The United Republic of Tanzania's economic performance in the first quarter of 2025 is highlighted in the National Bureau of Statistics report, showcasing a GDP growth rate of 5.4%, a slight increase from 5.2% in Q1 2024, reflecting stability and resilience. This growth, detailed at current prices of TZS 54.2 trillion (up 8.8% from TZS 49.8 trillion) and constant 2015 prices of TZS 40.7 trillion (up 5.4% from TZS 38.6 trillion), underscores a balanced expansion driven by sectors like mining (16.6% growth), electricity (19.0%), and finance (15.4%). Regionally, Tanzania leads the SADC with a 5.4% growth rate, outperforming South Africa (0.8%), Namibia (2.7%), and Botswana (-0.1%), while ranking third in the EAC behind Uganda (8.6%) and Rwanda (7.8%), demonstrating its consistent yet competitive standing.

1. GDP Growth Rate

• Tanzania:
  • 5.4% growth in Q1 2025, up slightly from 5.2% in Q1 2024.
  • This modest increase (+0.2 percentage points) shows stability and resilience, especially compared to regional peers.
• Regional Context:
  • SADC: Tanzania outperformed all selected SADC countries:
    • South Africa: only 0.8%, despite slight recovery from 0.5%.
    • Namibia: growth fell sharply to 2.7% from 4.8%.
    • Botswana: remained negative (-0.1%), though improving from -1.9%.
  • EAC: Tanzania ranked 3rd:
    • Uganda: fastest, at 8.6%, up from 7.1%.
    • Rwanda: slowed from 9.7% to 7.8%, but still strong.

Insight: Tanzania’s growth may look modest next to Uganda and Rwanda but is the most consistent, without sharp volatility.

2. GDP at Current Prices

• Q1 2025 GDP at current prices: TZS 54.2 trillion, compared to TZS 49.8 trillion in Q1 2024.
• That’s an 8.8% nominal increase (reflecting both price changes and output growth).

3. GDP at Constant 2015 Prices (Real GDP)

• Real GDP (inflation-adjusted): TZS 40.7 trillion in Q1 2025, up from TZS 38.6 trillion in Q1 2024.
• This reflects the 5.4% actual growth in economic output.

4. Comparative Highlights

• East African Community (EAC):
  • Tanzania: 5.4% (stable, 3rd place).
  • Uganda: 8.6% (leading, driven by strong agriculture and industry).
  • Rwanda: 7.8% (still higher than Tanzania, but slowed from 9.7%).
• Southern African Development Community (SADC):
  • Tanzania: 5.4% (highest among reported peers).
  • South Africa: 0.8% (struggling with structural issues).
  • Namibia: 2.7% (sharp decline, down from 4.8%).
  • Botswana: -0.1% (still contracting, though improving).

Insight: Tanzania is emerging as a regional leader in stable growth — ahead in SADC, but slightly behind the fastest-growing EAC peers.

5. Key Takeaways

1. Tanzania’s economy is expanding steadily: 5.4% real growth, supported by strong mining (+16.6%), electricity (+19.0%), and financial services (+15.4%).
2. Regional standing:
   • Leader in SADC.
   • Middle performer in EAC, behind Uganda and Rwanda.
3. Resilience: Tanzania avoided volatility seen in Rwanda (decline) and Namibia (slowdown), showing a balanced, sustainable path.

Table 2: Key Economic Indicators and Regional Comparison

1. Implications of GDP Growth Rate (5.4% in Q1 2025)

Tanzania's Q1 2025 GDP growth of 5.4%, a modest uptick from 5.2% in Q1 2024, underscores economic resilience in a challenging global environment marked by trade tensions and a projected worldwide slowdown to 2.8%. This stability, without sharp volatility, suggests effective policy interventions, including investments in infrastructure like the Julius Nyerere Hydropower Dam, which boosted electricity growth to 19.0%. However, the rate lags behind pre-pandemic highs, implying potential vulnerabilities to external shocks such as commodity price fluctuations affecting mining (16.6% growth). Positively, it supports poverty reduction and job creation, with per capita income rising, but sustained growth above 6% is needed to meet long-term goals like a USD 1 trillion economy by 2050.

2. Implications of GDP at Current Prices (TZS 54.2 Trillion)

The 8.8% nominal GDP increase to TZS 54.2 trillion from TZS 49.8 trillion reflects both real output growth and moderate inflation (implicitly around 3.4%, derived from nominal minus real growth). This indicates controlled price pressures, aligning with national targets and regional benchmarks in the EAC and SADC. Economically, it enhances fiscal space for government spending on social services and infrastructure, potentially reducing debt burdens if revenues rise accordingly. However, if inflation accelerates due to global factors like energy costs, it could erode purchasing power, particularly for low-income households reliant on agriculture.

3. Implications of Real GDP at Constant 2015 Prices (TZS 40.7 Trillion)

The inflation-adjusted rise to TZS 40.7 trillion from TZS 38.6 trillion highlights genuine productivity gains, driven by sectors like finance (15.4% growth) and manufacturing (7.2%). This fosters investor confidence, as evidenced by projections of 5.5-6% growth for 2025 overall. Implications include improved living standards and reduced inequality if distributed equitably, but over-reliance on resource-based sectors (e.g., mining) risks "Dutch disease," where currency appreciation hampers non-mining exports. Long-term, it positions Tanzania for middle-income status, though human capital investments in education (8.6% growth) are crucial.

4. Implications of Comparative Highlights

In the EAC, Tanzania's 5.4% growth ranks third behind Uganda (8.6%) and Rwanda (7.8%), signaling competitive pressures but also opportunities for intra-regional trade, where EAC integration boosts exports by over 25%. In SADC, outperforming South Africa (0.8%), Namibia (2.7%), and Botswana (-0.1%) establishes Tanzania as a regional leader, potentially attracting FDI and aiding SADC's 4.1% projected growth for 2025. Dual membership in EAC and SADC enhances market access but poses challenges like overlapping regulations; studies show Tanzania's trade intensity is higher with EAC, suggesting prioritization for efficiency. Overall, this positioning strengthens geopolitical influence, with citizens viewing both blocs positively for economic benefits.

5. Key Takeaways and Broader Implications

Tanzania's steady expansion, supported by mining, electricity, and financial services, signals a balanced path amid global uncertainties, outperforming advanced economies like the US (1.4% projected) and EU (~1-2%). As a SADC leader and EAC mid-performer, it benefits from regional integration, but volatility in peers like Rwanda's slowdown highlights the need for diversification. Risks include geopolitical tensions affecting trade, while opportunities lie in climate-resilient reforms and private sector boosts to reach 5.9% growth in 2025/26. Policy focus on agriculture and industry could sustain momentum, fostering inclusive development.

The United Republic of Tanzania's economy showcased a steady performance in the first quarter of 2025, with GDP growth rising to 5.4% from 5.2% in the same period of 2024, as detailed in the National Bureau of Statistics report. Key insights reveal the top contributors to this growth include Mining & Quarrying (15.4%), Agriculture (14.2%), Finance & Insurance (12.0%), Construction (11.3%), Manufacturing (10.4%), and Transport & Storage (9.3%). The strongest growth rates were observed in Electricity (19.0%), Mining (16.6%), Finance & Insurance (15.4%), and Education (8.6%), highlighting robust sectoral advancements. However, weaker performers such as Construction (slowed to 4.3%), Trade (fell to 3.5%), and Information & Communication (halved from 14.6% to 7.8%) indicate areas needing attention to sustain overall economic momentum.

1. Overall GDP

• Growth: Q1 2025 GDP grew by 5.4%, slightly higher than 5.2% in Q1 2024.
• Size: At constant 2015 prices, GDP rose to TZS 40.7 trillion from TZS 38.6 trillion in Q1 2024.

2. Primary Activities (40.7% of GDP)

• Agriculture, Forestry & Fishing:
  • Growth improved from 2.5% (2024) to 3.0% (2025).
  • Key drivers:
    • Paddy production rose by 9.6% (568.9k tons → 623.3k tons).
    • Wheat output jumped 29.4% (29.6k → 38.3k tons).
    • Oil seeds +5.5%, beans +0.9%.
  • Contribution: 14.2% of total GDP growth.
  • Share in GDP: 27.2%.
• Mining & Quarrying:
  • Explosive growth: 3.5% (2024) → 16.6% (2025).
  • Production surged in key minerals:
    • Gold +16.1% (13,610 kg → 15,797 kg).
    • Coal +19.1% (745k tons → 888k tons).
    • Mica +475.6%, Iron ore +256%, Phosphate +465%.
  • Contribution: largest, at 15.4% of total GDP growth.
  • Share in GDP: 11.0%.

3. Secondary Activities (21.4% of GDP)

• Manufacturing:
  • Growth: 5.8% → 7.2%.
  • Supported by increased production of consumer and industrial goods.
  • Contribution: 10.4% of growth.
  • Share in GDP: 6.8%.
• Electricity:
  • Massive jump: 7.6% → 19.0%.
  • Boosted by Julius Nyerere Hydropower Dam coming online.
  • Share in GDP: 0.2% (small, but impactful growth driver).
• Water Supply:
  • Growth: 3.1% → 4.2%, linked to production rising to 98.9m m³ (from 94.7m).
  • Share in GDP: 0.4%.
• Construction:
  • Slowed: 6.4% → 4.3%.
  • Still important with 11.3% contribution to GDP growth.
  • Supported by cement & iron-steel output.
  • Share in GDP: 12.7%.

4. Tertiary Activities (37.9% of GDP)

• Trade & Repair:
  • Decline in growth: 5.3% → 3.5%.
  • Impacted by moderate import and agriculture trade flows.
  • Share in GDP: 8.4%.
• Transport & Storage:
  • Growth: 5.7% → 6.5%, driven by cargo tonnage and SGR rail services.
  • Contribution: 9.3% of GDP growth.
  • Share in GDP: 7.2%.
• Financial & Insurance:
  • Growth: 14.9% → 15.4%.
  • Supported by:
    • Deposits up 18.5% (TZS 36.3T → 43.0T).
    • Loans up 14.7% (TZS 34.1T → 39.1T).
  • Contribution: 12.0%.
  • Share in GDP: 3.5%.
• Information & Communication:
  • Slowed sharply: 14.6% → 7.8%.
  • Still supported by mobile money, internet expansion & broadcasting.
  • Share in GDP: 1.6%.
• Education:
  • Growth: 5.5% → 8.6%, thanks to rising student enrollments.
  • Share in GDP: 2.2%.

Table 1: Sectoral Growth Performance and Contribution Analysis

The economic implications of Tanzania's sectoral growth and contributions in Q1 2025 are multifaceted, reflecting both strengths and challenges:

Tanzania's Q1 2025 GDP growth of 5.4% at constant 2015 prices, rising from TZS 38.6 trillion in Q1 2024 to TZS 40.7 trillion, signals a resilient and accelerating economy amid a global slowdown. This performance outpaces the revised global projection of 2.8% for 2025, influenced by U.S. tariff policies and trade tensions, as well as Sub-Saharan Africa's expected 3.8% growth. It also exceeds regional peers in the SADC (e.g., South Africa's 0.8%, Namibia's 2.7%) and aligns with strong EAC growth (Uganda at 8.6%, Rwanda at 7.8%). This implies sustained macroeconomic stability, potentially boosting investor confidence and supporting Tanzania's ambition to reach a USD 1 trillion economy by 2050 through structural reforms. However, reliance on public sector-driven growth could strain fiscal balances if external shocks like commodity price volatility or climate events intensify.

The growth trajectory suggests potential for full-year 2025 GDP expansion of 5.8-6.0%, driven by infrastructure and sectoral diversification, but it highlights vulnerabilities: inflation risks from rising energy and food costs, and the need for private sector-led reforms to enhance job creation, as agriculture employs 65% of the workforce yet grows modestly. Positive spillovers include improved foreign exchange reserves from mining exports and reduced energy imports due to hydropower advancements, potentially stabilizing the Tanzanian shilling.

Primary Sector Implications (40.7% of GDP)

Agriculture, Forestry & Fishing (27.2% share, 3.0% growth, 14.2% contribution): The sector's uptick from 2.5% in Q1 2024, fueled by paddy (+9.6% to 623.3k tons) and wheat (+29.4% to 38.3k tons), implies enhanced food security and rural income growth, supporting poverty reduction in a sector employing most Tanzanians. However, modest overall growth underscores challenges like weather dependency and low productivity, potentially exacerbating inequality if not addressed through investments in irrigation and value chains. Positive linkages to manufacturing (e.g., agro-processing) could amplify multiplier effects, but slower trade flows might limit export gains.

Mining & Quarrying (11.0% share, 16.6% growth, 15.4% contribution): Explosive growth from gold (+16.1% to 15,797 kg), coal (+19.1% to 888k tons), and surges in mica (+475.6%), iron ore (+256%), and phosphate (+465%) positions mining as the top growth driver, boosting export revenues (gold alone accounts for ~50% of non-traditional exports) and government royalties. Implications include stronger fiscal space for infrastructure, but risks of Dutch disease—where resource booms crowd out other sectors—and environmental concerns from expanded operations. This could attract FDI but heighten volatility tied to global commodity prices.

Secondary Sector Implications (21.4% of GDP)

Manufacturing (6.8% share, 7.2% growth, 10.4% contribution): Acceleration from 5.8% reflects increased production of consumer and industrial goods, signaling progress in industrialization under Tanzania's FYDP III. This implies job creation in urban areas and reduced import dependence, with linkages to agriculture (e.g., food processing) and mining (e.g., metal fabrication). However, energy-intensive industries benefit from electricity growth, potentially lowering costs and enhancing competitiveness.

Electricity (0.2% share, 19.0% growth): The massive jump, driven by the Julius Nyerere Hydropower Dam's commissioning, enhances energy security, reduces reliance on costly imports, and supports industrial expansion. Implications include lower electricity tariffs (potentially curbing inflation), improved manufacturing productivity, and export potential via regional grids, but risks from hydrological variability due to climate change.

Water Supply (0.4% share, 4.2% growth): Tied to production rising to 98.9 million m³, this suggests better urban access, aiding health and sanitation. Broader implications: Supports agriculture and manufacturing, but urban-rural disparities could persist without expanded infrastructure.

Construction (12.7% share, 4.3% growth, 11.3% contribution): Slowdown from 6.4% amid cement and iron-steel output growth indicates a maturing infrastructure cycle (e.g., SGR rail). This implies sustained employment in labor-intensive projects but potential fiscal pressure if public spending tapers. Positive: Multiplier effects on transport and real estate.

Tertiary Sector Implications (37.9% of GDP)

Trade & Repair (8.4% share, 3.5% growth): Decline from 5.3% due to moderate imports and agriculture flows suggests subdued consumer demand or supply chain issues, potentially signaling inflationary pressures or weaker external trade amid global tensions. Implications: Slower retail growth could limit informal sector jobs, but ties to agriculture imply recovery with better harvests.

Transport & Storage (7.2% share, 6.5% growth, 9.3% contribution): Driven by cargo and SGR services, this enhances logistics efficiency, reducing costs for exports and imports. Implications: Boosts trade competitiveness, tourism, and regional integration (EAC), with potential for more FDI in ports/rail.

Financial & Insurance (3.5% share, 15.4% growth, 12.0% contribution): Supported by deposits (+18.5% to TZS 43.0 trillion) and loans (+14.7% to TZS 39.1 trillion), this reflects deepening financial inclusion via mobile money and credit expansion. Implications: Stimulates investment across sectors, but rapid credit growth risks non-performing loans if economic shocks hit.

Information & Communication (1.6% share, 7.8% growth): Sharp slowdown from 14.6% despite mobile/internet expansion implies saturation or competition. Implications: Digital economy growth supports fintech and e-commerce, enhancing productivity, but slower pace could hinder tech-driven diversification.

Education (2.2% share, 8.6% growth): Rising enrollments signal human capital investment, implying long-term productivity gains and reduced inequality.

Key Insights and Broader Risks

Top contributors (mining 15.4%, agriculture 14.2%, finance 12.0%) highlight a balanced yet resource-heavy growth model, with strongest rates in electricity (19.0%) and mining (16.6%) pointing to infrastructure-led momentum. Weaker areas like construction (4.3%), trade (3.5%), and ICT (7.8%) suggest external vulnerabilities. Overall, this fosters employment (especially in services/mining), fiscal revenues, and poverty alleviation, but calls for diversification to mitigate climate risks, global trade disruptions, and debt sustainability. IMF recommendations emphasize reforms for private sector growth to sustain 6%+ annual expansion.

As we look toward 2025, Tanzania stands at the threshold of extraordinary economic transformation. With a GDP of $78.78 billion in 2024 and projected growth of 6.0% in 2025, this East African nation is rapidly emerging as one of the continent's most compelling investment destinations.

Why Tanzania, Why Now?

Tanzania's investment appeal stems from a unique convergence of demographic dividends, strategic positioning, and government-led reforms. The country's 65 million population, with a median age of 18 and 63% under 25, represents both a dynamic workforce and an expanding consumer base. As the gateway to the 177-million-strong East African Community (EAC) market, Tanzania provides access to over 500 million consumers through regional trade agreements.

The numbers tell a compelling story:

• Strategic Location: Bordering eight landlocked countries with 1,424 km of Indian Ocean coastline
• Rapid Urbanization: 37% urban population growing at 5% annually
• Digital Adoption: 80% mobile penetration driving fintech and e-commerce growth
• Resource Abundance: 44 million hectares of arable land, 7,000+ MW renewable energy potential, and 57 trillion cubic feet of natural gas

Transformational Infrastructure Driving Growth

Tanzania's infrastructure renaissance is creating unprecedented opportunities. The $2.9 billion Julius Nyerere Hydropower Project (2,115 MW), operational since 2024, exemplifies the scale of transformation underway. The Standard Gauge Railway expansion, Dar es Salaam Port modernization, and emerging Special Economic Zones are establishing Tanzania as the region's logistics and manufacturing hub.

Sectoral Investment Opportunities

• Agribusiness & Food Processing: With opportunities ranging from $200,000 to $25 million, Tanzania's agricultural sector offers massive potential in fruit processing ($300M+ market), edible oil production ($220.8M import substitution), and dairy development ($500M+ demand).
• Manufacturing: The sector presents $2+ billion in opportunities, driven by import substitution in plastics ($695.8M imports), pharmaceuticals ($433.1M imports), and textiles ($157.9M imports).
• Energy: Beyond traditional hydro and gas, Tanzania offers exceptional renewable energy prospects with 5,000+ MW solar potential and 1,000+ MW wind capacity.
• Real Estate: A 3-million-unit housing deficit creates substantial demand for affordable housing, mixed-use developments, and industrial parks.

The PPP Advantage: $16.35 Billion Portfolio

Tanzania's Public-Private Partnership portfolio represents one of Africa's most comprehensive investment programs. Spanning 21 strategic projects from 2025-2030, this portfolio promises:

• Total Investment: $16.35 billion across critical sectors
• GDP Impact: $6.7 billion annually by 2030
• Job Creation: 1,137,000+ positions (direct and indirect)
• Regional Integration: Projects aligned with EAC and AfCFTA objectives

Key flagship projects include:

• Standard Gauge Railway Phase 4-6: $2.0 billion
• Natural Gas Monetization: $3.0 billion
• Bagamoyo Deep Sea Port: $1.2 billion
• Critical Minerals Processing: $1.5 billion

Policy Environment: Reformed and Investor-Friendly

The 2022 Tanzania Investment Act and MKUMBI II reform program have fundamentally improved the investment climate. Special Economic Zones now offer tax holidays, duty exemptions, and 99-year land leases. The Tanzania Investment Centre registered $3.7 billion in projects in 2025 alone, with 156 manufacturing projects creating over 41,000 jobs.

TICGL: Your Strategic Partner in Tanzania

As Tanzania Investment and Consultant Group Ltd (TICGL), we've facilitated $3.7 billion in FDI and structured $500 million in PPP projects. Our deep local expertise, government relationships, and proven track record in feasibility studies provide investors with the market intelligence and strategic guidance essential for success in Tanzania's dynamic economy.

Our comprehensive approach includes:

• Market Intelligence: Deep understanding of regulatory frameworks and local dynamics
• Risk Mitigation: Comprehensive due diligence and ongoing project support
• Stakeholder Access: Direct relationships with government bodies and private sector leaders
• Regional Positioning: Strategic guidance for EAC market expansion

Looking Forward: Vision 2050

Tanzania's Development Vision 2050 targets a $1 trillion economy, positioning the country as a middle-income, industrialized nation. This ambitious roadmap, supported by ongoing infrastructure investments and policy reforms, creates a compelling long-term investment thesis.

The convergence of demographic trends, infrastructure development, policy reforms, and regional integration positions Tanzania at the forefront of Africa's economic transformation. For investors seeking exposure to one of the world's fastest-growing markets, Tanzania offers a rare combination of immediate opportunities and long-term growth potential.

Ready to explore Tanzania's investment opportunities?

Connect with TICGL for comprehensive market intelligence, feasibility studies, and investment facilitation services that transform local insights into global success.

In the Tanzania's Monthly Economic Review for August 2025, inflation remained stable at 3.3% in July 2025, within the 3-5% target, while national debt exhibited modest growth (1% increase to USD 46,586.6 million in June 2025), driven by balanced inflows and prudent management. These factors have collectively supported the stability and recent appreciation of the Tanzanian Shilling (TZS) against the US Dollar (USD). Stable inflation preserves purchasing power and enables accommodative monetary policy, reducing depreciation pressures, while controlled debt enhances fiscal credibility, attracting foreign inflows and bolstering reserves (USD 6,194.4 million in July 2025, covering 5 months of imports). This has contributed to a narrowed current account deficit (USD 2,079.2 million in the year to July 2025, down 23.4%), easing external vulnerabilities. However, broader pressures like import demands and global USD strength have led to a net annual depreciation, though recent data shows stabilization and mild appreciation by September 2025 (around TZS 2,488 per USD).

Key Impacts on TZS Value

1. Stable Inflation's Positive Influence

• Low and predictable inflation (3.3%) anchors expectations, supporting the TZS by maintaining relative purchasing power parity with trading partners. This stability allowed the Bank of Tanzania to lower the Central Bank Rate (CBR) to 5.75% in July 2025, stimulating credit growth (15.9%) and economic activity without fueling inflationary pressures that could erode currency value.
• Decelerating energy inflation (1.0% from 2.1%) and core inflation (1.9%), amid global commodity moderation (e.g., crude oil at USD 69.2 per barrel), reduced import costs, alleviating downward pressure on the TZS. This contributed to the shilling's monthly depreciation slowing to 0.11% annually in July 2025 (from 0.21% in June).
• Overall, stable inflation has fostered investor confidence, with foreign exchange reserves rising to support interventions (e.g., USD 17.5 million sold in July 2025), helping stabilize the TZS at an average of TZS 2,666.79 per USD in July.

2. Debt Developments' Stabilizing Role

• The modest debt increase (external: +0.1% to USD 32,955.5 million; domestic: -0.4% to TZS 35,351.4 billion) reflects fiscal discipline, with disbursements (USD 868.4 million) outpacing services (USD 234.4 million). This sustainability reduces risk premiums, making Tanzania more attractive for foreign investment and remittances, which bolster TZS inflows.
• A shift toward domestic financing (79.7% Treasury bonds) and concessional multilateral debt (58.7% of external) minimizes forex exposure, mitigating depreciation from debt servicing. Strong revenue (TZS 3,753.4 billion in June, +5.1% above target) further supports this, narrowing borrowing needs.
• Combined with export growth (goods and services up 14.4% to USD 16,655 million), stable debt has narrowed the current account deficit, reducing TZS sell-off pressures. However, high external debt (70.7% of total) remains a vulnerability if global rates rise.

3. Net Impact on TZS Value

• The TZS depreciated annually by about 9.6% through mid-2025 due to import surges and debt-financed infrastructure, but inflation and debt stability have driven recent appreciation (e.g., from TZS 2,666.79/USD in July to ~TZS 2,488/USD by September 6, 2025). This reflects improved external balances and policy credibility.
• Projections indicate moderate depreciation (3.7% for 2025 overall), but sustained low inflation could further strengthen the TZS if debt remains manageable. Risks include global uncertainties (e.g., trade policy index spikes) potentially reversing gains.

Key Figures

The Bank of Tanzania's Monthly Economic Review for August 2025 highlights a stable national debt profile, with the total debt stock at USD 46,586.6 million as of the end of June 2025, marking a modest 1% increase from the previous month. This stability is evidenced by minimal fluctuations in both external and domestic components: external debt rose by just 0.1% to USD 32,955.5 million (70.7% of total debt), while domestic debt decreased by 0.4% to TZS 35,351.4 billion as of July 2025. The review attributes this equilibrium to prudent fiscal management, balanced debt inflows and outflows, and a focus on long-term instruments, which mitigate volatility. Supplementing this, external analyses from sources like the IMF and World Bank emphasize broader factors such as fiscal discipline and economic diversification, projecting a downward trend in public debt over the medium term.

Key Factors Contributing to Debt Stability

Several interconnected factors contribute to the stability of Tanzania's national debt, as outlined in the review and corroborated by recent economic assessments. These include controlled debt accumulation, effective revenue and expenditure management, and a strategic shift toward domestic financing, which reduces exposure to external risks like currency fluctuations.

1. Balanced Debt Inflows and Outflows

• External debt disbursements significantly outpaced service payments, supporting liquidity without excessive accumulation. In June 2025, disbursements totaled USD 868.4 million, compared to debt service payments of USD 234.4 million (including USD 173.6 million in principal repayments). This net positive inflow (USD 634.0 million in net transfers) helped maintain stability while funding development needs.
• The composition of external debt remained largely unchanged, with multilateral institutions holding 58.7% (USD 19,328.5 million), providing concessional terms that lower servicing costs and enhance sustainability.
• Domestic borrowing was managed conservatively: The government raised TZS 514.4 billion (TZS 356.8 billion via Treasury bonds and TZS 157.6 billion via bills) but serviced TZS 670.8 billion, resulting in a net reduction. This reflects a deliberate strategy to align borrowing with repayment capacity.

2. Strong Fiscal Performance and Revenue Mobilization

• Government revenue in June 2025 exceeded targets by 5.1%, reaching TZS 3,753.4 billion, driven by tax collections of TZS 3,108.7 billion (7.8% above target). This surplus enabled expenditures to stay within available resources at TZS 3,350.0 billion, reducing the need for additional borrowing.
• Non-tax revenue, while below target at TZS 470.5 billion, was offset by robust tax administration improvements, contributing to fiscal space for debt management.
• Broader fiscal discipline, including setting debt ceilings and coordinating monetary-fiscal policies, has been highlighted as a key stabilizer, preventing rapid debt growth amid spending pressures.

3. Shift Toward Domestic and Long-Term Financing

• Domestic debt's slight decline (0.4%) was primarily due to reduced overdraft usage (from TZS 5,314.0 billion in June to TZS 4,990.5 billion in July), signaling improved liquidity management. Long-term instruments like Treasury bonds dominated at 79.7% (TZS 28,189.8 billion), offering predictable servicing and reducing rollover risks.
• This domestic focus minimizes reliance on volatile external funds, as noted in analyses, where forex fluctuations (e.g., shilling depreciation) have historically driven debt increases. Commercial banks and pension funds held 28.8% and 26.4% of domestic debt, respectively, providing stable local creditor bases.

4. Economic Resilience and External Support

• Stable inflation (3.3% in July 2025) and strong GDP growth projections (around 6% for 2025) underpin debt sustainability by boosting revenue and export performance. The current account deficit narrowed to USD 2,079.2 million in the year ending July 2025 (from USD 2,713.5 million), driven by export growth, reducing external borrowing needs.
• Multilateral support and economic diversification (e.g., in mining and agriculture) further bolster stability, with Fitch affirming a 'B+' rating and stable outlook in June 2025, citing prudent policies despite wider deficits.

Key Figures Illustrating Stability

These figures demonstrate controlled growth and effective management, ensuring debt remains sustainable at around 60-65% of GDP based on recent estimates. However, risks like shilling depreciation and global uncertainties persist, underscoring the need for continued reforms.

The Tanzania Shilling (TZS) remained broadly stable in July 2025 despite mild depreciation pressures. The currency averaged TZS 2,666.79 per USD, a 1.34% monthly decline from June, while annual depreciation slowed to 0.11%, reflecting resilience compared to 0.21% in June. Stability was supported by higher foreign exchange market activity, with IFEM turnover rising 33.7% to USD 162.5 million, boosted by export inflows, while the Bank of Tanzania intervened by selling USD 17.5 million. Importantly, reserves strengthened to USD 6,194.4 million, covering about 5 months of imports, well above EAC (4.5 months) and SADC (3 months) benchmarks, cushioning the currency against external shocks.

1. Exchange Rate Movement
   • The Shilling traded at an average of TZS 2,666.79 per USD in July 2025, compared to TZS 2,631.56 per USD in June 2025.
   • This represents a monthly depreciation of about 1.34%.
   • On an annual basis, the Shilling depreciated at a rate of 0.11%, slightly better than the 0.21% annual depreciation recorded in June 2025.
2. Market Liquidity & Central Bank Intervention
   • Interbank Foreign Exchange Market (IFEM) turnover increased to USD 162.5 million in July 2025, up from USD 121.5 million in June 2025.
   • The Bank of Tanzania intervened by selling USD 17.5 million, compared to USD 6.3 million in the previous month.
   • Seasonal inflows from cash crops and gold exports supported liquidity and moderated depreciation pressure.
3. Reserves Buffer
   • Gross foreign exchange reserves stood at USD 6,194.4 million at the end of July 2025, compared to USD 5,292.2 million in July 2024.
   • This covers about 5 months of imports of goods and services, above both the EAC and SADC benchmarks.
   • Strong reserves have helped cushion the Shilling from sharper depreciation.

Table: Tanzania Shilling Stability (July 2025)

Economic Implications of Tanzania Shilling Stability – July 2025

1. Exchange Rate Movement

• Marginal Depreciation and Resilience: The TZS's 1.34% monthly depreciation to 2,666.79 per USD from June 2025 indicates mild pressure from import demand, yet the annual depreciation slowed to 0.11% from 0.21% in June, highlighting improved stability compared to prior periods. Economically, this controlled weakening helps maintain export competitiveness, particularly for key commodities like gold (exports up to USD 3,977.6 million annually) and cash crops, boosting foreign earnings without triggering inflationary spirals. It reflects a narrowing current account deficit to USD 2,079.2 million in the year to July 2025 (down 23.4% from 2024), driven by a 19.7% rise in goods exports to USD 9,479.4 million, as per the report's external sector data.
• Broader Implications: A stable yet slightly depreciating currency reduces the risk of capital outflows, supporting domestic investment and aligning with BOT's accommodative policy (CBR at 5.75%). However, persistent depreciation could elevate debt servicing costs for USD-denominated external debt (USD 32,955.5 million as of June 2025), though strong reserves mitigate this.

2. Market Liquidity & Central Bank Intervention

• Increased Turnover and Supportive Inflows: The Interbank Foreign Exchange Market (IFEM) turnover surged 33.7% to USD 162.5 million from USD 121.5 million in June 2025, signaling enhanced market liquidity bolstered by seasonal inflows from cash crops (e.g., cashew nuts up significantly) and gold exports. BOT's increased intervention—selling USD 17.5 million versus USD 6.3 million—helped moderate depreciation pressures, ensuring orderly market conditions.
• Economic Meaning: This liquidity boost enhances forex availability for importers, stabilizing supply chains in import-dependent sectors like manufacturing and energy (imports at USD 14,720.3 million annually). It underscores BOT's role in smoothing volatility, fostering business confidence and credit growth (15.9% annually), while aligning with global easing of trade tensions that could further support export-driven liquidity. Overall, it contributes to macroeconomic stability, potentially lowering transaction costs and encouraging foreign direct investment.

3. Reserves Buffer

• Robust Accumulation and Coverage: Gross foreign reserves rose to USD 6,194.4 million by end-July 2025, up 17% from USD 5,292.2 million in July 2024, covering 5 months of imports—exceeding EAC (4.5 months) and SADC (3 months) benchmarks. This buildup, fueled by export growth (e.g., tourism receipts up 3.8% to USD 3,871.9 million), provides a strong buffer against external shocks.
• Economic Significance: High reserves enhance currency credibility, reducing vulnerability to global risks like oil price stability (at USD 69.2 per barrel) and enabling BOT to intervene effectively. It supports fiscal flexibility for development spending (TZS 909.4 billion in June) and debt management (national debt at USD 46,586.6 million), promoting sustainable growth. In a regional context, this positions Tanzania favorably for credit ratings and inflows, aiding long-term projections of 6% GDP growth amid subdued global uncertainties.

Summary of Broader Economic Significance

The TZS's stability in July 2025 reflects a positive interplay of export strength, reserve adequacy, and policy vigilance, mitigating depreciation risks while supporting economic expansion. This fosters a conducive environment for private sector activity, with potential upsides in tourism and agriculture, though monitoring import pressures remains key to avoid imbalances. Compared to earlier depreciations (e.g., 6.1% in 2023), current trends indicate improved resilience, aligning with IMF and World Bank views on Tanzania's stable outlook.

As of June/July 2025, Tanzania’s national debt reached approximately TZS 115.0 trillion, up 1% from the previous month, with external debt (TZS 81.0 trillion, 70.7%) dominating over domestic debt (TZS 34.0 trillion, 29.3%). The bulk of external borrowing is owed by the central government (85.4%), largely to multilateral institutions (58.7%) and commercial lenders (34.8%), while domestic debt remains concentrated in Treasury bonds (79.7%) held mainly by commercial banks and pension funds. Despite rising obligations, debt levels remain manageable, supported by strong tax performance and a June fiscal surplus. On the currency front, the Tanzania Shilling averaged TZS 2,666.79 per USD in July 2025, a 1.3% monthly depreciation but only a 0.11% annual decline, underscoring relative stability. This resilience is underpinned by robust foreign reserves (USD 6.2 billion, equivalent to ~TZS 16.5 trillion, covering five months of imports), strong export inflows (gold and tourism), and timely BoT interventions, which together cushion external risks while sustaining investor confidence.

1. Tanzania National Debt (June/July 2025)

a) Total National Debt

• USD 46,586.6 million at the end of June 2025.
• Slight increase (+1%) from the previous month.
• Composition:
  • External Debt: USD 32,955.5m (70.7%)
  • Domestic Debt: TZS 35,351.4 billion (~USD 13,631m) (29.3%)

b) External Debt

• Stock: USD 32,955.5m (June 2025).
• By Borrower:
  • Central Government: USD 28,133.7m (85.4%)
  • Private Sector: USD 4,820.6m (14.6%)
  • Public Corporations: USD 1.3m (~0.0%)
• By Creditor:
  • Multilateral institutions: USD 19,328.5m (58.7%)
  • Commercial lenders: USD 11,458.3m (34.8%)
  • Bilateral lenders: USD 1,525.5m (4.6%)
  • Export credit: USD 643.3m (2.0%)

c) Domestic Debt

• Stock: TZS 35,351.4 billion (July 2025).
• By Instrument:
  • Treasury Bonds: 79.7%
  • Treasury Bills: 5.7%
  • Government Stocks: 0.4%
  • Non-securitized debt (overdrafts, others): 14.2%
• By Creditor:
  • Commercial Banks: 28.8%
  • Pension Funds: 26.4%
  • Bank of Tanzania: 19.2%
  • Other creditors (public institutions, companies, individuals): 18.3%
  • Insurance Companies: 5.1%
  • BoT Special Funds: 2.2%

Table: Tanzania National Debt (June/July 2025)

*Percentages within external debt.

2. Tanzania Shilling (TZS) – Stability and Performance

• Exchange Rate (July 2025):
  • Averaged TZS 2,666.79 per USD, compared to TZS 2,631.56 per USD in June 2025.
  • This is a monthly depreciation of about 1.3%.
• Annual Movement:
  • Shilling depreciated at an annual rate of 0.11%, compared to 0.21% in June 2025.
  • Shows relative stability year-on-year.
• Reserves:
  • FX reserves stood at USD 6,194.4m at end-July 2025, enough to cover 5 months of imports, meeting EAC and SADC benchmarks.
• Drivers of Stability:
  • Export inflows (gold, cashew, cereals, tourism).
  • BoT interventions (USD 17.5m sold in July 2025).
  • High reserves acting as a buffer against shocks.

Economic Implications of Tanzania’s National Debt and Shilling Performance – June/July 2025

1. Tanzania National Debt (June/July 2025)

• Total National Debt: Reached USD 46,586.6 million by June 2025, up 1% from the previous month, with 70.7% (USD 32,955.5 million) as external debt and 29.3% (TZS 35,351.4 billion, ~USD 13,631 million) as domestic debt.
• External Debt:
  • Stock at USD 32,955.5 million, with 85.4% owed by the central government (USD 28,133.7 million), 14.6% by the private sector (USD 4,820.6 million), and a negligible 0.0% by public corporations (USD 1.3 million).
  • Creditors include multilateral institutions (58.7%, USD 19,328.5 million), commercial lenders (34.8%, USD 11,458.3 million), bilateral lenders (4.6%, USD 1,525.5 million), and export credit (2.0%, USD 643.3 million).
• Domestic Debt: TZS 35,351.4 billion, with 79.7% in Treasury bonds, 5.7% in Treasury bills, 0.4% in government stocks, and 14.2% in non-securitized debt (e.g., overdrafts). Creditors are led by commercial banks (28.8%), pension funds (26.4%), Bank of Tanzania (19.2%), other creditors (18.3%), insurance companies (5.1%), and BoT special funds (2.2%).
• Economic Implications:
  • The 1% debt increase reflects ongoing financing needs, with external debt’s 70.7% share (USD 32,955.5 million) highlighting reliance on foreign capital, manageable at ~40% of GDP per IMF estimates. Multilateral loans (58.7%) offer concessional terms, reducing interest burdens, but commercial debt’s 34.8% share (USD 11,458.3 million) exposes Tanzania to market volatility and higher costs (e.g., global rates at 2.8% per IMF 2025 forecast).
  • Domestic debt’s stability (TZS 35,351.4 billion, down 0.4% from June) and bond dominance (79.7%) indicate strong local absorption by banks and pension funds (55.2% combined), supporting fiscal operations (TZS 403.4 billion surplus in June). However, the 14.2% non-securitized portion (overdrafts) suggests short-term liquidity pressures.
  • Risks include a moderate debt distress risk (World Bank), with 68.9% of external debt USD-denominated, amplifying costs if the shilling weakens further. Opportunities lie in leveraging multilateral support for infrastructure (e.g., SGR, USD 7.6 billion) to boost 6% GDP growth.

2. Tanzania Shilling (TZS) – Stability and Performance

• Exchange Rate: Averaged TZS 2,666.79 per USD in July 2025, a 1.3% monthly depreciation from TZS 2,631.56 in June, but an annual depreciation of just 0.11% (down from 0.21% in June), indicating year-on-year stability.
• Reserves: Foreign exchange reserves hit USD 6,194.4 million, covering 5 months of imports, exceeding EAC/SADC benchmarks (4 months).
• Drivers: Stability is fueled by export inflows (gold USD 3,977.6 million, tourism USD 3,871.9 million), BoT interventions (USD 17.5 million sold in July), and robust reserves.
• Economic Meaning:
  • The 1.3% monthly depreciation reflects seasonal import pressures (USD 17,603.1 million) and USD demand for debt servicing (USD 234.4 million in June), yet the 0.11% annual rate underscores stability, supported by a 17.7% export rise (gold +21.9%, cereals tripled). Reserves (USD 6,194.4 million) provide a strong buffer, enhancing investor confidence (Fitch B+ rating).
  • BoT’s active management (e.g., USD 62.3 million sold in March) and export growth (USD 9,479.4 million) counter depreciation, aligning with a 6% GDP projection. However, 70% USD-denominated external debt poses a risk if depreciation accelerates, potentially raising debt servicing costs by TZS 1-2 trillion annually.
  • Compared to 2023’s 8% depreciation, the current stability (0.11% annual) reflects policy success (CBR 5.75%), though import reliance and global rate hikes could challenge this if export growth slows.

Summary of Broader Economic Significance

• Debt Dynamics: The USD 46,586.6 million debt, with a balanced external-domestic mix, supports growth (6%) but requires cautious management to avoid distress, especially with commercial debt exposure (34.8%).
• Shilling Resilience: The shilling’s stability (0.11% annual depreciation) and reserves (5 months cover) bolster trade and investment, though USD debt sensitivity remains a vulnerability.
• Outlook: Sustained export growth and reserve strength could mitigate risks, but fiscal discipline and import control are key to maintaining this trajectory amid global uncertainties (e.g., oil at USD 69.2/barrel).

In July 2025, Tanzania's headline inflation rate remained stable at 3.3%, unchanged from June 2025 and well within the Bank of Tanzania's medium-term target range of 3-5%. This stability was driven by offsetting dynamics in the inflation basket: a slight rise in food inflation was counterbalanced by decelerations in non-food components, particularly energy, fuel, and utilities. According to the National Bureau of Statistics and Bank of Tanzania computations, this outcome aligned with regional convergence benchmarks in the East African Community (EAC) and Southern African Development Community (SADC), where inflation trends were mixed but generally moderate.

Key Figures from the Bank of Tanzania Monthly Economic Review (August 2025):

• Headline Inflation: 3.3% (annual rate), stable from the previous month (Headline inflation consistently within the 3-5% target band over recent periods).
• Food and Non-Alcoholic Beverages Inflation: Rose to 7.6% from 7.3% in June 2025, driven by increases in staple prices like rice and finger millet (Annual wholesale price changes, with rice showing upward trends).
• Core Inflation: Unchanged at 1.9%, down from 3.6% in July 2024, reflecting limited pressures in non-volatile categories (Depicts twelve-month inflation trends, with core remaining low).
• Energy, Fuel, and Utilities Inflation: Decelerated to 1.0% from 2.1% in June 2025, attributed to declining wood charcoal and petroleum product prices (Domestic petroleum prices trending downward in line with global oil markets, with petrol, diesel, and kerosene averaging below TZS 3,200 per liter).

This stability contributed to a subdued inflation outlook, enabling supportive monetary policy adjustments.

Influence on Economic Development

Stable inflation fosters economic development by preserving purchasing power, reducing uncertainty for investors and consumers, and allowing central banks to ease monetary policy without risking price spirals. In Tanzania's case, the July 2025 inflation stability directly influenced development through enhanced credit availability, boosted economic activity, and sustained growth momentum. Low and predictable inflation encourages household consumption, business investment, and foreign direct investment, which are critical for Tanzania's transition toward middle-income status.

Direct Impacts from Monetary Policy Adjustments:

The Monetary Policy Committee (MPC) cited the stable inflation environment as a key factor in lowering the Central Bank Rate (CBR) to 5.75% from 6.00% for the quarter ending September 2025. This decision aimed to stimulate credit growth amid strengthening domestic conditions and diminishing global risks. As a result:

• Extended Broad Money Supply (M3) Growth: Accelerated to 19.9% annually in July 2025, up from 18.7% in June 2025 (M3 stock reaching around TZS 50,000 billion, with growth rates climbing steadily).
• Private Sector Credit Growth: Remained strong at 15.9%, consistent with prior months (Though not fully detailed in the provided excerpts, indicates sustained expansion supporting sectors like agriculture and manufacturing).

These figures reflect how inflation stability enabled liquidity injections—such as TZS 758.8 billion in reverse repo operations—to steer interbank rates within the 3.75-7.75% corridor, facilitating cheaper borrowing and investment.

Broader Economic Growth Context:

Tanzania's overall economic growth has benefited from this inflation stability, with real GDP expanding robustly in 2025. Projections indicate GDP growth of approximately 6% for the year, up from an estimated 5.4% in 2024, supported by low inflation that mitigates cost-of-living pressures and enhances fiscal space. Stable inflation has also helped maintain a manageable fiscal balance and improved the current account, as noted by the IMF, contributing to foreign exchange reserve buildup and reduced external vulnerabilities.

In the agricultural sector—a key driver of Tanzania's economy—inflation stability intersected with food security measures. The National Food Reserve Agency maintained stocks at 485,930 tonnes in July 2025, up significantly from 368,855 tonnes in July 2024, buffering against food price volatility and supporting rural livelihoods.

Challenges and Long-Term Implications:

While positive, food inflation's uptick (7.6%) highlights vulnerabilities to supply-side shocks, such as weather or global commodity trends (Mixed world commodity prices, with declines in maize and rice aiding stability). Overall, stable inflation has reinforced Tanzania's resilience, with the World Bank noting robust growth amid single-digit inflation. This environment positions Tanzania for sustained development, potentially accelerating poverty reduction and infrastructure investment, though external factors like global trade uncertainties could pose risks if inflation deviates.

Tanzania Monthly Economic Review - August 2025," a table of key figures relevant to Tanzania's economic performance, inflation, monetary policy, and related indicators:

Notes:

• Inflation rates are annual percentages based on the 2020 = 100 index.
• Monetary policy figures reflect decisions from the 237th MPC meeting in July 2025.
• Petroleum prices are approximate, based on trends, with values in Tanzanian Shillings (TZS) per liter.
• "N/A" indicates data not available or not directly comparable in the provided excerpts for the previous month.

This table summarizes key economic indicators that reflect Tanzania's economic stability and policy responses as of July 2025, providing a snapshot for further analysis.

The Bank of Tanzania’s August 2025 review shows that government domestic debt stood at TZS 35,351.4 billion in July 2025, a slight decline of 0.4% from June’s TZS 35,502.8 billion, mainly due to reduced overdraft use. The debt structure remains dominated by Treasury bonds (79.7%), reflecting a preference for long-term financing. By creditor category, commercial banks (28.8%) and pension funds (26.4%) together held more than half of the stock, while the Bank of Tanzania accounted for 19.2%. Other contributors included public institutions, firms, and individuals (18.3%), insurance companies (5.1%), and BoT’s special funds (2.2%). This composition highlights the critical role of institutional investors in supporting government financing while aligning with fiscal consolidation efforts that produced a budget surplus of TZS 403.4 billion in June 2025.

1. Government Domestic Debt Stock (July 2025)

• Total stock: TZS 35,351.4 billion.
• Slight decline from TZS 35,502.8 billion in June 2025 (–0.4%), mainly due to reduced overdraft use.
• Debt remains dominated by Treasury bonds (79.7%) and commercial banks/pension funds as key creditors.

2. Government Domestic Debt by Creditor (July 2025)

• Commercial Banks: TZS 10,176.3 billion (28.8% of total).
• Pension Funds: TZS 9,328.8 billion (26.4%).
• Bank of Tanzania (BoT): TZS 6,799.3 billion (19.2%).
• Other Creditors (public institutions, private companies, individuals): TZS 6,461.3 billion (18.3%).
• Insurance Companies: TZS 1,808.4 billion (5.1%).
• BoT’s Special Funds: TZS 777.3 billion (2.2%).

Table: Government Domestic Debt by Creditor Category (July 2025)

Economic Implications of Government Domestic Debt – July 2025

1. Government Domestic Debt Stock (July 2025)

• Slight Decline: The total domestic debt stock fell to TZS 35,351.4 billion from TZS 35,502.8 billion in June 2025 (–0.4%), primarily due to reduced overdraft use.
• Economic Meaning: The modest decline suggests improved fiscal management, supported by the June 2025 budget surplus (TZS 403.4 billion), reducing reliance on short-term borrowing like overdrafts. The dominance of Treasury bonds (79.7%) indicates a shift toward longer-term financing, aligning with lower yields (e.g., 10-year bond yield at 13.74%) and investor preference for stability. This supports the BOT’s liquidity management (TZS 758.8 billion in reverse repos) and the government’s ability to fund development (TZS 909.4 billion) without crowding out private credit. However, the high stock (TZS 35,351.4 billion, or ~25% of GDP per IMF estimates) signals ongoing debt dependency, necessitating sustained revenue growth (tax revenue at TZS 3,108.7 billion).

2. Government Domestic Debt by Creditor (July 2025)

• Creditor Breakdown: Commercial banks hold TZS 10,176.3 billion (28.8%), pension funds TZS 9,328.8 billion (26.4%), BOT TZS 6,799.3 billion (19.2%), other creditors TZS 6,461.3 billion (18.3%), insurance companies TZS 1,808.4 billion (5.1%), and BOT’s special funds TZS 777.3 billion (2.2%).
• Economic Implications:
  • Commercial Banks and Pension Funds (55.2%): The combined 55.2% share reflects strong institutional support, providing stable, long-term funding via Treasury bonds. This supports government spending (e.g., transport at 28.6% of external debt use) but ties bank liquidity to public debt, potentially limiting private lending unless offset by BOT’s accommodative stance (CBR 5.75%).
  • BOT’s Role (19.2%): The BOT’s significant holding indicates its role in monetary financing, stabilizing markets during liquidity shortages (e.g., interbank turnover at TZS 3,746 billion). This aligns with reverse repo operations but risks inflation if overextended, though current stability (3.3%) mitigates this.
  • Other Creditors (18.3%): Growing participation from public institutions, firms, and individuals diversifies the creditor base, reducing banking sector concentration risk. This broadens domestic investment, supporting the shilling’s stability (TZS 2,666.79/USD).
  • Insurance and Special Funds (7.3%): Smaller shares suggest limited alternative funding, highlighting reliance on traditional creditors, though this could grow with financial sector deepening.

Summary of Broader Economic Significance

• Fiscal and Monetary Alignment: The slight debt reduction and surplus (TZS 403.4 billion) reflect effective fiscal consolidation, complemented by monetary easing (CBR cut), reducing domestic borrowing pressure and supporting growth (6% GDP projection). The bond dominance (79.7%) ensures predictable debt servicing, aided by stable yields (e.g., 8.13% for Treasury bills).
• Liquidity and Stability: BOT’s 19.2% holding and reverse repos (TZS 758.8 billion) enhance liquidity, while the 55.2% bank-pension share provides a stable funding base. This supports private credit expansion (15.9%) and export resilience (USD 9,479.4 million).
• Risks and Opportunities: Concentration in banks and pension funds (55.2%) poses risks if these sectors face shocks (e.g., global trade uncertainties), but diversification via other creditors (18.3%) mitigates this. The high debt stock (TZS 35,351.4 billion) requires sustained tax performance (107.8% of target) to avoid crowding out effects.
• Comparative Context: Compared to 2024 (TZS 34,890 billion), the slight decline aligns with regional trends (e.g., Kenya’s domestic debt stabilization), positioning Tanzania favorably amid global commodity stability (oil at USD 69.2/barrel).

The Bank of Tanzania’s August 2025 review shows that Tanzania’s external debt stock stood at USD 32,955.5 million in June 2025, with the central government accounting for 85.4% (USD 28,133.7 million) and the private sector holding 14.6% (USD 4,820.6 million). By sectoral use, debt was mainly channeled into transport and telecommunications (28.6%), social welfare and education (18.5%), and energy and mining (16.7%), underscoring the focus on infrastructure and human capital development. In terms of currency composition, the debt portfolio remains highly exposed to the US dollar (69.8%), followed by the euro (18.1%), with smaller shares in the yen (5.4%) and yuan (3.2%). This structure highlights Tanzania’s reliance on public borrowing to fund long-term projects while emphasizing the importance of managing currency risk in debt servicing.

1. External Debt Stock by Borrower (June 2025)

• Total external debt stock: USD 32,955.5 million.
• Public sector dominates: Central Government accounts for 85.4%, while private sector holds 14.6%.

Details:

• Central Government: USD 28,133.7m (85.4%)
• Private Sector: USD 4,820.6m (14.6%)
• Public Corporations: USD 1.3m (≈0.0%)

2. Disbursed Outstanding Debt by Use of Funds (June 2025, % Share)

• Transport & telecommunications: 28.6%
• Social welfare & education: 18.5%
• Energy & mining: 16.7%
• Agriculture: 6.4%
• Industries: 5.7%
• Other sectors (including finance, trade, etc.): 24.1%

3. Disbursed Outstanding Debt by Currency Composition (June 2025, % Share)

• US Dollar (USD): 69.8%
• Euro (EUR): 18.1%
• Japanese Yen (JPY): 5.4%
• Chinese Yuan (CNY): 3.2%
• Other currencies: 3.5%

Table 1: External Debt Stock by Borrower (June 2025)

Table 2: Disbursed Outstanding Debt by Use of Funds (%)

Table 3: External Debt by Currency Composition (%)

Economic Implications of External Debt Profile – June 2025

1. External Debt Stock by Borrower (June 2025)

• Composition: The total external debt stock is USD 32,955.5 million, with the central government holding USD 28,133.7 million (85.4%), the private sector USD 4,820.6 million (14.6%), and public corporations a negligible USD 1.3 million (0.0%).
• Economic Meaning: The heavy public sector dominance (85.4%) underscores the government's role in financing large-scale infrastructure and social projects, aligning with development goals (e.g., Vision 2050 targeting a USD 1 trillion economy). This reduces private sector borrowing pressure, supporting credit growth (15.9% annually), but increases public debt servicing risks (national debt at USD 46,586.6 million). The minimal public corporation share suggests limited state-owned enterprise reliance on external funds, potentially reflecting fiscal discipline. Compared to regional peers (e.g., Kenya’s 60% public share), Tanzania's high public borrowing may enhance state-led growth but requires robust revenue mobilization (tax revenue at TZS 3,108.7 billion) to sustain.

2. Disbursed Outstanding Debt by Use of Funds (June 2025, % Share)

• Allocation: Transport and telecommunications lead at 28.6%, followed by social welfare and education (18.5%), energy and mining (16.7%), agriculture (6.4%), industries (5.7%), and other sectors (24.1%).
• Economic Significance: The 47.1% allocation to transport/telecoms and social sectors supports long-term growth by improving connectivity (e.g., roads, digital infrastructure) and human capital (education, health), key to Tanzania’s 6% GDP growth projection. Energy and mining (16.7%) bolster resource exports (gold at USD 3,977.6 million), while the low agriculture (6.4%) and industries (5.7%) shares may hinder diversification, a noted challenge in IMF assessments. The "other" category (24.1%) likely includes trade and finance, indicating broad sectoral support. This mix reflects a development-focused strategy, but underinvestment in agriculture (despite 27% GDP contribution) could limit rural growth and food security (stocks at 485,930.4 tonnes).

3. Disbursed Outstanding Debt by Currency Composition (June 2025, % Share)

• Breakdown: USD dominates at 69.8%, followed by EUR (18.1%), JPY (5.4%), CNY (3.2%), and other currencies (3.5%).
• Economic Implications: The 69.8% USD exposure heightens vulnerability to exchange rate fluctuations, especially with the TZS depreciating 1.34% to 2,666.79/USD in July 2025. A stronger dollar (e.g., amid global trade tensions) could raise debt servicing costs, straining public finances (surplus TZS 403.4 billion in June). Diversification into EUR (18.1%) and JPY (5.4%) mitigates some risk, reflecting loans from multilateral institutions (e.g., IMF, World Bank). The low CNY share (3.2%) suggests limited Chinese financing compared to peers like Zambia, potentially reducing geopolitical debt dependency. Stable reserves (USD 6,194.4 million) provide a buffer, but currency risk remains a key concern.

Summary of Broader Economic Significance

• Growth and Development: The debt structure supports infrastructure and social investment, driving Tanzania’s 6% growth outlook and export resilience (USD 9,479.4 million in goods). Public sector dominance ensures state-led progress, but private sector growth (14.6%) needs nurturing to diversify the economy.
• Risk Management: High USD exposure (69.8%) and public debt concentration (85.4%) pose exchange rate and fiscal risks, though reserves and a fiscal surplus offer stability. This aligns with IMF’s moderate debt distress risk assessment, but prudent management is critical.
• Comparative Context: Compared to 2024 (USD 32.89 billion), the slight rise to USD 32,955.5 million reflects controlled borrowing, outperforming countries with higher debt-to-GDP ratios (e.g., Ghana at 90%). The sectoral focus mirrors successful models like Rwanda’s infrastructure drive, but agriculture underfunding lags behind peers.
• Future Outlook: Sustained tax revenue growth (107.8% of target) and export inflows (e.g., tourism at USD 3,871.9 million) could offset risks, though currency diversification and private sector debt expansion are needed for long-term sustainability.