In October 2025, Tanzania’s government securities market demonstrated high activity and liquidity, with Treasury bills (T-bills) and Treasury bonds (T-bonds) auctions attracting strong oversubscription amid ample banking sector liquidity (M3 growth at 21.5% YoY). Total issuance reached TZS 359.4 billion (TZS 128 billion in T-bills, TZS 231.4 billion in T-bonds), financing 15% of the monthly budget deficit and supporting domestic debt at TZS 38,114.8 billion. Investor participation was led by commercial banks (35% holdings) and pension funds (16.4%), reflecting confidence in sovereign paper amid stable inflation (3.5%) and shilling appreciation (9.5% YoY). As of December 13, 2025, the market remains robust, with November auctions (e.g., T-bill No. 1188 on Nov 19 yielding ~6.35%, up slightly from October's 6.27%) continuing oversubscription trends, per BoT data. This activity aligns with the FY2025/26 issuance calendar, targeting TZS 20-25 trillion in bonds to fund infrastructure (28% budget share).

Economic Implications: The liquid market enables low-cost fiscal financing (average yields 6-12%), keeping debt service at 6.5% of budget and public debt-to-GDP at 49.6%—below EAC's 55% threshold—thus preserving space for growth-oriented spending (e.g., USD 3.5 billion hydropower adding 1.2% to GDP). Strong demand signals financial deepening (market size ~15% GDP), crowding-in private investment via benchmark yields, but heavy bank exposure (70% holdings) risks transmission of liquidity shocks to credit (16.1% YoY growth), potentially slowing SME lending and 0.5% of projected 6.2% GDP expansion if yields spike, per IMF 2025 analysis. Overall, it bolsters monetary-fiscal coordination, anchoring inflation and supporting 4.7-month reserve cover. Read More: Tanzania Liquidity Strengthens Markets

1.1 Treasury Bills (T-Bills)

Two T-bill auctions were conducted in October 2025 (Nos. 1185 and 1186 on Oct 8 and 22), with 364-day maturities dominating (70% allocation). Oversubscription reflected liquidity surplus from remittances (USD 579 million YoY) and exports.

Observation: Auctions oversubscribed by 84% (bids 1.84x offer), driven by banks seeking short-term, risk-free assets amid 7-day interbank rates at 6.28%. Yield uptick (24 bps) tied to seasonal demand, not stress.

November 2025 Update: Auctions 1187 (Nov 5) and 1188 (Nov 19) raised TZS 250 billion combined, with oversubscription at 78% and WAY at 6.35% (mild rise), per BoT results. December auction (No. 1189, Dec 3) targeted TZS 180 billion, yielding ~6.40%.

Economic Implications: T-bill liquidity (38.2% of domestic debt) facilitates short-term deficit funding (TZS 15.1 billion October gap), stabilizing reserves (USD 6.17 billion) and shilling (TZS 2,463/USD as of Dec 13). Low yields support transmission to lending rates (15.19%), boosting private credit and 1% GDP from consumption, but persistent oversubscription signals crowding-out—banks allocate 25% balance sheets to securities, limiting SME loans and risking 0.3% growth drag in manufacturing (5.2% credit), per World Bank 2025 CPF.

1.2 Treasury Bonds (T-Bonds)

Two auctions: 2-year (Oct 15, coupon 10.00%) and 10-year (Oct 1, coupon 13.5%), with re-openings emphasizing long-term funding (59.2% debt composition).

Interpretation: Bids 2.54x offer signal confidence; yields stable (10-12.55%), attracting pensions/insurers for liability matching. 2-year focus aids rollover (maturity 8.2 years).

November 2025 Update: Auctions included 15-year (No. 688, Nov 12, coupon 12.75%, raised TZS 140.7 billion at 12.80% yield) and 5-year (No. 689, Nov 26, coupon 10.75%, oversubscribed 2.1x at 10.85%). Upcoming: 20-year re-opening (Dec 17, coupon 13.00%).

Economic Implications: Bond appetite (TZS 670.5 billion bids) extends maturities, reducing refinancing risks (25% rollover in 2024) and costs (interest TZS 277.9 billion October), freeing 2% budget for social sectors (21.5% allocation). This deepens capital markets (TZS 22.5 trillion outstanding), lowering spreads (6.28 pp) and FDI (USD 1.5 billion Q3), but yield sensitivity to global rates (Fed easing) could add 0.4% to debt service if rising, constraining 6% growth—mitigable via green bonds (USD 1 billion potential), per Afreximbank.

2. Interbank Cash Market (IBCM)

The IBCM facilitates short-term liquidity among 32 banks, with October volumes at TZS 2,255.4 billion (down 31% MoM but +12% YoY), dominated by 7-day trades (75.4%). Rates eased to 6.38% overall, within CBR corridor (3.75-7.75%), aided by BoT's TZS 1.2 trillion reverse repos.

2.1 IBCM Trading Volumes

Breakdown by Tenor (October 2025):

Interpretation: Volume dip from seasonal factors (harvest remittances), but activity signals efficient redistribution; 7-day dominance reflects working capital needs.

November 2025 Update: Volumes rebounded to TZS 2,800 billion (+24% MoM), with 7-day at 76%, per preliminary BoT data amid November export peaks. Rates averaged 6.40%, slight uptick from liquidity absorption.

Economic Implications: Declining volumes indicate surplus liquidity (interbank below corridor), supporting 25.8% M2 growth and easing funding stress—key for 16.1% private credit, adding 1.5% to GDP via investment. Short-term bias aids daily operations but limits long-term allocation; rebound in November underscores resilience, but volatility could transmit to lending (15.19%), risking 0.2% drag in trade (21.8% credit growth) if tightening.

2.2 IBCM Interest Rates

Analysis: Easing (7 bps) reflects BoT operations; proximity to CBR signals policy effectiveness.

November 2025 Update: Overall at 6.40% (mild rise), 7-day stable at 6.30%, per TICGL report.

Economic Implications: Low rates (within corridor) enhance transmission, keeping inflation at 3.4% (November) and supporting consumption (3.5% contribution to growth). Adequate liquidity buffers shocks (e.g., election volatility), but easing trend risks moral hazard in lending—BoT's repos ensure stability, fostering 6.2% GDP via efficient intermediation (ROA 2.5%).

3. Summary Table – Government Securities & Interbank Market

Sources: BoT November Review; updates from TICGL and BoT auctions.

Economic Implications: Metrics highlight a resilient system, with oversubscription funding deficits without yield spikes, sustaining 3.5% inflation and 6% growth. November rebound signals post-harvest liquidity, but short-term focus (75%+) limits capex—policy shifts (e.g., longer repos) could unlock 0.5% additional GDP via deeper markets.

4. Interpretation and Insights

Government Securities Market:

• Oversubscription (84% T-bills, 154% bonds) from banks/pensions reflects confidence amid 3.4% inflation.
• Rising yields (24 bps T-bills) normalizes without stress; long-term demand (10-year at 12.55%) aids maturity extension.

Interbank Market:

• Volume drop (-31%) but rate easing (6.38%) implies surplus liquidity; BoT repos (TZS 1.2T) effective.
• 7-day dominance (75.4%) suits trade cycles.

Economic Implications: Active markets ensure fiscal-monetary synergy, financing TZS 49.2 trillion budget (65% development) at low cost, driving infra multipliers (2% GDP) and reserves (USD 6.17B). Stability anchors expectations, boosting FDI (10% YoY), but bank dominance risks crowding-out—diversifying to retail (7.7% holdings) could mobilize TZS 1T, enhancing inclusion and 7% growth potential, per Deloitte 2025 Outlook. November trends confirm momentum, positioning Tanzania resiliently amid global easing.