1. External Debt Stock by Borrower

• Overview: Tanzania’s external debt includes obligations owed to non-residents, repayable in foreign currency, goods, or services. It encompasses public and publicly guaranteed (PPG) debt (central government and public corporations) and private sector debt. The Bank of Tanzania (BoT) defines external debt based on residency, covering long-term debt, short-term debt, and use of IMF credit. The total external debt stock reflects Tanzania’s financing needs for development projects, balance of payments (BoP) support, and private sector investments.
• May 2025 Performance:
  • Total External Debt Stock: USD 35.60 billion.
  • Borrower Breakdown:
    • Central Government: USD 27.12 billion (76.2% of total).
    • Private Sector: USD 8.48 billion (23.8% of total).
    • Public Corporations: USD 0.004 billion (0.01% of total).
• Context and Analysis:
  • Central Government Dominance: The central government’s 76.2% share (USD 27.12 billion) underscores its role as the primary borrower, funding large-scale infrastructure (e.g., Standard Gauge Railway, Julius Nyerere Hydropower Plant) and social programs (e.g., education, health). This aligns with November 2024 data, where the central government held 76.8% (USD 25.43 billion) of a USD 33.14 billion external debt stock. The slight decrease in share (from 76.8% to 76.2%) may reflect increased private sector borrowing or debt repayments.
  • Private Sector Growth: The private sector’s 23.8% share (USD 8.48 billion) indicates growing external borrowing, up from 23.2% (USD 7.70 billion) in November 2024. This reflects private investments in sectors like manufacturing, agriculture, and tourism, supported by foreign direct investment (FDI) inflows (USD 922 million in 2021). The increase suggests improved access to commercial loans, though at higher costs compared to multilateral financing.
  • Negligible Public Corporations: Public corporations’ 0.01% share (USD 4 million) is consistent with their minimal role, as seen in September 2024 (USD 3.8 million). This reflects limited borrowing by state-owned enterprises (SOEs), possibly due to government guarantees (2.8% of GDP for National Insurance Corporation) or reliance on central government funding.
  • Economic Drivers: The external debt stock rose from USD 33.14 billion in November 2024 to USD 35.60 billion in May 2025, a 7.4% increase, driven by new disbursements for infrastructure and BoP support. Multilateral creditors (e.g., World Bank, IMF) account for 72.5% of PPG debt, offering concessional terms, while commercial borrowing (30.5% of new disbursements in FY2022/23) has grown, increasing debt servicing costs. The BoT reports no outstanding external debt (Document, Page 12), aligning with IMF findings.
  • Implications: The central government’s dominance (76.2%) places repayment burdens on public finances, requiring robust revenue mobilization (TZS 2,544.1 billion in April 2025). The private sector’s growing share (23.8%) supports economic diversification but exposes it to commercial loan risks. The negligible public corporation share minimizes SOE-related fiscal risks, but contingent liabilities (3% of GDP) warrant monitoring. Tanzania’s debt sustainability remains moderate, with a low risk of external debt distress, supported by IMF financing (USD 441 million approved in April 2025).

2. Disbursed Outstanding Debt by Use of Funds

• Overview: Disbursed outstanding debt (DOD) reflects funds already utilized from external borrowings, allocated across sectors to drive Tanzania’s development goals under the Third Five-Year National Development Plan (2021/22–2025/26). Key sectors include infrastructure, social services, and BoP support, aligning with Vision 2050’s focus on industrialization and human capital.
• May 2025 Allocation:
  • Sectoral Breakdown (% of DOD):
    • Transport & Telecommunications: 21.5%
    • Budget Support / Balance of Payments: 20.2%
    • Social Welfare & Education: 20.1%
    • Energy & Mining: 13.7%
    • Agriculture: 5.2%
    • Real Estate & Construction: 4.6%
    • Industry: 4.1%
    • Finance & Insurance: 3.8%
    • Tourism: 1.7%
    • Other: 5.2%
• Context and Analysis:
  • Infrastructure Focus: Transport & Telecommunications (21.5%) remains the largest recipient, consistent with September 2024 (21.5%) and December 2019 (27%). Funds support projects like the Standard Gauge Railway (SGR) and Dar es Salaam Maritime Gateway, enhancing connectivity and trade (exports up 16.8% in April 2025, Document, Page 14). This aligns with the 2025/26 budget’s TZS 7.72 trillion for capital payments.
  • Budget Support: BoP support (20.2%) reflects reliance on external financing to stabilize foreign exchange reserves (USD 5.7 billion, 4 months of import cover). This is critical amid shilling depreciation (2.6% in 2025) and global risks (e.g., trade tensions).
  • Social Investments: Social Welfare & Education (20.1%) supports human capital development (e.g., 28,000 health workers trained in 2025/26), aligning with Vision 2050’s goals. The slight drop from 20.8% in September 2024 may indicate reallocation to other sectors.
  • Energy & Mining: 13.7% funds projects like the Julius Nyerere Hydropower Plant (3,680 MW), reducing power shortages. The decline from 14.8% in September 2024 suggests completion of major projects or slower disbursements.
  • Underfunded Sectors: Agriculture (5.2%) and Tourism (1.7%) receive low shares, despite contributing 27% and 17% to GDP, respectively. This may reflect reliance on domestic or private funding, but underinvestment risks growth in these sectors.
  • Economic Drivers: The sectoral allocation aligns with Tanzania’s development priorities, but the low share for agriculture (5.2%) contrasts with its 65% employment share, suggesting under prioritization. The 2025/26 budget’s focus on agricultural reforms (e.g., irrigation, TZS 2.6 trillion) aims to address this. Commercial borrowing’s rise (30.5% of new disbursements) increases costs but supports infrastructure and BoP needs.
  • Implications: The focus on transport (21.5%) and social services (20.1%) supports long-term growth (6% GDP projected for 2025), but low allocations to agriculture and tourism may limit inclusive growth. Efficient project implementation is critical to ensure debt-financed investments (USD 35.60 billion) yield returns, as emphasized by the IMF. The high BoP share (20.2%) underscores vulnerability to external shocks, requiring robust export growth (gold, cashew nuts).

3. Disbursed Outstanding Debt by Currency Composition

• Overview: The currency composition of external debt reflects the denominations in which Tanzania’s obligations are repayable, exposing the country to exchange rate risks. The dominance of major currencies like the USD and Euro is driven by multilateral and commercial creditors.
• May 2025 Composition:
  • Currency Breakdown (% of DOD):
    • US Dollar (USD): 67.4%
    • Euro (EUR): 16.7%
    • Chinese Yuan (CNY): 6.3%
    • Other Currencies: 9.6%
• Context and Analysis:
  • USD Dominance: The 67.4% USD share aligns with February 2023 (68.9%) and November 2024 (67.4%), reflecting reliance on multilateral (e.g., World Bank, IMF) and commercial creditors. The USD’s dominance exposes Tanzania to exchange rate risks, as a 2.6% shilling depreciation in 2025 increases debt servicing costs (e.g., USD 447.9 million in bilateral debt service in 2024).
  • Euro and Yuan: The 16.7% Euro share supports financing from European creditors (e.g., EU, export credits), while the 6.3% Yuan share reflects Chinese loans for infrastructure (e.g., SGR). Both are stable, with Euro usage consistent (17% in 2019) and Yuan growing due to China’s role in energy and transport projects.
  • Other Currencies: The 9.6% share includes currencies like the Japanese Yen and SDRs (IMF credit), aligning with multilateral financing (72.5% of PPG debt). This diversification mitigates some currency risk but remains minor.
  • Economic Drivers: The USD’s dominance is driven by multilateral loans (47.2% of debt stock) and commercial borrowing (30.5% of new disbursements), which favor USD denominations. The shilling’s depreciation (8% in 2023, 2.6% in 2025) increases servicing costs, with external debt service projected at TZS 5.2 trillion in 2025/26. Foreign exchange reserves (USD 5.7 billion, Document, Page 12) provide a buffer, covering 4 months of imports.
  • Implications: The 67.4% USD share heightens vulnerability to shilling depreciation, increasing debt servicing costs (TZS 4,714.8 billion in FY2024/25). Diversifying currency composition or boosting exports (16.8% growth in April 2025) is critical to manage risks. The IMF’s USD 441 million support in April 2025 strengthens reserves, but prudent debt management is needed to maintain sustainability.

Summary Snapshot

Additional Insights and Outlook

• Debt Sustainability: Tanzania’s external debt (USD 35.60 billion, 47.36% of GDP in 2023) remains sustainable, with a moderate risk of distress. The fiscal deficit (2.5% of GDP in 2024/25) and strong revenue performance (TZS 2,544.1 billion in April 2025) support repayment capacity. However, rising commercial borrowing (30.5% of new disbursements) and shilling depreciation (2.6%) increase costs.
• Policy Support: The 2025/26 budget’s TZS 40.47 trillion revenue target and IMF’s USD 441 million financing bolster fiscal space. The BoT’s reserves (USD 5.7 billion, Document, Page 12) and export growth (16.8%) mitigate currency risks.
• Risks: High USD exposure (67.4%) and low agriculture/tourism allocations (5.2%, 1.7%) pose risks to inclusive growth. Upcoming elections (October 2025) may increase fiscal pressures, potentially widening deficits (TZS 743.2 billion in April 2025).
• Outlook: Continued infrastructure and social investments (42.3% of DOD) support 6% GDP growth, but diversifying funding (e.g., domestic bonds, TZS 32.62 trillion stock) and boosting agriculture/tourism allocations are critical. Enhanced debt transparency, as per IMF’s September 2024 assessment, will strengthen sustainability.

Tanzania External Debt Overview - May 2025: Key Figures