Stability, Resilience, and Growth Momentum
By Amran Bhuzohera
Tanzania’s economy in 2025 continues to display strong resilience amid a complex post-election environment and global uncertainties. Data from the Bank of Tanzania (BoT) and National Bureau of Statistics (NBS) highlight a broadly stable macroeconomic landscape marked by low inflation, steady currency appreciation, manageable public debt, and rising foreign investment flows. The combination of policy discipline, export recovery, and domestic demand expansion positions Tanzania as one of East Africa’s most stable economies heading into 2026.
1. Inflation: Controlled and Predictable
Headline inflation remained within the 3–5% target range, rising slightly to 3.5% in October 2025 from 3.4% the previous month. The modest uptick reflects higher food prices (7.4%) partially offset by declining fuel and energy costs (–1.4% monthly).
| Indicator | Oct 2024 | Oct 2025 | Annual Change (%) | Notes |
| Headline Inflation | 3.0 | 3.5 | +0.5 | Stable, low inflation |
| Food Inflation | 7.0 | 7.4 | +0.4 | Driven by cereals and vegetables |
| Core Inflation | 2.2 | 2.1 | –0.1 | Stable non-food prices |
| Energy/Fuel Inflation | 3.7 | –1.4 (monthly) | — | Lower global oil prices |
Key takeaway: Inflation stability preserves purchasing power and encourages investor confidence. Food inflation remains a challenge, particularly for low-income households, but easing monthly trends suggest temporary relief.
2. Exchange Rate and External Sector: Strong Shilling, Narrowing Deficit
The Tanzanian shilling appreciated 9.4% year-on-year to an average of TZS 2,471.69/USD in September 2025, reversing the 10.1% depreciation of 2024. This reflects robust export performance—especially gold, cashews, and cereals—and increasing tourism earnings.
| Indicator | Sep 2025 | Change | Economic Implication |
| Exchange rate (TZS/USD) | 2,471.69 | +9.4% YoY | Strengthens import affordability |
| Current Account Balance | –1.5% of GDP | Narrowed | Boosted by tourism +15.8% |
| Foreign Reserves | USD 6.66B | 5.8 months import cover | Ample external buffer |
| Services Receipts | USD 6.97B | +4.6% | Tourism recovery |
Key takeaway: Currency strength has improved debt servicing capacity and dampened imported inflation, anchoring macroeconomic stability.
3. Public Debt: Sustainable and Development-Focused
Tanzania’s total national debt stood at TZS 127.47 trillion (USD 50.77 billion) as of September 2025, with external debt accounting for 70.6%. The debt composition remains largely concessional and directed toward infrastructure, energy, and social services.
| Category | Amount | Share (%) | Key Notes |
| Total Debt | TZS 127,474.5B | 100 | Up 1.4% MoM |
| External Debt | USD 35.44B | 69.8 | 77.5% held by central government |
| Domestic Debt | TZS 37,459B | 30.2 | 73% bonds, 27% T-bills |
| USD Share (of External) | 66% | — | FX exposure risk |
| Debt/GDP Ratio | 40.1% | — | Below EAC 50% ceiling |
Key takeaway: Debt levels are sustainable and aligned with regional thresholds. An appreciating shilling reduces repayment costs for USD-denominated debt, though diversification of borrowing remains essential.
4. Fiscal and Monetary Position: Discipline Anchored in Stability
Fiscal operations show a TZS 618.5 billion deficit, financed mainly through domestic bonds and concessional loans. Revenue performance reached 87.2% of target while expenditure execution stood at 71.9%. The BoT policy rate remained at 6.0%, supporting 12% private sector credit growth.
| Fiscal Indicator | Value | Performance |
| Revenue (collected) | TZS 2,728.1B | 87.2% of target |
| Expenditure | TZS 3,346.6B | 71.9% executed |
| Deficit | TZS 618.5B | 3.5% of GDP (approx.) |
| Policy Rate | 6.0% | Accommodative stance |
| Credit Growth | 12% | Driven by SMEs and trade |
Key takeaway: Fiscal discipline, supported by strong domestic debt markets, has preserved macroeconomic credibility without crowding out private credit.
5. Sectoral Outlook: Growth Catalysts Emerging
The 2025 outlook projects GDP growth between 5.5% and 6.5%, supported by agriculture, tourism, and manufacturing. Infrastructure investment and digital transformation remain key growth levers under the FYDP III framework.
| Sector | Contribution to GDP | 2025 Performance | Outlook |
| Agriculture | 25–30% | Food inflation pressure but export resilience | Needs irrigation, value addition |
| Tourism | 10–12% | Arrivals +15.8% | Post-election rebound |
| Manufacturing | 8–10% | Stable input costs | Expansion via local supply chains |
| Mining | 7–9% | Gold exports +12.8% | Sustained global demand |
Key takeaway: Structural investments in transport, power, and agriculture will sustain growth momentum into 2026, while diversification remains essential to shield against external shocks.
6. Zanzibar: Parallel Progress
Zanzibar’s economy mirrors mainland stability, posting 3.5% inflation and a USD 836.6 million current account surplus (+34.7%), driven by tourism (+28.2% arrivals). Fiscal discipline and service exports remain key strengths.
Conclusion
Tanzania’s 2025 economic story is one of stability amid transition. Inflation remains low, the shilling is strong, and debt sustainability is intact. However, persistent food inflation and USD exposure warrant close monitoring. Continued structural reforms, SME incentives, and agricultural modernization under the FYDP III will determine whether Tanzania sustains its 6%+ growth trajectory and advances toward upper-middle-income status by 2030.