billion were successful. The bid-to-cover ratio of approximately 2.0x signals strong investor appetite for Tanzanian government paper.

In line with strong demand, the overall weighted average yield on Treasury bills declined slightly to 5.06% from 5.21% in March 2026, indicating improved market confidence and downward pressure on short-term borrowing costs.

For Treasury bonds, the Bank conducted 5-year and 10-year auctions with tender sizes of TZS 174.9 billion and TZS 144.6 billion respectively. Both were oversubscribed, registering total bids of TZS 408.3 billion, with TZS 291.3 billion accepted. Weighted average yields declined to 9.54% for the 5-year bond and 9.40% for the 10-year bond — indicating falling long-term yields despite rising short-term inflationary pressures, reflecting investor trust in Tanzania's debt servicing capacity.

The Interbank Cash Market (IBCM) continued to serve its core function of redistributing liquidity across banks. Total IBCM market turnover in April 2026 was TZS 2,708.5 billion, marginally higher than TZS 2,699.5 billion in March 2026. The 7-day tenor dominated market activity, accounting for 60.5% of total transactions.

The overall IBCM rate rose to 7.32% in April 2026, up from 6.32% in March 2026. The 7-day IBCM rate averaged 6.15%, within the CBR corridor. This uptick in the IBCM rate reflects the tighter liquidity conditions as oil-driven inflationary pressures fed into interbank pricing.

The overnight IBCM rate stood at 6.15% in April 2026, compared to 6.17% in March 2026, showing relative stability in the very short end of the interbank curve.

Interest rates remained broadly unchanged in April 2026, with modest upward adjustments in both lending and deposit rates. The overall lending rate increased to 15.33% from 15.11% in March 2026, while negotiated lending rates for prime customers rose to 12.56% from 12.21%. The overall deposit rate edged up to 8.54% from 8.33%, while the spread between one-year lending and deposit rates narrowed to 5.50 percentage points from 5.85 points in March 2026 — a modestly positive development for credit access.

Revenue collection remained strong. The Government collected a total of TZS 3,836.9 billion in March 2026, which was 8.5% above the monthly target. Central government revenue reached TZS 3,703.3 billion — 9.3% above target. Tax revenue amounted to TZS 3,317.5 billion, exceeding the target by 10.8%, driven primarily by income taxes which surpassed their target by 17.2%.

Total government expenditure was TZS 4,273.4 billion in March 2026, comprising TZS 2,545.3 billion in recurrent expenditure and TZS 1,728.1 billion in development expenditure.

The national debt stock reached USD 51,067.2 million at the end of April 2026, a 0.5% increase from March. External debt comprised 70.4% of the total, standing at USD 35,949.6 million. Of this, 82.7% was public external debt. Multilateral institutions continued to hold the largest share of external debt creditors at 58.3%, followed by commercial lenders at 34.3%.

The domestic debt stock reached TZS 39,335.8 billion, a 2.3% increase from March 2026, mainly due to utilization of the overdraft facility. Government bonds constitute the dominant instrument at 80.8% of domestic debt stock.

The current account deficit widened to USD 2,651.8 million in the year ending April 2026, compared with USD 2,107.1 million in the corresponding period in 2025. This was primarily driven by robust import growth (15.5%) that outpaced export gains. Despite the wider deficit, foreign exchange reserves remained adequate at USD 5,722.5 million, sufficient to cover 4.4 months of projected imports — consistent with both national benchmarks and EAC requirements.

Exports grew by 13.5% to USD 18,876.7 million, led by strong gold export performance and higher travel receipts. Gold exports alone reached USD 5,268.9 million, up from USD 3,821.2 million in 2025 — a remarkable 37.9% increase. The Tanzanian shilling appreciated by 2.7% year-on-year against the USD, trading at an average of TZS 2,612.46 per USD in April 2026.

Zanzibar's headline inflation reached 5.0% in April 2026, up from 4.3% in April 2025, driven primarily by higher food prices and rising transport costs linked to fuel price increases. Food inflation in Zanzibar was notably high at 9.9% annually in April 2026, while non-food inflation eased to 1.1% from 4.4% in the same period of 2025.

On the fiscal front, Zanzibar's domestic revenue and grants reached TZS 249.2 billion in April 2026 — surpassing the monthly target by 35%. Development spending accounted for 74% of total government expenditure of TZS 372.5 billion, of which 73.2% was domestically financed. The resulting overall fiscal deficit was TZS 123.3 billion, financed through domestic borrowing.

Zanzibar's current account improved by 18.5% to a surplus of USD 842 million in the year ending April 2026, driven by tourism-related service receipts. Tourist arrivals rose by 21.7% to 944,056. Exports of goods and services grew by 22.4%, with clove export values surging significantly on higher unit prices (USD 6,862 per tonne vs USD 3,050 in April 2025).