Tanzania's Debt Landscape: Balancing External and Domestic Borrowing

External Debt

• 21-Apr: TZS 75,390,711.00 million
• Mar-23: TZS 87,667,894.00 million
• Apr-24: TZS 83,799,672.00 million
• 1 Month Change: Decreased by 4% (from Mar-24 to Apr-24)
• 1 Year Change: Increased by 11% (from Apr-23 to Apr-24)

Tanzania's external debt stood at TZS 75.39 billion in April 2021, increased to TZS 87.67 billion by March 2023, and slightly decreased to TZS 83.80 billion by April 2024. This represents a 4% decrease in just one month but shows an 11% increase over the year from April 2023 to April 2024, indicating fluctuating trends in external borrowing.

Domestic Debt

• 21-Apr: TZS 27,937,600.00 million
• Mar-23: TZS 31,339,300.00 million
• Apr-24: TZS 30,753,800.00 million
• 1 Month Change: Decreased by 2% (from Mar-24 to Apr-24)
• 1 Year Change: Increased by 10% (from Apr-23 to Apr-24)

Tanzania's domestic debt was TZS 27.94 billion in April 2021, rose to TZS 31.34 billion by March 2023, and then decreased slightly to TZS 30.75 billion by April 2024. There was a 2% decrease in domestic debt over the course of one month but a 10% increase over the year, indicating steady growth in internal borrowing.

Total Debts

• 21-Apr: TZS 103,328,311.00 million
• Mar-23: TZS 119,007,194.00 million
• Apr-24: TZS 114,553,472.00 million
• 1 Month Change: Decreased by 4% (from Mar-24 to Apr-24)
• 1 Year Change: Increased by 11% (from Apr-23 to Apr-24)

The total debt of Tanzania, combining both external and domestic components, was TZS 103.33 billion in April 2021, increased to TZS 119.01 billion by March 2023, and decreased slightly to TZS 114.55 billion by April 2024. This reflects a 4% decrease in total debt over one month but an 11% increase over the year, highlighting significant changes in Tanzania's overall debt landscape.

Tanzania economic perspective on debt levels and implications:

Tanzania's proactive approach to financing development and stimulating economic growth through borrowing, it also underscores the importance of sustainable debt management and prudent fiscal policies to ensure long-term economic stability and resilience.

1. Debt Composition and Trends: The breakdown between external and domestic debt reveals how Tanzania finances its development and budgetary needs. External debt, which increased by 11% over the year, indicates reliance on foreign borrowing to fund infrastructure projects and economic initiatives. On the other hand, domestic debt, despite a slight decrease month-over-month, saw a significant 10% increase over the year, suggesting robust borrowing within the country to support various sectors.
2. Impact on Fiscal Policy: The fluctuations in debt levels reflect the government's fiscal policy and its response to economic conditions. A decrease in total debt over one month could indicate efforts to manage debt burdens or possibly a slowdown in borrowing activities. However, the year-over-year increase in total debt suggests ongoing investments and expenditure commitments to stimulate economic growth and development.
3. Economic Stability and Risk Management: Managing debt levels is crucial for economic stability. While borrowing can fuel growth, excessive debt accumulation can strain public finances, leading to potential risks such as higher debt servicing costs and vulnerability to economic shocks. Tanzania's government needs to balance borrowing with sustainable economic growth strategies to mitigate these risks effectively.
4. Investment in Development: The increase in both external and domestic debt over the year highlights Tanzania's efforts to invest in infrastructure, education, healthcare, and other developmental sectors. This investment is essential for long-term economic growth, job creation, and improving living standards. However, it requires prudent debt management and efficient use of borrowed funds to maximize developmental outcomes.
5. Global and Regional Economic Context: Tanzania's debt dynamics are also influenced by global and regional economic trends, including interest rates, global financial conditions, and regional economic integration efforts. Monitoring these external factors helps policymakers navigate borrowing decisions and manage economic risks effectively.