Tanzania’s debt development, as outlined in the April 2025 Monthly Economic Review and recent data, influences economic growth through fiscal constraints and resource allocation. Below, we analyze the debt structure, including domestic and external debt figures, percentage changes, and their implications for growth, using specific figures to illustrate impacts.

Debt Structure and Figures

Figures:

• Domestic Debt: TZS 34.26 trillion in March 2025, with 29% held by commercial banks and 26.5% by pension funds.
• External Debt: USD 34.1 billion (approximately TZS 91.29 trillion at TZS 2,677/USD, based on a 2.6% year-on-year exchange rate depreciation, Page 30), with 78.3% held by the central government and 67.7% denominated in US dollars.
• Total National Debt: TZS 91.7 trillion in 2024/25 budget context.
• Public Debt (Historical): 45.5% of GDP in 2022/23, up from 43.6% in 2021/22.
• Percentage Change: Exact year-on-year percentage changes for March 2025 debt are not provided in the document or search results. However, domestic debt uptake increased through treasury bills and bonds, and external debt grew to USD 34.1 billion (), suggesting continued borrowing. For context, public debt rose by 4.4% (45.5% - 43.6% of GDP) from 2021/22 to 2022/23.

Explanation:

• Domestic Debt: The TZS 34.26 trillion domestic debt finances fiscal deficits, with significant holdings by commercial banks (TZS 9.93 trillion, 29%) and pension funds (TZS 9.08 trillion, 26.5%). Increased borrowing indicates rising deficits, potentially driven by a 13.4% planned spending increase to TZS 57.04 trillion in FY 2025/26.
• External Debt: The USD 34.1 billion (TZS 91.29 trillion) external debt supports development projects, with 78.3% (USD 26.7 billion) held by the central government. The 67.7% USD denomination (USD 23.1 billion) exposes Tanzania to exchange rate risks, amplified by a 2.6%-shilling depreciation.
• Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with public debt at 35% of GDP in 2024, below the 55% benchmark (). Total debt service was 2.89% of GNI in 2023.

Impact on Economic Growth

Figures and Explanation:

• Fiscal Space Constraints: Limited fiscal space, noted globally, restricts Tanzania’s ability to fund growth. The FY 2024/25 budget of TZS 49.35 trillion includes TZS 29.41 trillion (59.6%) from tax revenue, leaving a deficit financed by domestic (TZS 34.26 trillion) and external (USD 34.1 billion) borrowing. A planned 13.4% spending increase to TZS 57.04 trillion in FY 2025/26 will further rely on debt, with TZS 16.07 trillion (28.2%) from borrowing.
• Debt Servicing Costs: Debt servicing absorbs significant resources. Historically, external debt servicing consumed 40% of government expenditures. In 2023, total debt service was 2.89% of GNI. For March 2025, servicing TZS 34.26 trillion domestic debt (at, e.g., 15.5% lending rates,) and USD 34.1 billion external debt (at concessional rates,) could cost TZS 5.31 trillion and USD 1-2 billion annually, diverting funds from investments. The 2.6%-shilling depreciation increases external debt costs by TZS 2.37 trillion.
• Crowding-Out Effect: Domestic borrowing of TZS 34.26 trillion (29% by banks) raises lending rates to 15.5%, crowding out private investment. Credit to the private sector weakened in Q4 2024, limiting business growth. The 6% Central Bank Rate mitigates this, but high government borrowing (TZS 4,362 billion average,) strains liquidity.
• Growth Projections: GDP growth is projected at 5.4% in 2024 and 6% in 2025, driven by agriculture (26.5% of GDP), construction (13.2%), and mining (9%). However, debt servicing and fiscal constraints could cap growth below the 6.4% potential by 2026.

Global and Domestic Economic Context

Figures and Explanation:

• Global Risks: The IMF’s global growth forecast of 2.8% for 2025 and rising interest rates increase external borrowing costs. Tanzania’s USD 34.1 billion external debt, with 67.7% in USD, faces higher servicing costs amid global tightening.
• Commodity Impacts: Declining coffee (-2%) and sugar (-1.5%) prices reduce export revenues, straining foreign exchange for debt repayment (Page 3). Gold prices at USD 2,983.25/ounce (+3%) and exports at USD 16.1 billion bolster reserves (USD 5.7 billion, 3.8 months of imports,), easing debt pressures.
• Inflation and Policy: Headline inflation at 3.3% and food inflation at 5.4% (Page 4) increase household costs, potentially slowing consumption. The 6% Central Bank Rate and 587,062-tonne food reserves (32,598 tonnes released) stabilize prices, supporting growth.

Opportunities and Mitigation

Figures and Explanation:

• Development Projects: External debt of USD 34.1 billion funds infrastructure (48% of World Bank’s USD 10 billion portfolio,), like the Standard Gauge Railway, boosting long-term growth. Projects worth TZS 14.81 trillion (30% of FY 2024/25 budget,) enhance connectivity and trade.
• Debt Management: The moderate debt distress risk and concessional financing keep debt sustainable. Revenue mobilization (TZS 2.47 trillion collected in March 2025,) and IMF’s USD 441 million ECF/RSF support () reduce reliance on costly borrowing.
• Fiscal Reforms: Plans to raise tax revenue to TZS 29.41 trillion (10% increase,) and reduce the fiscal deficit to 2.5% of GDP by 2024/25 () enhance fiscal space, freeing resources for growth.

Conclusion

Tanzania’s debt, at TZS 34.26 trillion domestic and USD 34.1 billion (TZS 91.29 trillion) external in March 2025, impacts growth by constraining fiscal space and diverting resources to servicing costs (e.g., TZS 5.31 trillion domestic, USD 1-2 billion external annually). A 2.6%-shilling depreciation and high lending rates (15.5%) exacerbate pressures, crowding out private investment. While debt fuels infrastructure (TZS 14.81 trillion in projects), declining exports (coffee -2%) and global risks (2.8% growth) challenge repayment. Prudent policy (6% CBR, USD 5.7 billion reserves) and revenue growth (TZS 29.41 trillion) mitigate risks, supporting 5.4%-6% GDP growth, but fiscal discipline is crucial.

Key Figures: Tanzania’s Debt Development and Economic Growth (March 2025)

Notes:

• Figures reflect March 2025 unless stated otherwise. TZS/USD conversion uses TZS 2,677/USD (Page 30).
• Debt servicing estimates are based on typical rates (15.5% for domestic, concessional for external).
• Percentage change for debt limited to historical data (4.4% public debt increase, 2021/22-2022/23).
• Source: “Page” refers to April 2025 Monthly Economic Review; “Web” refers to search data; “Est.” indicates estimates.
• Domestic borrowing crowds out private investment; external debt funds infrastructure (e.g., TZS 14.81 trillion).

Tanzania’s economic growth faces several challenges, both domestic and global, as outlined in the April 2025 Monthly Economic Review. Below, we detail these challenges with specific figures to illustrate their impact, drawing from the document’s data on inflation, commodity markets, logistical issues, and global economic risks.

Rising Food and Energy Inflation

Challenge: Increasing food and energy prices drive headline inflation, reducing purchasing power and potentially slowing economic activity.

Figures and Explanation:

• Headline Inflation: Rose to 3.3% in March 2025 from 3.0% in March 2024, largely due to food and energy price hikes.
• Food Inflation: Surged to 5.4% in March 2025 from 1.4% in March 2024, driven by higher prices for maize, rice, and beans. This increase is attributed to logistical challenges in transportation caused by seasonal heavy rains, which disrupt supply chains and raise costs.
• Energy, Fuel, and Utilities Inflation: Increased to 7.9% in March 2025 from 6.6% in March 2024, primarily due to rising prices of petroleum products and wood charcoal. The rise in wood charcoal prices is linked to scarcity following seasonal rains.
• Impact: Higher food and energy costs strain household budgets, particularly for low-income groups, reducing consumption and potentially dampening economic growth. The document notes that unprocessed food inflation is increasingly contributing to overall inflation, highlighting its significance.

Logistical Challenges Due to Seasonal Rains

Challenge: Seasonal heavy rains disrupt transportation, increasing food prices and complicating supply chain logistics, which hinders economic efficiency.

Figures and Explanation:

• Food Inflation Driver: The 5.4% food inflation in March 2025 was amplified by logistical challenges in transporting staples like maize, rice, and beans due to heavy rains (Page 4).
• Food Reserves: The National Food Reserve Agency (NFRA) held 587,062 tonnes of food stocks by March 2025 and released 32,598 tonnes of maize and paddy to mitigate price pressures. Despite this, logistical bottlenecks persisted.
• Impact: Disrupted transportation increases costs for producers and traders, contributing to higher food prices and inflation. This can reduce agricultural sector efficiency, a key driver of Tanzania’s economy, and limit growth in related industries like trade and processing.

Global Trade Tensions and Economic Uncertainties

Challenge: Global trade tensions and unpredictable policies create an uncertain economic environment, impacting Tanzania’s export markets and investment inflows.

Figures and Explanation:

• Global Growth Forecast: The IMF revised global growth downward to 2.8% for 2025 and 3.0% for 2026, from 3.3% for both years, citing trade tensions and unpredictable policies.
• Economic Outlook: The global economic outlook is tilted downward due to trade tensions, diminishing fiscal buffers, and unpredictable policies.
• Impact on Tanzania: As a commodity-dependent economy, Tanzania is vulnerable to global trade disruptions. For example, declining coffee and sugar prices (down 2% and 1.5%, respectively, in March 2025) due to improved global production may reduce export revenues, limiting foreign exchange earnings and growth potential. Trade tensions could also deter foreign investment, constraining capital for development projects.

Commodity Price Volatility

Challenge: Fluctuations in global commodity prices affect Tanzania’s export earnings and import costs, creating uncertainty for economic planning.

Figures and Explanation:

• Gold Prices: Rose 3% to USD 2,983.25 per ounce in March 2025, benefiting Tanzania’s gold exports.
• Fertilizer Prices: Increased 2% to USD 615.13 per tonne due to supply constraints, raising agricultural input costs.
• Crude Oil Prices: Fell 4% to USD 70.70 per barrel due to oversupply, reducing import costs.
• Coffee and Sugar Prices: Declined 2% and 1.5%, respectively, hurting export revenues.
• Palm Oil Prices: Edged up 0.2% to USD 1,069 per tonne, supporting the edible oil sector.
• Impact: While lower oil prices ease import costs, higher fertilizer prices increase agricultural production costs, contributing to food inflation (5.4%). Declining coffee and sugar prices reduce export earnings, impacting the trade balance and limiting funds for growth-enhancing investments. Volatility in commodity markets complicates fiscal and monetary planning.

Climate Change and Environmental Risks

Challenge: Climate change, particularly through extreme weather events like heavy rains, disrupts agriculture and infrastructure, posing a long-term threat to growth.

Figures and Explanation:

• Global Risk: The document notes climate change as a factor obscuring the medium-term global economic outlook, particularly for developing economies.
• Domestic Impact: Seasonal heavy rains in March 2025 caused logistical challenges, increasing food prices (e.g., 5.4% food inflation) and wood charcoal scarcity (contributing to 7.9% energy inflation).
• Impact: Climate-related disruptions, such as floods or droughts, can damage agricultural output, a cornerstone of Tanzania’s economy. The document highlights rains disrupting food transport, which raises costs and inflation. Over time, climate change could reduce agricultural productivity and infrastructure reliability, hindering sustained economic growth.

Limited Fiscal Space

Challenge: Limited fiscal space restricts Tanzania’s ability to fund development projects and respond to economic shocks, constraining growth.

Figures and Explanation:

• Global Context: The IMF notes limited fiscal space as a challenge for developing economies, exacerbating medium-term economic risks.
• Tanzania’s Debt: The document discusses national debt developments (Page 30) but lacks specific figures for March 2025. Public debt includes domestic (for fiscal deficits) and external components (for development projects).
• Impact: Limited fiscal space, coupled with rising global interest rates, increases debt servicing costs, diverting resources from infrastructure, education, or health investments critical for growth. The document’s mention of diminishing fiscal buffers globally suggests Tanzania faces similar constraints, potentially limiting its ability to stimulate the economy during downturns.

Conclusion

Tanzania’s economic growth in March 2025 is challenged by rising food (5.4%) and energy (7.9%) inflation, logistical disruptions from seasonal rains, global trade tensions, commodity price volatility (e.g., fertilizer up 2%, coffee down 2%), climate change, and limited fiscal space. These factors increase costs, reduce export revenues, and constrain investment, posing risks to sustained growth. However, stable monetary policy (6% Central Bank Rate) and food reserves (587,062 tonnes) mitigate some pressures, providing resilience amid these challenges.

Key Figures: Challenges Facing Tanzania’s Economic Growth (March 2025)

Notes:

• All Tanzania figures reflect March 2025 unless stated otherwise.
• Global figures are IMF forecasts or commodity price changes for March 2025.
• Source refer to the April 2025 Monthly Economic Review.

In 2024, global debt surged to an alarming USD 250 trillion, equal to 237% of global GDP, as reported by the IMF’s 2024 Global Debt Monitor. Of this, USD 98 trillion was public debt (94% of GDP), and over USD 150 trillion was private debt (143% of GDP). These high levels of global debt—especially in public finances—create ripple effects for low-income countries like Tanzania, which recorded a public debt of 43.3% of GDP in the same year. While Tanzania’s debt remains below the average for Low-Income Developing Countries (50% of GDP), increasing global borrowing costs, tighter financial conditions, and slowing global growth (expected to fall from 2.7% to 2.2% over the next five years) pose challenges. These pressures may raise Tanzania’s external debt servicing costs, limit access to affordable financing, and affect government spending and private sector credit growth.

How Global Debt Trends Could Impact Tanzania's Economy and Public Debt

1. Rising Global Public Debt Creates External Pressure

• Global public debt reached USD 98 trillion (94% of global GDP in 2023/2024).
• Many low-income developing countries (LIDCs), including Tanzania, have seen public debt increase. LIDC public debt rose to 50% of GDP, the highest since early 2000s.
• Tanzania’s own public debt stood at about 43.3% of GDP in 2023/2024 (Bank of Tanzania data), below the LIDC average — but upward pressure is visible.

Implication:
As more countries compete for external financing, borrowing costs could rise for Tanzania, especially for external commercial debt. This could lead to higher debt servicing costs and reduce fiscal space for development spending.

2. Reduced Private Sector Borrowing Globally — Credit Squeeze Risk

• Global private debt fell to 143% of GDP, with household debt at 54% and corporate debt at 90%.
• In emerging and low-income economies, private debt growth has slowed or reversed.
• In Tanzania, private sector credit growth declined slightly in 2023/2024, and is mostly concentrated in trade, manufacturing, and personal loans.

Implication:
If global banks and investors become more risk-averse, Tanzania's private sector may face tighter access to credit — especially SMEs and startups that depend on microfinance or external funding.

3. Tight Global Financial Conditions — Impact on Debt Sustainability

• The IMF highlights that higher interest rates globally are not reducing debt levels significantly but are increasing servicing costs.
• Tanzania’s external debt service payments were over USD 1.5 billion in FY2022/23, and this will likely rise with any tightening in external financial markets.

Implication:
Tanzania may need to shift more toward concessional financing or domestic sources to avoid debt distress. Already, the country spends about 14–16% of government revenue on debt service, a figure that could increase if global rates stay high.

4. Risk of Slower Global Growth — Impacts on Tanzania’s Exports and Revenue

• Global medium-term growth expectations declined from 2.7% to 2.2% (5-year forecast).
• This implies reduced demand for Tanzanian exports such as minerals, tourism, and agricultural products.

Implication:
Lower global demand could mean slower foreign exchange earnings, potentially weakening the shilling, reducing government revenue, and making external debt more expensive to repay.

Summary for Tanzania:

Global vs. Tanzania Debt Figures (2023/2024)

What Tanzania Should Consider:

• Prioritize concessional borrowing and monitor external debt exposure.
• Strengthen domestic revenue mobilization to reduce dependency.
• Promote local financial inclusion and SME support to sustain private sector momentum.
• Maintain fiscal prudence to stay below LIDC risk levels (currently at 43.3% of GDP, still manageable).