Tanzania’s financial sector has experienced steady expansion from 2021 to 2024, with domestic credit growing from 27.37 trillion TZS in 2021 to 46.82 trillion TZS in 2024, reflecting increased economic activity. Private sector lending also rose significantly, from 19.64 trillion TZS to 33.76 trillion TZS, showing business growth. Meanwhile, foreign financial assets fluctuated, declining from 12.24 trillion TZS in 2021 to 9.66 trillion TZS in 2023, before recovering to 12.09 trillion TZS in 2024. The money supply (M3) expanded from 32.12 trillion TZS in 2021 to 47.09 trillion TZS in 2024, indicating increased liquidity and banking activity. These trends highlight Tanzania’s growing financial sector, with expanding credit and liquidity supporting economic growth.

Analyzing Tanzania's monetary and financial data from January 2021 to February 2025 reveals key trends across various financial indicators:

1. Foreign Financial Assets (Net)

• 2021 average: 12,240,636 million TZS​
• 2022 average: 10,571,449 million TZS​
• 2023 average: 9,663,721 million TZS​
• 2024 average: 12,099,428 million TZS​

Trend Analysis: There was a decline in net foreign financial assets from 2021 to 2023, followed by a recovery in 2024. This fluctuation may reflect changes in foreign exchange reserves and international investment positions.​

2. Domestic Credit

• 2021 average: 27,371,154 million TZS​
• 2022 average: 34,595,463 million TZS​
• 2023 average: 41,047,502 million TZS​
• 2024 average: 46,824,755 million TZS​

Trend Analysis: Domestic credit exhibited consistent growth over the period, indicating an expansion in lending activities within the economy.​

3. Government Claims (Net)

• 2021 average: 6,501,863 million TZS​
• 2022 average: 9,562,896 million TZS​
• 2023 average: 11,603,732 million TZS​
• 2024 average: 11,576,752 million TZS​

Trend Analysis: Net claims on the government increased from 2021 to 2023, stabilizing in 2024. This suggests increased government borrowing during the initial years, possibly for developmental projects or budgetary support, followed by stabilization.​

4. Claims on Private Sector

• 2021 average: 19,643,860 million TZS​
• 2022 average: 23,815,125 million TZS​
• 2023 average: 28,528,613 million TZS​
• 2024 average: 33,759,428 million TZS​

Trend Analysis: There was a steady increase in claims on the private sector, reflecting robust credit growth. Notably, private sector credit expanded by approximately 22% in both July and August 2023, before moderating to 19.5% in September 2023, surpassing the initial projection of 16.4% for December 2023. This growth is attributed to an improved business environment and supportive monetary policies. ​

5. Reserve Money (M0)

• 2021 average: 7,913,564 million TZS​
• 2022 average: 9,103,874 million TZS​
• 2023 average: 9,922,327 million TZS​
• 2024 average: 11,049,539 million TZS​

Trend Analysis: Reserve money showed consistent growth, indicating an increase in the central bank's monetary base.​

6. Extended Broad Money (M3)

• 2021 average: 32,127,715 million TZS​
• 2022 average: 36,201,424 million TZS​
• 2023 average: 41,107,812 million TZS​
• 2024 average: 47,090,824 million TZS​

Trend Analysis: M3, which includes M2 plus foreign currency deposits, grew steadily, reflecting an overall increase in the money supply.​

7. Broad Money (M2)

• 2021 average: 24,773,941 million TZS​
• 2022 average: 28,296,534 million TZS​
• 2023 average: 32,083,035 million TZS​
• 2024 average: 35,505,154 million TZS​

Trend Analysis: M2, comprising currency in circulation and local currency deposits, also exhibited consistent growth, indicating increased liquidity in the economy.​

8. Foreign Currency Deposits (FCD)

• 2021 average: 7,353,728 million TZS​
• 2022 average: 7,904,890 million TZS​
• 2023 average: 9,024,777 million TZS​
• 2024 average: 11,585,670 million TZS​
• FCD in USD (2024 average): 4,355 million USD​

Trend Analysis: Foreign currency deposits increased annually, both in TZS and USD terms, suggesting growing confidence in foreign currency holdings.​

Key Observations:

• Consistent Growth in Domestic Credit: The steady rise in domestic credit indicates an expanding lending environment, supporting economic activities.​
• Fluctuations in Foreign Financial Assets: The decline followed by a recovery in net foreign financial assets may reflect changes in foreign exchange reserves and international investment positions.​
• Robust Private Sector Credit Expansion: The private sector experienced significant credit growth, with rates reaching approximately 22% in mid-2023, surpassing initial projections. This surge is linked to supportive monetary policies and an improved business environment. ​
• Expansion of Monetary Aggregates: The consistent growth in monetary aggregates (M0, M2, M3) indicates an increasing money supply, aligning with economic expansion.

The monetary and financial data for Tanzania from 2021 to 2024 in millions of TZS:

Tanzania's monetary and financial trends from 2021 to 2024, showing overall economic expansion with a few notable trends:

1. Domestic Credit Growth (↑)

• Domestic credit has increased consistently from 27.37 trillion TZS in 2021 to 46.82 trillion TZS in 2024.
• This suggests expanding economic activity, higher lending to businesses and households, and greater access to financial resources.

2. Foreign Financial Assets (Fluctuations)

• Declined from 12.24 trillion TZS in 2021 to 9.66 trillion TZS in 2023, before recovering to 12.09 trillion TZS in 2024.
• This suggests a temporary reduction in foreign reserves, possibly due to trade imbalances or forex interventions, followed by recovery.

3. Increased Government Borrowing (↑)

• Government net claims grew from 6.50 trillion TZS in 2021 to 11.57 trillion TZS in 2024.
• Indicates rising government debt and reliance on credit, which could be used for infrastructure projects or fiscal deficit financing.

4. Private Sector Credit Expansion (↑)

• Increased from 19.64 trillion TZS in 2021 to 33.76 trillion TZS in 2024.
• This suggests improved business confidence and investment, with private sector borrowing more to expand operations.

5. Money Supply Growth (M0, M2, M3) (↑)

• Reserve Money (M0) increased from 7.91 trillion TZS in 2021 to 11.04 trillion TZS in 2024.
• Broad Money (M2) grew from 24.77 trillion TZS in 2021 to 35.50 trillion TZS in 2024.
• Extended Broad Money (M3) increased from 32.12 trillion TZS in 2021 to 47.09 trillion TZS in 2024.
• A growing money supply indicates strong economic expansion, rising liquidity, and higher banking activities.

6. Rising Foreign Currency Deposits (FCD)

• Increased from 7.35 trillion TZS in 2021 to 11.58 trillion TZS in 2024.
• Foreign deposits in USD reached 4.35 billion in 2024, showing growing confidence in Tanzania’s financial sector from international investors.

Key Takeaways:

✅ Tanzania's economy is expanding, with increased money supply, credit, and financial activity.
✅ Private sector growth is strong, showing businesses are investing and borrowing more.
✅ Government borrowing has increased, which could either boost development or create fiscal risks.
✅ Foreign reserves saw fluctuations, indicating external financial pressures but a recovery in 2024.
✅ Liquidity is improving, supporting higher economic participation.

As of February 28, 2025, the Bank of Tanzania’s total assets grew by 3.18%, reaching TZS 26.05 trillion, up from TZS 25.24 trillion in January. This growth was driven by a 15% increase in cash reserves (TZS 6.05 trillion) and a 10.2% rise in foreign currency marketable securities (TZS 8.53 trillion). Meanwhile, equity surged by 15.3%, supported by a 16% rise in reserves (TZS 2.41 trillion). However, advances to the government declined by 17.1%, reflecting tighter monetary policy, while currency in circulation fell by 1.4%, signaling a possible shift towards digital transactions or inflation control measures.

1. Total Assets:

• Total: TZS 26.05 trillion (increased from TZS 25.24 trillion in January 2025, a 3.18% increase).
• Main Asset Components:
  • Cash & Cash Equivalent: TZS 6.05 trillion (+15% from January's TZS 5.26 trillion).
  • Foreign Currency Marketable Securities: TZS 8.53 trillion (up from TZS 7.74 trillion, +10.2%).
  • Advances to Governments: TZS 4.70 trillion (declined from TZS 5.68 trillion, -17.1%).
  • Gold Holdings: TZS 87.12 billion (up from TZS 82.18 billion, +6%).
  • Quota in IMF: TZS 1.35 trillion (increased from TZS 1.29 trillion, +4.7%).
  • Government Securities: TZS 2.00 trillion (slight decrease from TZS 2.04 trillion, -1.7%).
  • Loans & Receivables: TZS 1.01 trillion (+6.8% from TZS 946.97 billion).

2. Total Liabilities:

• Total: TZS 23.53 trillion (up from TZS 23.06 trillion, +2%).
• Major Liabilities:
  • Currency in Circulation: TZS 8.04 trillion (slight decrease from TZS 8.15 trillion, -1.4%).
  • Deposits (Banks & Non-Bank Financial Institutions): TZS 4.04 trillion (up from TZS 3.51 trillion, +14.8%).
  • Deposits (Others): TZS 2.95 trillion (down from TZS 3.10 trillion, -4.8%).
  • Foreign Currency Financial Liabilities: TZS 4.61 trillion (+1.1% from TZS 4.56 trillion).
  • IMF-related Liabilities: TZS 1.17 trillion (no change).
  • Special Drawing Rights (SDRs) Allocation: TZS 1.94 trillion (up from TZS 1.86 trillion, +4.7%).

3. Equity:

• Total: TZS 2.51 trillion (up from TZS 2.18 trillion, +15.3%).
• Breakdown:
  • Paid-up Capital: TZS 100 billion (unchanged).
  • Reserves: TZS 2.41 trillion (up from TZS 2.08 trillion, +16%).

Key Takeaways:

✅ Increase in Assets (+3.18%), driven by growth in foreign marketable securities, loans, and cash reserves.
✅ Increase in Liabilities (+2%), with a rise in bank deposits and foreign currency liabilities.
✅ Growth in Equity (+15.3%), mainly due to an increase in reserves.
⚠️ Decline in Advances to Government (-17.1%), indicating reduced central bank lending to the government.
⚠️ Slight decrease in Currency Circulation (-1.4%), potentially reflecting economic factors like lower cash demand.

Analysis of the Bank of Tanzania's Financial Position (As of 28 February 2025)

The financial statement shows key trends in Tanzania’s monetary system and economic conditions.

1. Financial Stability and Growth

✅ Total Assets Increased (+3.18%)

• The growth in total assets to TZS 26.05 trillion suggests a stronger financial position for the central bank.
• The rise in foreign currency marketable securities (+10.2%) indicates increased foreign reserves, which enhances Tanzania’s ability to manage external shocks.
• Higher cash reserves (+15%) signal stronger liquidity and better financial sector stability.

✅ Increase in Equity (+15.3%)

• A rise in reserves (+16%) suggests that the central bank has improved its capital buffer, making it more resilient against financial risks.

2. Monetary Policy Implications

⚠️ Decline in Advances to Government (-17.1%)

• A reduction in lending to the government means the Bank of Tanzania is possibly tightening its monetary policy, aiming to control inflation or reduce fiscal dependency on central bank funding.

⚠️ Decrease in Currency Circulation (-1.4%)

• A drop in money circulation could suggest:
  • Lower cash demand, possibly due to increased digital transactions.
  • Slower economic activity, as businesses and individuals hold less cash.
  • Efforts to control inflation by reducing excess liquidity in the economy.

✅ Increase in Bank Deposits (+14.8%)

• This indicates stronger banking sector liquidity, suggesting that banks have more funds available for lending to businesses and individuals, which can drive economic growth.

3. External Sector and IMF Involvement

✅ Increase in IMF Quota & Special Drawing Rights (SDRs) (+4.7%)

• Tanzania’s higher quota and SDRs mean increased access to IMF financial support if needed, enhancing the country’s external financial stability.

✅ Increase in Foreign Currency Liabilities (+1.1%)

• This could indicate external borrowing or obligations, possibly linked to foreign exchange market interventions or debt management.

4. Potential Risks & Considerations

⚠️ Reduction in Government Securities (-1.7%)

• This could signal lower investment in domestic government debt, potentially affecting fiscal financing.

⚠️ Deposits from Other Sources Dropped (-4.8%)

• A decrease in non-bank deposits might indicate lower private sector liquidity or withdrawals from certain institutional accounts.

Conclusion

✅ The Bank of Tanzania’s financial position is strong, with rising reserves, improved liquidity, and controlled government lending.
⚠️ However, the decline in cash circulation and advances to the government may indicate monetary tightening and a possible slowdown in cash-based economic activities.
💡 Recommendation: Monitor government borrowing and liquidity trends to ensure balanced growth without excessive tightening.

Tanzania’s National Development Plan for 2025/26 outlines strategic priorities to sustain economic growth, enhance infrastructure, and improve social services. With a projected GDP growth of 6.0%, the plan emphasizes industrialization, investment, agriculture, and public-private partnerships (PPP) to drive development. Key focus areas include energy expansion, transport modernization, job creation, and food security, ensuring a resilient and self-sufficient economy while preparing for Vision 2050.

Key Highlights and Figures:

1. Economic Performance (2024/2025)

• Global Economy: Growth was 3.2% in 2024 and is projected to be 3.3% in 2025. Growth is slowing due to aging populations, reduced productivity in developed countries, and geopolitical tensions.
• Regional Economy:
  • SADC: Growth declined from 5.2% in 2023 to 5.1% in 2024, expected to reach 4.1% in 2025.
  • EAC: Growth slowed from 3.9% in 2023 to 3.4% in 2024, projected to recover to 5.7% in 2025.
• Tanzania’s GDP Growth:
  • Grew by 5.6% in 2024 (Jan-Sept) vs. 5.1% in 2023.
  • Expected to grow 6.0% in 2025 and 6.1% in 2026.
• Inflation:
  • Fell to 3.1% in 2024 (vs. 3.8% in 2023).
  • Tanzania’s inflation target is 3.0%-5.0%, within EAC limits (below 8%).

2. Development Achievements (2019/20 – 2024/25)

3. Budget for 2025/26

• Total Budget: TZS 57.04 trillion
• Development Budget: TZS 19.47 trillion (34.1% of total budget)
• Sources:
  • Domestic funds: TZS 13.32 trillion
  • External funding: TZS 6.15 trillion
• Private Sector Role: Emphasizing Public-Private Partnerships (PPP) to fund development projects.

4. Key Priority Areas for 2025/26

1. Competitive and Inclusive Economy – Infrastructure (transport, ICT, energy), improving business environment.
2. Manufacturing and Services – Boosting industrial productivity.
3. Investment and Trade – Improving regulatory frameworks, tax policies.
4. Human Development – Education, health, water, land planning, youth skill development.
5. Human Capital Development – Strengthening technical and vocational training.

5. Major Government Plans

• Malaria Eradication Campaign: Government to intensify control using locally produced chemicals.
• Reduced Foreign Aid Dependence: Strengthening AIDS Trust Fund, leveraging PPP models for funding.

The plan aligns with Tanzania’s Vision 2025 and is part of the Third Five-Year National Development Plan (2021/22 – 2025/26). The government aims to complete ongoing projects while preparing for Vision 2050. The focus remains on sustaining economic growth, improving social services, and enhancing private sector involvement.

Tanzania’s National Development Plan for 2025/26, outlining the country’s economic performance, achievements, budget allocations, and strategic priorities.

1. Economic Growth & Stability

• Tanzania’s economy is growing steadily, with GDP increasing from 5.1% in 2023 to 5.6% in 2024, and projected at 6.0% in 2025.
• Inflation has remained low and stable at 3.1%, which is within the government’s target range of 3.0% - 5.0%.
• The East African Community (EAC) and SADC economies are slowing due to inflation, global debt, and geopolitical instability, but Tanzania is expected to maintain growth.

2. Development Achievements (2019 – 2024/25)

The government has made significant progress in infrastructure, energy, agriculture, health, and education:

• Electricity production increased from 1,602 MW to 3,077 MW.
• Villages connected to electricity: 8,587 → 12,318 (100% target met).
• Food security remains strong (114% in 2019 → 128% in 2024).
• Tourism has recovered, with tourist numbers growing from 1.03 million (2019) to 4.24 million (2024), boosting foreign exchange earnings.
• Irrigated agriculture expanded to 983,466 hectares, supporting food production.

3. Budget Priorities for 2025/26

• The total budget is TZS 57.04 trillion, with 34.1% (TZS 19.47 trillion) dedicated to development projects.
• Funding sources:
  • TZS 13.32 trillion from domestic revenue.
  • TZS 6.15 trillion from external financing.
• Public-Private Partnerships (PPP) will be expanded to reduce dependence on foreign aid.

4. Key Priorities for 2025/26

• Infrastructure Development: Completion of SGR railway, road networks, ports, and energy projects.
• Agriculture & Food Security: Expanding irrigation, mechanization, and agribusiness investment.
• Industrialization & Investment: Encouraging local and foreign investment in manufacturing and services.
• Health & Education:
  • Expanding public health services and strengthening malaria eradication programs.
  • Enhancing vocational and technical training to improve youth employment.

5. Future Outlook

• Tanzania is on track to maintain strong economic growth and complete Vision 2025 goals before transitioning to Vision 2050.
• Self-sufficiency in key sectors like food, energy, and healthcare will be prioritized.
• Private sector involvement will be key to funding national projects through PPPs.

Overall Message

• Tanzania is making solid progress toward economic transformation and social development.
• The government is reducing dependency on foreign aid while boosting domestic investment.
• Key focus areas in 2025/26: Economic growth, infrastructure, agriculture, manufacturing, education, and healthcare.

In January 2025, the Tanzanian Shilling traded at an average of TZS 2,454.04 per USD, reflecting a 1.37% depreciation from TZS 2,420.84 in December 2024. However, on an annual basis, the Shilling appreciated by 2.6%, showing long-term stability. Foreign exchange market activity declined, with transactions dropping from USD 95.7 million in December 2024 to USD 16.3 million, while the Bank of Tanzania intervened by selling USD 7 million to stabilize the currency. Despite short-term pressures, foreign exchange reserves rose to USD 5,323.6 million, covering 4.3 months of imports, ensuring continued exchange rate stability.

1. Exchange Rate Movement: Slight Depreciation in January 2025

• In January 2025, the Tanzanian Shilling traded at an average of TZS 2,454.04 per USD, compared to TZS 2,420.84 per USD in December 2024.
• This reflects a monthly depreciation of approximately 1.37%, meaning the Shilling weakened slightly against the US dollar.
• However, on an annual basis, the Shilling appreciated by 2.6% compared to January 2024.

What It Means:

✅ The Shilling remains relatively stable, with only a minor depreciation (1.37%) month-over-month.
✅ Annual appreciation (2.6%) suggests a stronger Shilling compared to early 2024, reflecting better forex reserves and trade performance.
⚠ The slight monthly depreciation indicates short-term pressures, possibly due to increased import demand or external debt repayments.

2. Foreign Exchange Market Activity: Declining Transactions

• Total forex market transactions dropped to USD 16.3 million in January 2025, from USD 95.7 million in December 2024.
• The Bank of Tanzania intervened by selling USD 7 million to stabilize the market and prevent excessive depreciation.

What It Means:

✅ Lower forex market activity suggests reduced speculative trading, contributing to exchange rate stability.
✅ Bank of Tanzania’s intervention helped control excessive depreciation, ensuring Shilling stability.
⚠ A decline in foreign exchange market transactions could indicate lower foreign investment or trade activity.

3. Foreign Exchange Reserves Support Stability

• Foreign exchange reserves stood at USD 5,323.6 million in January 2025, compared to USD 5,107.1 million in January 2024.
• These reserves are sufficient to cover 4.3 months of imports, exceeding the national benchmark of 4 months.

What It Means:

✅ Stronger forex reserves contribute to Shilling stability by ensuring the country can meet external obligations.
✅ Sufficient reserves reduce pressure on the Shilling, helping manage exchange rate fluctuations.

Summary of Key Trends

Economic Implications of Shilling Stability

🔹 Positive Signs:
✅ Annual appreciation (+2.6%) shows long-term strength of the Shilling.
✅ Sufficient foreign exchange reserves (USD 5.3 billion) provide stability.
✅ Bank of Tanzania’s intervention controlled excessive depreciation.

🔸 Challenges:
⚠ Short-term depreciation (-1.37%) suggests forex market pressure.
⚠ Declining forex market activity may indicate lower trade or investor participation.
⚠ Heavy reliance on USD (68.1% of external debt) increases exchange rate risks.

Key Insights from Tanzania’s Shilling Stability (January 2025)

1. The Shilling Depreciated Slightly in the Short Term (-1.37%)

• The exchange rate moved from TZS 2,420.84 per USD in December 2024 to TZS 2,454.04 per USD in January 2025, showing a 1.37% depreciation.
• This suggests increased demand for USD, possibly for imports, debt servicing, or foreign investment repatriation.
• The Bank of Tanzania sold USD 7 million to stabilize the exchange rate, preventing excessive depreciation.

What it Means:

✅ The depreciation is minimal, meaning the Shilling remains largely stable.
⚠ Increased USD demand could signal rising import costs or capital outflows.
✅ Central Bank intervention helped prevent sharp currency fluctuations.

2. Long-Term Strength: The Shilling Appreciated by 2.6% Year-on-Year

• Compared to January 2024, the Shilling strengthened by 2.6%, meaning it performed better than the previous year.
• This suggests stronger forex reserves, improved exports, or controlled inflation.

What it Means:

✅ Tanzania’s economy is stable enough to maintain long-term Shilling strength.
✅ A stronger Shilling benefits businesses by reducing the cost of imported goods and debt repayments.

3. Forex Market Activity Dropped Significantly

• Forex market transactions declined from USD 95.7 million in December 2024 to USD 16.3 million in January 2025.
• Lower trading volume suggests reduced foreign exchange demand from businesses and investors.

What it Means:

⚠ Reduced forex transactions could indicate lower trade activity or reduced foreign investment inflows.
✅ Lower speculation in the forex market contributes to exchange rate stability.

4. Strong Forex Reserves Support Stability

• Foreign exchange reserves stood at USD 5,323.6 million, enough to cover 4.3 months of imports, above the national target of 4 months.

What it Means:

✅ Sufficient reserves reduce exchange rate risks, ensuring the government can manage forex fluctuations.
✅ The Shilling has a strong backup, reducing the likelihood of a major devaluation.

Overall Economic Implications

🔹 Positive Signs:
✅ The Shilling remains stable overall, with only minor fluctuations.
✅ Long-term appreciation (+2.6%) shows economic resilience.
✅ Strong forex reserves (USD 5.3 billion) help maintain stability.

🔸 Challenges:
⚠ Short-term depreciation (-1.37%) could indicate temporary pressure on the currency.
⚠ Declining forex market transactions suggest lower trade or investor activity.
⚠ High USD-denominated debt (68.1%) makes the economy vulnerable to exchange rate fluctuations.

Tanzania’s government domestic debt grew by 4.6%, reaching TZS 34,154.9 billion in January 2025, up from TZS 32,649.3 billion in December 2024. Commercial banks remained the largest creditors, holding TZS 9,816.6 billion (28.7%), followed by pension funds at TZS 9,094.6 billion (26.6%). The Bank of Tanzania’s share increased to 20.8% (TZS 7,112.3 billion), reflecting its role in liquidity management. However, insurance companies reduced their holdings to 5.5% (TZS 1,872.6 billion), down by 1.3%, indicating a shift in investment strategies.

1. Tanzania’s Total Government Domestic Debt Increased

• Total domestic debt stock reached TZS 34,154.9 billion in January 2025, up from TZS 32,649.3 billion in December 2024.
• This reflects an increase of TZS 1,505.6 billion (4.6%) in just one month.

What It Means:

✅ The government is increasing domestic borrowing, possibly to finance budget deficits or infrastructure projects.
✅ Higher domestic debt means banks and financial institutions are lending more to the government, which can impact private sector credit availability.

2. Government Domestic Debt by Creditor Category

The main creditors holding Tanzania’s domestic debt are commercial banks, pension funds, the Bank of Tanzania, and insurance companies.

Breakdown of Government Domestic Debt by Creditor (January 2025, TZS Billion)

3. Key Observations on Creditors

Commercial Banks Hold the Largest Share (28.7%)

• Banks remain the biggest lenders to the government, holding TZS 9,816.6 billion (28.7% of total domestic debt).
• This suggests that banks are prioritizing government securities over private sector loans, which could limit access to credit for businesses and households.

Pension Funds Are the Second Largest Holders (26.6%)

• Pension funds hold TZS 9,094.6 billion (26.6%), a 1.2% increase from December 2024.
• This reflects a stable investment strategy, as pension funds prefer long-term government securities for steady returns.

The Bank of Tanzania’s Holdings Increased (20.8%)

• The Bank of Tanzania (BOT) now holds TZS 7,112.3 billion (20.8%), marking a 2.6% rise from December 2024.
• This increase suggests the BOT is helping manage liquidity by holding more government securities.

Insurance Companies and Other Creditors Play a Smaller Role

• Insurance companies’ share declined slightly to 5.5% (TZS 1,872.6 billion), possibly shifting investments to other financial instruments.
• Other creditors, including public institutions, private companies, and individuals, increased their holdings by 3.4%, reaching 16.9% of total debt (TZS 5,782.6 billion).

Summary of Key Trends

Economic Implications of Domestic Debt Trends

🔹 Positive Signs:
✅ Banks, pension funds, and BOT remain reliable sources of government financing, ensuring economic stability.
✅ Higher BOT holdings suggest improved liquidity management, preventing excessive inflation risks.
✅ Pension funds benefit from stable government bond returns, supporting retirees' long-term savings.

🔸 Challenges:
⚠ Banks are prioritizing lending to the government, which could reduce loan availability for businesses.
⚠ Rising domestic debt may lead to higher interest payments, increasing the government’s fiscal burden.
⚠ Lower insurance sector participation suggests shifting investment strategies, which could affect financial market stability.

Key Insights from Tanzania’s Domestic Debt Trends (January 2025)

1. Government is Increasing Domestic Borrowing (+4.6%)

• Total domestic debt increased to TZS 34,154.9 billion, a 4.6% rise from December 2024.
• This means the government is relying more on domestic borrowing, possibly to cover budget deficits and finance public projects.

What It Means:

✅ Government securities remain attractive to investors, ensuring steady domestic financing.
⚠ Higher domestic borrowing could crowd out private sector credit, making loans expensive for businesses.

2. Banks and Pension Funds Are the Biggest Lenders

• Commercial banks hold 28.7% (TZS 9,816.6 billion) of domestic debt, making them the largest government creditors.
• Pension funds hold 26.6% (TZS 9,094.6 billion), a 1.2% increase from December 2024.

What It Means:

✅ Banks prefer lending to the government rather than businesses, as government bonds are safer investments.
✅ Pension funds are increasing investment in government securities, ensuring long-term financial security for retirees.
⚠ Less bank lending to the private sector could slow business expansion and economic diversification.

3. The Bank of Tanzania’s Debt Holdings Have Increased

• The BOT’s holdings increased by 2.6%, reaching 20.8% (TZS 7,112.3 billion).
• This suggests the BOT is helping stabilize the financial system by holding more government securities.

What It Means:

✅ Government borrowing is well-managed with central bank support, avoiding excessive market disruptions.
⚠ Higher BOT debt holdings could mean tighter monetary policy, which may impact interest rates and inflation control.

4. Insurance Companies Reduced Their Holdings

• Insurance companies' share of domestic debt dropped by 1.3% to 5.5% (TZS 1,872.6 billion).
• This could mean they are shifting to other investment opportunities like corporate bonds or equities.

What It Means:

⚠ A decline in insurance sector investment in government debt may indicate concerns over returns or market conditions.
✅ Diversification into other financial assets can help develop broader financial markets.

Overall Economic Implications

🔹 Positive Signs:
✅ Government has access to stable domestic financing, reducing reliance on external debt.
✅ Pension funds and banks continue to invest in government bonds, ensuring financial stability.
✅ BOT intervention helps regulate liquidity, preventing excessive inflation or credit shortages.

🔸 Challenges:
⚠ Heavy government borrowing from banks could reduce private sector lending, slowing economic growth.
⚠ Rising domestic debt means higher future interest payments, increasing fiscal pressure.
⚠ Reduced insurance sector participation suggests changing investment dynamics, which could impact financial market liquidity.

Stable Growth but High USD Exposure

Tanzania’s external debt stock stood at USD 33,905.1 million in January 2025, reflecting a 0.5% decline from December 2024. The government holds 76.4% (USD 25,896.7 million) of the total debt, while the private sector’s share dropped to 23.6% (USD 8,004.7 million). Most of the debt was allocated to transport & telecommunications (21.0%), budget support (19.9%), and social welfare & education (19.9%). The US dollar remains the dominant borrowing currency (68.1%), increasing vulnerability to exchange rate fluctuations, while the Euro (16.1%) and Chinese Yuan (6.3%) provide some diversification.

1. External Debt Stock by Borrower

Total External Debt Declines Slightly

• Tanzania’s total external debt stock (public and private) stood at USD 33,905.1 million in January 2025, reflecting a 0.5% decline from USD 34,075.5 million in December 2024.
• The central government remains the largest borrower, holding 76.4% (USD 25,896.7 million) of total external debt.
• Private sector debt accounts for 23.6% (USD 8,004.7 million).
• Public corporations’ external debt remained negligible at USD 3.8 million.

Breakdown of External Debt by Borrower (January 2025)

What It Means:

✅ The government remains the largest borrower, funding major national projects.
⚠ Private sector external debt is slightly declining, indicating reduced foreign credit access.
✅ Public corporations have minimal debt exposure, reducing government liability risks.

2. Disbursed Outstanding Debt by Use of Funds (Percentage Share)

Debt Allocation Focuses on Transport, Energy, and Social Services

• The largest share of external debt (21.0%) was used for transport and telecommunications projects, reflecting investment in roads, railways, ports, and digital infrastructure.
• Social welfare and education (19.9%) and budget support (19.9%) were the next largest recipients, showing a focus on social development and government financing.
• Energy and mining received 14.3%, supporting projects like electricity generation and mineral development.
• Finance and insurance sector held 4.1%, helping stabilize the financial system.

Breakdown of External Debt by Use of Funds (January 2025, % Share)

What It Means:

✅ Heavy investment in transport and infrastructure projects, supporting economic expansion.
✅ Education and social welfare receive significant funding, showing a commitment to human capital development.
⚠ Lower funding for industries (4.0%) and tourism (1.6%) may slow manufacturing growth and tourism sector development.

3. Disbursed Outstanding Debt by Currency Composition (Percentage Share)

US Dollar Dominates External Debt Portfolio

• 68.1% of Tanzania’s external debt is in US dollars, making it the most dominant currency.
• Euro-denominated debt accounts for 16.1%, reflecting loans from European institutions.
• Chinese Yuan holds a 6.3% share, highlighting China's role in Tanzania’s financing.
• Other currencies make up 9.4%, including debt in Japanese Yen, British Pound, and Special Drawing Rights (SDRs).

Breakdown of External Debt by Currency (January 2025, % Share)

What It Means:

✅ US Dollar exposure is high (68.1%), making debt repayments vulnerable to exchange rate fluctuations.
⚠ A weaker Tanzanian Shilling could increase repayment costs, as most debt is in foreign currency.
✅ Diversified borrowing in Euros and Yuan helps reduce reliance on USD-based financing.

Summary of Key Trends

Economic Implications of Tanzania’s Debt Trends

🔹 Positive Signs:
✅ Controlled external debt (declined by 0.5%), reducing future repayment risks.
✅ Investment in infrastructure and social services supports long-term development.
✅ Diversification in borrowing currencies (Euro, Yuan) helps manage exchange rate risks.

🔸 Challenges:
⚠ High USD-denominated debt (68.1%) exposes Tanzania to exchange rate volatility.
⚠ Private sector external borrowing is declining, which may slow business expansion.
⚠ Lower funding for industries and tourism could impact long-term diversification efforts.

Key Insights from Tanzania’s Debt Developments (January 2025)

1. Government Continues to Dominate Borrowing

• 76.4% of total external debt (USD 25,896.7 million) belongs to the government, showing its continued reliance on external financing for public projects.
• Private sector debt declined to 23.6% (USD 8,004.7 million), meaning businesses are borrowing less from foreign sources.

What it Means:

✅ Government financing is focused on long-term national development projects like roads, energy, and education.
⚠ Private sector borrowing is shrinking, which may slow business expansion and foreign investment.

2. Debt is Primarily Funding Infrastructure & Social Development

• 21.0% of external debt is invested in transport & telecommunications, showing a focus on infrastructure expansion (roads, ports, railways, ICT).
• 19.9% of debt is used for budget support, meaning the government relies on external financing to cover operational expenses.
• 19.9% is allocated to social welfare & education, ensuring investment in human capital development.

What it Means:

✅ Tanzania is prioritizing economic growth by investing in transport & telecommunications.
✅ Social welfare & education funding supports long-term workforce development.
⚠ High reliance on external budget support (19.9%) could lead to fiscal risks if future financing decreases.

3. Tanzania’s Debt is Highly Exposed to US Dollar Risk

• 68.1% of total external debt is in US dollars, making Tanzania vulnerable to exchange rate fluctuations.
• 16.1% of debt is in Euros, reducing some risk from USD dependency.
• 6.3% is in Chinese Yuan, reflecting China’s growing role in Tanzania’s financial partnerships.

What it Means:

⚠ A weaker Tanzanian Shilling will increase the cost of debt repayments due to heavy USD exposure.
✅ Diversification into Euros & Yuan helps reduce reliance on the US dollar, though the impact is still small.

Overall Economic Implications

🔹 Positive Signs:
✅ Debt levels are stable, with a 0.5% decline in total external debt.
✅ Strong investment in infrastructure & education supports long-term growth.
✅ Some currency diversification helps manage exchange rate risks.

🔸 Challenges:
⚠ High reliance on USD (68.1%) makes Tanzania vulnerable to currency fluctuations.
⚠ Declining private sector borrowing may slow economic diversification and job creation.
⚠ Heavy dependence on external budget support (19.9%) could create fiscal pressures if funding is reduced.

Tanzania’s total external debt stood at USD 33,905.1 million in January 2025, reflecting a 0.5% decline from USD 34,075.5 million in December 2024 due to ongoing repayments. The government accounted for 76.4% (USD 25,896.7 million) of total external debt, while the private sector held 23.6% (USD 8,004.7 million), down by 1.8%. The decline in private sector borrowing may indicate reduced access to foreign credit, while high government debt levels raise concerns about future repayment obligations.

1. Total External Debt Stock Slightly Declined

• Tanzania’s total external debt stood at USD 33,905.1 million in January 2025, reflecting a 0.5% decline from USD 34,075.5 million in December 2024.
• The decrease was mainly due to repayments made by both the government and private institutions.

2. Government vs. Private Sector Borrowing

• Government external debt accounted for 76.4% (USD 25,896.7 million) of total external debt.
• Private sector external debt accounted for 23.6% (USD 8,004.7 million).

Comparison of Government and Private Sector External Debt (January 2025)

3. Implications of External Debt Trends

✅ The government remains the largest borrower (76.4%), indicating reliance on external financing for major projects.
✅ The private sector's external debt share (23.6%) shows businesses are accessing foreign funding but at a declining rate (-1.8%).
⚠ The reduction in private sector borrowing may limit business expansion and foreign investment in Tanzania.
⚠ Debt repayments are helping reduce total debt, but the government still holds a significant portion of external liabilities.

Key Insights from Tanzania’s External Debt (January 2025)

1. The Government Remains the Biggest Borrower (76.4%)

• The government’s external debt stood at USD 25,896.7 million, accounting for 76.4% of total external debt.
• This suggests that public projects such as infrastructure, energy, and social services are heavily financed by external loans.

What It Means:

✅ Government borrowing supports long-term development, ensuring investments in key sectors like transport and energy.
⚠ A high share of external debt means future repayments could put pressure on national finances, especially if revenue growth is slow.

2. Private Sector Borrowing is Declining (-1.8%)

• Private sector external debt dropped to USD 8,004.7 million (23.6%), a 1.8% decline from December 2024.
• This indicates reduced access to foreign credit by businesses or lower demand for external financing.

What It Means:

⚠ Private companies may be facing challenges in securing international loans, which could slow business expansion.
✅ A reduction in private sector borrowing could signal that companies are focusing on local financing options.

3. Total External Debt is Declining (-0.5%)

• The total external debt declined slightly by 0.5%, showing that both the government and private sector are repaying some of their loans.

What It Means:

✅ Debt repayments are ongoing, helping to manage overall debt levels.
⚠ Despite repayments, the government still holds a significant portion of external debt, meaning fiscal risks remain.

Overall Economic Implications

🔹 Positive Signs:
✅ Government borrowing is supporting infrastructure and public services.
✅ Debt repayments are reducing total external liabilities.
✅ Private sector reliance on foreign debt is decreasing, possibly indicating local financing alternatives.

🔸 Challenges:
⚠ A high government share (76.4%) means future debt servicing costs could strain national finances.
⚠ A decline in private sector borrowing could slow economic expansion and private investment.
⚠ Continued reliance on external debt means Tanzania remains exposed to exchange rate fluctuations and global credit conditions.

Tanzania’s tourism sector expanded significantly in 2024, with 1,748,500 tourist arrivals (+12.4%), generating USD 3,259.8 million in earnings (+9.5%). The sector contributed 17.2% to GDP, up from 16.4% in 2023, and supported over 1.5 million jobs. Serengeti National Park remained the top attraction, receiving 589,300 visitors (+11.2%), while Mount Kilimanjaro saw the fastest growth (+13.4%). However, rising costs and regional competition pose challenges, requiring continued investment in infrastructure and marketing to sustain growth.

1. Tourism Sector Growth: Strong Recovery and Increased Earnings

• Tanzania received 1,748,500 tourists in 2024, a 12.4% increase from 1,556,200 in 2023.
• Tourism earnings reached USD 3,259.8 million in 2024, compared to USD 2,976.3 million in 2023, reflecting a 9.5% increase.

What It Means:

✅ More tourists are visiting Tanzania, showing post-pandemic recovery and increased global interest in Tanzanian destinations.
✅ Higher earnings indicate stronger foreign exchange inflows, supporting the economy.
⚠ The growth rate has slowed slightly compared to previous years, requiring further tourism development strategies.

2. Visitor Arrivals by Region

• European tourists led arrivals, accounting for 39.6% (693,500 visitors), driven by demand for wildlife safaris and beach tourism.
• North America contributed 18.3% (319,900 visitors), reflecting growing interest from the U.S. and Canada.
• Asian tourists accounted for 14.2% (248,300 visitors), with an increase in visitors from India and China.
• African tourists made up 21.7% (379,500 visitors), mainly from Kenya, South Africa, and Uganda.

What It Means:

✅ Europe remains Tanzania’s largest tourism market, but North America and Asia are emerging as key growth areas.
✅ Regional tourism from African countries is growing, supporting cross-border trade and investment.
⚠ More investment is needed in marketing to diversify Tanzania’s tourism sources further.

3. Key Tourism Destinations and Their Growth

What It Means:

✅ Serengeti remains the top attraction, but Zanzibar and Kilimanjaro are gaining more visitors.
✅ Growth in mountain tourism (+13.4%) shows increased interest in adventure tourism.
⚠ More investments in infrastructure and conservation are needed to sustain growth.

4. Contribution of Tourism to Tanzania’s Economy

• Tourism contributed 17.2% to Tanzania’s GDP in 2024, up from 16.4% in 2023.
• The sector provided direct employment to over 1.5 million people, supporting jobs in hotels, transportation, and cultural tourism.
• Hotel occupancy rates increased to 74.5%, up from 69.8% in 2023, showing higher demand for accommodation.

What It Means:

✅ Tourism is a key economic driver, supporting jobs and GDP growth.
✅ Higher hotel occupancy rates indicate strong demand, benefiting the hospitality sector.
⚠ More investment is needed in training and service quality to maintain competitiveness.

5. Challenges Facing Tanzania’s Tourism Sector

🔸 High operating costs – Rising costs for park fees, hotel services, and travel expenses may limit growth.
🔸 Competition from other African destinations – Countries like Kenya and South Africa offer similar safari experiences.
🔸 Climate change effects – Rising temperatures and unpredictable rainfall patterns could affect wildlife and natural attractions.
🔸 Infrastructure gaps – Some key parks and destinations still face challenges with road access and accommodation availability.

Summary of Key Trends in Tanzania’s Tourism (2024)

Economic Implications of Tourism Growth in Tanzania

🔹 Positive Signs:
✅ Tourism remains a key foreign exchange earner, supporting economic growth.
✅ Diversification in visitor sources (North America and Asia) reduces reliance on Europe.
✅ Growth in adventure tourism (Kilimanjaro) and cultural tourism strengthens the sector.

🔸 Challenges:
⚠ High costs and competition require better pricing and service strategies.
⚠ Infrastructure improvements are needed to support continued growth.
⚠ Climate change could impact long-term sustainability of tourism attractions.

Key Insights from Tanzania’s Tourism Performance (2024-2025)

1. Tanzania’s Tourism Industry is Expanding (+12.4% Arrivals, +9.5% Revenue)

• 1,748,500 tourists visited Tanzania in 2024, up 12.4% from 2023.
• Tourism earnings grew by 9.5% to USD 3,259.8 million, reflecting higher spending by visitors.

What It Means:

✅ Tanzania remains a leading destination in Africa, attracting more tourists each year.
✅ More foreign exchange is entering the economy, strengthening reserves and GDP growth.
⚠ Revenue growth (+9.5%) is slower than arrival growth (+12.4%), suggesting that tourists may be spending less per visit.

2. Europe Dominates, But New Markets Are Emerging

• Europe remains the largest source of tourists (39.6%), followed by North America (18.3%) and Asia (14.2%).
• African tourists (21.7%) are increasing, mainly from Kenya, Uganda, and South Africa.

What It Means:

✅ European tourism remains strong, supporting peak seasons.
✅ North America and Asia are growing markets, diversifying revenue sources.
⚠ Tanzania must continue marketing efforts in Asia and North America to reduce reliance on European tourists.

3. Serengeti and Kilimanjaro Lead Tourism Growth

• Serengeti National Park remains the top attraction, receiving 589,300 visitors (+11.2%).
• Mount Kilimanjaro had the fastest growth, with a 13.4% increase in climbers.
• Zanzibar’s beach tourism continues to expand (+9.6%), boosting hotel occupancy.

What It Means:

✅ Safari tourism remains strong, keeping Tanzania competitive in Africa.
✅ Kilimanjaro’s growth suggests a rising interest in adventure tourism.
⚠ Infrastructure improvements in parks and transport networks are needed to sustain growth.

4. Economic Impact: Tourism Now Contributes 17.2% to GDP

• Tourism’s share of GDP increased to 17.2%, up from 16.4% in 2023.
• Over 1.5 million jobs are directly supported by tourism, including hotels, transport, and tour operations.

What It Means:

✅ Tourism is a critical sector for employment and national revenue.
✅ A strong tourism industry supports businesses and local economies.
⚠ Rising costs for travel, accommodation, and park fees may slow future growth.

5. Challenges to Tanzania’s Tourism Growth

⚠ Higher costs – Increasing Park fees, hotel rates, and transport costs may reduce affordability.
⚠ Regional competition – Kenya, South Africa, and Rwanda are investing in tourism, increasing competition.
⚠ Climate change – Unpredictable weather patterns could affect wildlife migration and beach tourism.
⚠ Infrastructure gaps – Roads and airports need upgrades to handle increasing visitors.

Overall Economic Implications

🔹 Positive Signs:
✅ Tourism continues to grow, boosting Tanzania’s foreign exchange earnings.
✅ New markets (North America & Asia) are emerging, reducing reliance on Europe.
✅ Kilimanjaro and Zanzibar are attracting more adventure and luxury tourists.

🔸 Challenges:
⚠ Slower revenue growth compared to arrivals suggests visitors are spending less.
⚠ High travel costs and infrastructure gaps could slow future expansion.
⚠ Competition from other African destinations requires better marketing and service improvements.

Zanzibar’s economy grew by 6.2% in 2024, up from 5.6% in 2023, driven by tourism (7.1%) and construction (5.8%), while agriculture lagged at 3.5%. However, inflation rose to 4.3% in January 2025, fueled by higher food (+5.6%) and transport costs (+4.8%). The trade deficit widened to USD 387.4 million, as imports increased to USD 521.6 million (+4.5%), outpacing exports of USD 134.2 million (+2.9%). Despite a 5.2% rise in revenue to TZS 115.6 billion, government spending exceeded collections by TZS 22.3 billion, maintaining a budget deficit.

1. Zanzibar’s GDP Growth: Strong Expansion Driven by Services and Industry

• Zanzibar’s economy grew by 6.2% in 2024, up from 5.6% in 2023.
• Growth was mainly driven by services (7.1%) and industry (5.8%), while agriculture expanded by 3.5%.

Sectoral Growth Breakdown (2024 GDP Growth Rates)

What It Means:

✅ Tourism and trade are driving economic expansion, supported by increased visitor arrivals.
✅ The construction sector is growing, boosting industrial performance.
⚠ Agriculture is growing slowly (3.5%), indicating the need for modernization and investment.

2. Inflation: Slight Increase Due to Rising Food and Transport Costs

• Inflation in Zanzibar stood at 4.3% in January 2025, up from 4.0% in December 2024.
• The increase was mainly driven by higher food prices (+5.6%) and transport costs (+4.8%).

What It Means:

⚠ Higher food prices are putting pressure on household purchasing power.
✅ Inflation remains moderate and within the acceptable range.

3. Trade Performance: Imports Rising Faster than Exports

Exports Grew but Remain Low Compared to Imports

• Total exports reached USD 134.2 million in January 2025, an increase of 2.9% from December 2024.
• Clove exports (USD 46.8 million) and seaweed exports (USD 12.1 million) remained the top earners.

Imports Increased, Widening Trade Deficit

• Total imports rose to USD 521.6 million (+4.5%), led by fuel and construction materials.
• The trade deficit widened to USD 387.4 million, reflecting higher demand for imported goods.

What It Means:

⚠ Zanzibar remains a net importer, increasing reliance on foreign exchange inflows from tourism and remittances.
✅ Growth in clove and seaweed exports helps sustain the economy.

4. Government Revenue and Spending: Improved Collection but Budget Deficit Persists

• Total revenue collection reached TZS 115.6 billion in January 2025, a 5.2% increase from December 2024.
• Tax revenue accounted for 85.3% of total revenue, supported by higher VAT and import duties.
• Total government expenditure stood at TZS 137.9 billion, leaving a budget deficit of TZS 22.3 billion.

What It Means:

✅ Revenue collection is improving, reducing reliance on external funding.
⚠ The government continues to spend more than it collects, increasing the need for budget control measures.

Summary of Key Trends in Zanzibar’s Economy (January 2025)

Economic Implications of Zanzibar’s Performance

🔹 Positive Signs:
✅ Economic growth remains strong (6.2%), driven by tourism and construction.
✅ Revenue collection is improving, reducing fiscal pressure.
✅ Clove and seaweed exports are supporting foreign exchange earnings.

🔸 Challenges:
⚠ Inflation is rising, increasing the cost of living.
⚠ Imports are growing faster than exports, widening the trade deficit.
⚠ Government spending exceeds revenue, creating a budget deficit.

Key Insights from Zanzibar’s Economic Performance (January 2025)

1. Strong Economic Growth (6.2%) Driven by Tourism and Industry

• Zanzibar’s economy expanded by 6.2% in 2024, up from 5.6% in 2023.
• Growth was driven by tourism (services up 7.1%) and construction (industry up 5.8%).

What It Means:

✅ Tourism recovery is fueling service sector growth, increasing employment and foreign exchange.
✅ Construction and industrial expansion indicate long-term development and infrastructure improvements.
⚠ Agriculture is growing slowly (3.5%), meaning rural incomes and food security could be affected.

2. Inflation is Rising (4.3%), Driven by Higher Food and Transport Costs

• Inflation increased to 4.3% in January 2025, from 4.0% in December 2024.
• Food prices (+5.6%) and transport costs (+4.8%) were the main drivers.

What It Means:

⚠ The rising cost of living could reduce household purchasing power.
✅ Inflation remains manageable but needs monitoring to prevent further increases.

3. Trade Deficit Widening as Imports Outpace Exports

• Total exports reached USD 134.2 million (+2.9%), driven by clove exports (USD 46.8 million) and seaweed (USD 12.1 million).
• Imports rose to USD 521.6 million (+4.5%), mainly due to higher fuel and construction material imports.
• Trade deficit widened to USD 387.4 million, increasing Zanzibar’s reliance on foreign currency inflows.

What It Means:

⚠ Zanzibar depends heavily on imports, making the economy vulnerable to global price fluctuations.
✅ Growing exports of cloves and seaweed help offset some trade losses.

4. Government Revenue is Growing, But Deficit Remains

• Total revenue collection rose to TZS 115.6 billion (+5.2%), supported by higher tax collection (85.3% of revenue).
• Total expenditure stood at TZS 137.9 billion, leaving a budget deficit of TZS 22.3 billion.

What It Means:

✅ Tax revenues are improving, reducing reliance on external aid.
⚠ The government continues to spend more than it collects, requiring better budget management.

Overall Economic Implications

🔹 Positive Signs:
✅ Strong economic growth (6.2%) shows resilience and investment expansion.
✅ Tourism and construction remain key drivers of Zanzibar’s economy.
✅ Revenue collection is improving, supporting government operations.

🔸 Challenges:
⚠ Inflation is rising, increasing living costs for households.
⚠ Imports are outpacing exports, widening the trade deficit.
⚠ Government spending exceeds revenue, requiring fiscal adjustments.

Strong Revenue Growth and Controlled Deficit

Tanzania’s government revenue collection exceeded expectations, reaching TZS 3,877.4 billion in January 2025, surpassing the target by 8.6%. Tax revenue stood at TZS 3,153.0 billion, driven by strong income tax collections (TZS 1,573.8 billion) and taxes on imports (TZS 962.2 billion). Government expenditure totaled TZS 3,806.3 billion, with TZS 2,413.0 billion allocated to recurrent spending and TZS 1,393.3 billion for development projects. The budget deficit remained low at TZS 30 billion, financed through domestic borrowing, reflecting fiscal discipline and sustainable spending.

1. Central Government Revenues

Strong Revenue Collection, Surpassing Monthly Target

• Total government revenue in January 2025: TZS 3,877.4 billion, which exceeded the target by 8.6%.
• Revenue collected by the Central Government: TZS 3,755.6 billion (96.9% of total revenue).
• Tax revenue: TZS 3,153.0 billion, surpassing the target by 1.7%, driven by improvements in tax administration and compliance.

Breakdown of Major Revenue Sources (January 2025)

What It Means:

• Revenue collection is improving, supported by higher tax compliance and administrative measures.
• Tax revenue remains the dominant source, while non-tax revenue (TZS 602.6 billion) also plays a key role.
• Income tax collections were strong, reflecting business growth and improved earnings in the economy.

2. Central Government Expenditure

Spending Aligned with Revenue Growth

• Total government expenditure in January 2025: TZS 3,806.3 billion
• Recurrent expenditure: TZS 2,413.0 billion
• Development expenditure: TZS 1,393.3 billion, focused on infrastructure and social services.

Breakdown of Major Expenditures (January 2025)

What It Means:

• Recurrent spending remains high, mainly on wages and salaries (TZS 936.4 billion) and interest payments (TZS 467.2 billion).
• Development spending (TZS 1,393.3 billion) shows continued investment in infrastructure and key sectors.
• Lower interest payments suggest improved debt management or lower borrowing costs.

3. Budget Deficit and Financing

Lower Budget Deficit Reflects Fiscal Discipline

• Total budget deficit (after grants): TZS 30 billion
• Deficit financing sources: Domestic borrowing

What It Means:

• The government is keeping the budget deficit under control, avoiding excessive borrowing.
• Financing through domestic borrowing suggests reliance on Treasury bonds and bills rather than external loans.
• Lower deficit means reduced fiscal pressure, which could help stabilize debt levels.

Summary of Key Trends

Implications for Tanzania’s Economy

🔹 Positive Signs:
✅ Revenue collection exceeded targets, showing better tax compliance and economic growth.
✅ The budget deficit remains low, indicating fiscal discipline.
✅ Lower interest payments suggest improved debt management.

🔸 Challenges:
⚠ Development spending slightly declined, which could impact long-term infrastructure projects.
⚠ Continued reliance on domestic borrowing may crowd out private sector investments.

Key Insights from Tanzania’s Government Budget Performance (January 2025)

1. Strong Revenue Collection Indicates a Growing Economy

• Total revenue exceeded the target by 8.6% (TZS 3,877.4 billion), showing stronger tax compliance and improved business activity.
• Income tax (TZS 1,573.8 billion) led revenue collection, meaning companies and individuals are earning more, contributing to tax growth.
• Taxes on imports (TZS 962.2 billion) were strong, reflecting stable trade activity despite global economic challenges.

What it Means:

✅ The economy is expanding, with businesses generating higher taxable income.
✅ Tax enforcement and compliance measures are working, leading to consistent revenue growth.
⚠ However, lower taxes on local goods and services suggest weaker domestic demand.

2. Balanced Spending: Government Focuses on Wages & Development

• Total expenditure stood at TZS 3,806.3 billion, with a balance between recurrent spending (TZS 2,413.0 billion) and development projects (TZS 1,393.3 billion).
• Wages & salaries (TZS 936.4 billion) remained high, ensuring stable public sector employment.
• Development spending (TZS 1,393.3 billion) declined slightly, which may slow infrastructure growth.

What it Means:

✅ Public sector jobs are secure, maintaining government service delivery.
✅ Continued investment in infrastructure and social services, though at a slightly lower level.
⚠ Reduced development spending could slow long-term economic expansion.

3. Lower Budget Deficit Suggests Fiscal Discipline

• Budget deficit was just TZS 30 billion, much lower than in previous periods.
• The government relied on domestic borrowing, reducing dependence on external loans.

What it Means:

✅ The government is controlling borrowing, reducing fiscal pressure.
✅ Lower deficit means lower risk of inflation from excessive government spending.
⚠ Heavy reliance on domestic borrowing may reduce credit availability for businesses.

Overall Economic Implications

🔹 Positive Signs:
✅ Revenue collection is strong, reflecting economic stability and improved tax administration.
✅ The budget deficit is low, meaning less pressure on government debt.
✅ Government spending is balanced, with a focus on both wages and infrastructure.

🔸 Challenges:
⚠ Lower domestic tax collection signals weak consumer demand.
⚠ Reduced development spending could affect long-term growth.
⚠ Domestic borrowing could limit credit for private businesses.