Debt Structure and Figures

As of May 2025, Tanzania’s national debt stood at TZS 107.70 trillion, comprising TZS 72.94 trillion in external debt and TZS 34.76 trillion in domestic debt. The external debt stock, equivalent to approximately USD 34.1 billion (using an exchange rate of TZS 2,884.42 per USD from April 2025), was primarily held by multilateral institutions and directed toward key sectors such as transportation (21.5%) and telecommunications. The central government accounted for 78.3% of external debt (USD 26.7 billion), with 67.7% of this debt denominated in US dollars (USD 23.1 billion). Domestic debt, at TZS 34.26 trillion in March 2025, was largely financed by commercial banks (29%) and pension funds (26.5%), with Treasury bonds dominating at 78.2%.

In May 2025, principal repayments on external debt amounted to USD 267 million. Debt servicing costs are significant, with historical data indicating that external debt servicing consumed up to 40% of government expenditures in earlier years. For 2023, total debt service was 2.89% of Gross National Income (GNI), and in 2025, servicing the external debt (at concessional rates) and domestic debt (at 15.5% lending rates) could cost approximately USD 1–2 billion and TZS 5.31 trillion annually, respectively. These costs divert resources from productive investments, potentially straining fiscal space.

Impact on the Tanzania Shilling

The Tanzania Shilling’s stability in May 2025 is supported by several factors related to debt management and economic performance:

• Foreign Exchange Reserves: The Bank of Tanzania (BoT) reported foreign exchange reserves of USD 5,360 million in May 2025, covering 4.2 months of imports, which exceeds the national benchmark of 4 months. By March 2025, reserves had increased to USD 5,700 million, covering 3.8 months of imports, indicating sustained adequacy. These reserves provide a buffer against external shocks, reducing pressure on the Shilling and enabling the BoT to meet external debt obligations without significant currency devaluation.
• Export Performance: Robust export growth, particularly in gold (24.5% increase) and cashew nuts (141% increase), contributed to a 16.8% rise in exports to USD 16.7 billion in the year ending April 2025. Gold prices, at USD 2,983.25 per ounce in March 2025, further bolstered foreign exchange inflows, supporting the Shilling’s stability.
• Fiscal and Monetary Policy: The BoT maintained the Central Bank Rate (CBR) at 6% in April 2025 to safeguard economic stability amid global uncertainties. Prudent fiscal policy, with a fiscal deficit trending toward 3% of GDP, and stringent monetary policy have kept inflation low at 3.2% in May 2025, below the BoT’s 5% target. Low inflation reduces pressure on the Shilling by maintaining purchasing power and stabilizing import costs.

Despite these stabilizing factors, the Shilling experienced a 3.86% annual depreciation against the USD, trading at TZS 2,884.42 per USD in April 2025. This depreciation, though improved from the previous month, reflects pressures from external debt servicing and import demands. The high USD denomination of external debt (67.7%) exacerbates these pressures, as a depreciating Shilling increases the local currency cost of debt servicing by approximately TZS 2.37 trillion for the USD 34.1 billion external debt, based on a 2.6% depreciation rate.

Foreign Exchange Interventions and Their Role

The BoT’s interventions in the Interbank Foreign Exchange Market (IFEM) have been critical to maintaining the Shilling’s stability. In January 2025, the BoT sold USD 7 million to stabilize the exchange rate, preventing excessive depreciation amid a 1.37% month-on-month weakening of the Shilling (from TZS 2,420.84 to TZS 2,454.04 per USD). Similar interventions likely occurred in April and May 2025, as the document notes that seasonal inflows from cash crops and gold exports, combined with BoT actions, mitigated depreciation pressures. However, IFEM transactions declined significantly from USD 95.7 million in December 2024 to USD 16.3 million in January 2025, suggesting reduced market activity, possibly due to lower trade or investor participation.

These interventions, supported by adequate reserves, have ensured short-term stability, with the Shilling appreciating by 2.6% year-on-year from January 2024 to January 2025. The BoT’s ability to intervene is bolstered by improved current account performance, with the deficit narrowing by 31.1% to USD 2,021.5 million in the year ending January 2025, driven by strong export earnings and moderate import growth.

Potential Risks to Long-Term Shilling Stability

The composition of Tanzania’s external debt and reliance on commodity-driven inflows pose several risks to the Shilling’s long-term stability:

1. High USD Denomination of External Debt: With 67.7% of the USD 34.1 billion external debt denominated in US dollars (USD 23.1 billion), the Shilling is highly exposed to exchange rate fluctuations. A further depreciation, such as the 2.6% observed in 2024, increases debt servicing costs in local currency, potentially requiring the BoT to draw down reserves or increase borrowing, both of which could weaken the Shilling.
2. Commodity Price Volatility: Tanzania’s foreign exchange inflows heavily depend on gold and agricultural exports (e.g., cashew nuts, coffee). While gold prices were strong at USD 2,983.25 per ounce in March 2025, declines in coffee (-2%) and sugar (-1.5%) prices highlight vulnerability to global commodity market fluctuations. A downturn in gold prices or reduced export demand could strain reserves and pressure the Shilling.
3. Global Economic Uncertainties: The document highlights risks from global trade tariffs and geopolitical tensions, with the IMF projecting global growth at 2.8% in 2025. Rising global interest rates could increase external borrowing costs, particularly for non-concessional loans, further straining fiscal resources and reserves needed to stabilize the Shilling.
4. Fiscal Constraints and Crowding-Out Effects: High domestic borrowing (TZS 34.26 trillion) and lending rates (15.5%) crowd out private sector investment, weakening credit growth and economic diversification. This limits the economy’s ability to generate sustainable foreign exchange inflows, increasing reliance on volatile commodity exports and BoT interventions.
5. Climate and Structural Risks: Climate change could reduce agricultural output, a key export sector, with the World Bank estimating a potential 4% GDP growth reduction by 2050 due to climate impacts. Slow structural transformation and shallow financial markets further constrain Tanzania’s ability to diversify revenue sources, heightening Shilling vulnerability.

Mitigating Factors and Policy Measures

Tanzania’s authorities are implementing measures to mitigate these risks:

• Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) classifies Tanzania’s risk of external debt distress as moderate, with public debt at 35% of GDP in 2024, well below the 55% benchmark. Access to concessional financing from multilateral institutions reduces servicing costs compared to commercial loans.
• Revenue Mobilization: The government collected TZS 2,441 billion in April 2025, with tax revenue exceeding targets by 1.5% due to improved administration. The proposed TZS 56.49 trillion 2025/26 budget aims to enhance revenue through new taxes and levies, reducing reliance on borrowing.
• Export Diversification: Investments in infrastructure (48% of World Bank financing) and sectors like manufacturing and tourism (projected to drive 6% GDP growth in 2025) aim to reduce reliance on commodity exports.
• Monetary Policy: The BoT’s 6% CBR and interventions in the IFEM demonstrate proactive management of liquidity and exchange rate stability. Food reserves (587,062 tonnes, with 32,598 tonnes released) help stabilize food prices, supporting low inflation and Shilling stability.

Conclusion

In May 2025, Tanzania’s national debt developments and foreign exchange interventions have supported the Tanzania Shilling’s short-term stability, with reserves of USD 5,360 million (4.2 months of import cover) and export-driven inflows mitigating a 3.86% annual depreciation. BoT interventions in the IFEM, backed by strong gold and cashew nut exports, have prevented sharp fluctuations, maintaining the Shilling at TZS 2,884.42 per USD in April 2025. However, the high USD denomination of external debt (67.7% of USD 34.1 billion), reliance on volatile commodity exports, and global uncertainties pose risks to long-term stability. A potential further depreciation could increase debt servicing costs by TZS 2.37 trillion, straining reserves and fiscal space. Continued prudent fiscal and monetary policies, alongside diversification efforts, are critical to sustaining Shilling stability and supporting Tanzania’s projected 6% GDP growth in 2025.

Table: Key Economic Figures Impacting Tanzania Shilling Stability (May 2025)

Notes and Explanations

1. Debt Figures: The total national debt (TZS 107.70 trillion) and its breakdown into external (USD 34.1 billion) and domestic (TZS 34.26 trillion) components reflect Tanzania’s borrowing profile. The high USD denomination (67.7%) of external debt increases vulnerability to exchange rate fluctuations, as a 2.6% depreciation could raise servicing costs by approximately TZS 2.37 trillion (calculated as 2.6% of TZS 72.94 trillion).
2. Foreign Exchange Reserves: Reserves of USD 5,360 million in May 2025 and USD 5,700 million in March 2025 provide a buffer for debt servicing and exchange rate stabilization. The 4.2-month import cover exceeds the national benchmark, supporting short-term Shilling stability.
3. Exchange Rate: The Shilling’s depreciation to TZS 2,884.42 per USD reflects pressures from debt servicing and imports, mitigated by BoT interventions (e.g., USD 7 million sale in January 2025). The 2.6% appreciation from January 2024 to January 2025 indicates effective short-term management.
4. Export Performance: Strong export growth (USD 16.7 billion, up 16.8%) driven by gold and cashew nuts bolsters foreign exchange inflows, critical for reserve accumulation and Shilling stability. Gold’s high price (USD 2,983.25 per ounce) is a key factor but introduces volatility risk.
5. Current Account and Inflation: The narrowed current account deficit (USD 2,175 million) and low inflation (3.2%) reduce pressure on the Shilling, supporting its purchasing power and import affordability.
6. Debt Servicing Costs: Estimated based on historical data (2.89% of GNI in 2023) and domestic lending rates (15.5%). These costs strain fiscal resources, potentially requiring reserve drawdowns or further borrowing, which could weaken the Shilling.

This table provides a concise overview of the key figures driving the Tanzania Shilling’s stability in May 2025, highlighting the interplay between debt developments, foreign exchange interventions, and external sector performance, as well as underlying risks from debt composition and commodity reliance.

As of May 2025, Tanzania’s national debt reached TZS 107.70 trillion (approx. USD 39.88 billion), with external debt accounting for TZS 72.94 trillion (67.7%) and domestic debt at TZS 34.76 trillion (32.3%). The debt-to-GDP ratio stands at an estimated 47.8%, up from 46.9% in 2023, though projections suggest a decline to 40.84% by 2029 due to robust GDP growth. External debt is heavily exposed to currency risk, with 67.4% denominated in USD (approx. TZS 49.18 trillion), amplifying the cost of servicing amid a 3.82% depreciation of the shilling. Despite rising debt levels, the 2024 Debt Sustainability Analysis (DSA) by the IMF and government confirms that Tanzania’s debt remains sustainable, backed by USD 5.14 billion in reserves (covering 4.2 months of imports) and a narrowing fiscal deficit projected at 3.0% of GDP in 2025/26.

1. Overview of National Debt

• Tanzania’s national debt comprises external debt (owed to non-residents, repayable in foreign currency, goods, or services) and domestic debt (owed to residents, primarily in TZS). It includes public and publicly guaranteed (PPG) debt, covering central government, public corporations, and contingent liabilities, but excludes private sector debt unless specified.
• Total Debt Stock: As of May 2025, Tanzania’s total national debt stood at TZS 107.70 trillion (USD 39.88 billion at TZS 2,698.42/USD), with external debt at TZS 72.94 trillion (67.7%) and domestic debt at TZS 34.76 trillion (32.3%).
• Debt-to-GDP Ratio: The debt-to-GDP ratio was 46.9% in 2023 (), rising to an estimated 47.8% in 2024 (based on GDP of TZS 156.6 trillion in 2024, and projected debt growth). Forecasts suggest a decline to 40.84% by 2029 due to GDP growth outpacing debt accumulation.
• Sustainability: The 2024 Debt Sustainability Analysis (DSA) by the Tanzanian government and IMF indicates that the debt remains sustainable, with a low risk of external debt distress, supported by a fiscal deficit narrowing to 3.0% of GDP in 2025/26 and foreign exchange reserves covering 4.2 months of imports.

2. External Debt

• Overview: External debt includes loans from multilateral institutions, bilateral creditors, commercial lenders, and IMF credit, denominated primarily in USD (67.4%), Euro (16.6%), and Chinese Yuan (6.3%). It finances infrastructure (e.g., Standard Gauge Railway, Julius Nyerere Hydropower Plant), social services, and energy projects.
• May 2025 Figures:
  • Total External Debt: TZS 72.94 trillion (USD 27.04 billion), up from TZS 64 trillion in October 2022 () and TZS 53.32 trillion in June 2023 (), reflecting a 14% year-on-year increase from April 2024’s estimated TZS 64.1 trillion (based on USD 23.75 billion at TZS 2,698.42/USD).
  • Composition by Creditor:
    • Multilateral Institutions: ~45.7% (~TZS 33.33 trillion), led by World Bank-IDA (TZS 19.1 trillion in 2020/21,) and African Development Bank-ADF (TZS 5.5 trillion in 2020/21).
    • Commercial Creditors: ~30.5% (~TZS 22.25 trillion), including Credit Suisse AG (TZS 3.1 trillion in 2020/21,) and Standard Chartered Bank (TZS 1.6 trillion).
    • Bilateral Creditors: ~11.2% (~TZS 8.17 trillion), with Exim China at TZS 3.9 trillion in 2020/21.
    • Other: ~12.6% (~TZS 9.19 trillion), including IMF credit and other multilateral lenders.
  • Currency Composition:
    • USD: 67.4% (~TZS 49.18 trillion), increasing repayment costs due to TZS depreciation (3.82% in May 2025).
    • Euro: 16.6% (~TZS 12.11 trillion).
    • Chinese Yuan: 6.3% (~TZS 4.59 trillion).
    • Other Currencies: 9.7% (~TZS 7.08 trillion).
  • Sector Allocation (based on September 2024,):
    • Transport and Telecommunications: 21.5% (~TZS 15.68 trillion), e.g., SGR, port upgrades.
    • Social Welfare and Education: 20.8% (~TZS 15.17 trillion).
    • Energy and Mining: ~15% (~TZS 10.94 trillion), e.g., Julius Nyerere Hydropower Plant.
    • Agriculture: 5.1% (~TZS 3.72 trillion), low given its 25% GDP contribution.
    • Tourism: 1.6% (~TZS 1.17 trillion), underfunded despite 19.5% GDP contribution.
• Trends and Drivers:
  • Growth: External debt rose from TZS 47.07 trillion (USD 20.8 billion) in April 2022 () to TZS 72.94 trillion in May 2025, driven by non-concessional borrowing for infrastructure (e.g., SGR,) and increased disbursements (USD 31.43 billion disbursed, USD 5.04 billion undisbursed in September 2024,).
  • Key Projects: The 2025/26 budget allocates TZS 7.72 trillion for capital projects (), with external loans (TZS 8.68 trillion) funding energy (e.g., hydropower) and transport (e.g., SGR, Dar es Salaam port).
  • Currency Risk: The 67.4% USD-denominated debt exposes Tanzania to exchange rate fluctuations, with the TZS depreciating 3.82% annually in May 2025 (Document, Page 12). A 10% TZS depreciation could increase debt servicing by ~TZS 4.92 trillion.
• Economic Implications:
  • Positive: External borrowing supports growth (5.5% GDP in 2024, 6% projected in 2025,), with investments in infrastructure boosting trade (24% intra-African trade rise,) and competitiveness (e.g., AfCFTA,).
  • Risks: High USD exposure (67.4%) and rising commercial borrowing (30.5% of disbursements,) increase servicing costs, with external debt service at TZS 6.49 trillion in 2025/26 (). Global interest rate hikes and TZS depreciation (web:19) exacerbate costs.
  • Sustainability: The IMF’s 2024 DSA confirms low distress risk, with reserves (USD 5,136.6 million, 4.2 months import cover) and concessional loans (72.5% of external debt,) mitigating risks.elibrary.imf.orgelibrary.imf.org

3. Domestic Debt

• Overview: Domestic debt includes Treasury bonds (78.9%), Treasury bills (8.8%), and domestic arrears (1.1% of GDP in 2022/23,), held by commercial banks, pension funds, and the BoT. It finances recurrent spending (e.g., wages) and development projects.
• May 2025 Figures:
  • Total Domestic Debt: TZS 34.76 trillion (USD 12.88 billion), up from TZS 32.62 trillion in September 2024 and TZS 28.92 trillion in June 2023 (), a 6.5% increase from September 2024.
  • Composition by Creditor:
    • Commercial Banks: 28.8% (TZS 10.14 trillion, down from 29.7% in September 2024).
    • Pension Funds: 26.1% (TZS 9.20 trillion, down from 26.7%).
    • Bank of Tanzania: 20.3% (TZS 7.16 trillion, down from 20.5%).
    • Others (public institutions, private companies, individuals): 17.7% (TZS 6.24 trillion, up from 15.2%).
    • Insurance Companies: 5.2% (TZS 1.84 trillion, down from 9%).
    • BoT Special Funds: 1.8% (TZS 0.62 trillion, down from 2%).
  • Instrument Breakdown:
    • Treasury Bonds: 78.9% (TZS 27.43 trillion), preferred for long maturities.
    • Treasury Bills: 8.8% (TZS 3.06 trillion), used for short-term financing.
    • Domestic Arrears: ~1.1% of GDP (~TZS 1.72 trillion, based on 2024 GDP of TZS 156.6 trillion).
• Trends and Drivers:
  • Growth: Domestic debt rose from TZS 22.37 trillion in April 2022 () to TZS 34.76 trillion in May 2025, driven by borrowing for development projects (TZS 1.90 trillion in 2024/25,) and rollover of maturing securities (TZS 3.54 trillion).
  • Interest Rates: Treasury bill rates rose to 11.7% by March 2024 from 5.8% in March 2023, while Treasury bond yields (e.g., 20-year) increased by 2–2.9% (). Domestic debt servicing cost TZS 5.31 trillion in 2024/25.
  • Creditor Dynamics: Commercial banks (28.8%) and pension funds (26.1%) dominate, reflecting a robust domestic bond market. The BoT’s 20.3% share aligns with monetary policy (6% CBR).
• Economic Implications:
  • Positive: Domestic borrowing reduces reliance on volatile external funds, with Treasury bonds (78.9%) offering stable long-term financing (). The 2025/26 budget’s TZS 6.27 trillion domestic borrowing plan supports infrastructure.
  • Risks: Rising interest rates (11.7% for T-bills,) and arrears (TZS 1.72 trillion) strain fiscal space. High domestic debt (32.3% of total) crowds out private sector credit, with lending rates at 15.5%.
  • Sustainability: The domestic debt-to-GDP ratio (~22.2%, based on TZS 156.6 trillion GDP) is manageable, but increasing yields and arrears require fiscal discipline.

4. Economic Implications and Outlook

• Debt Sustainability: The 2024 DSA confirms sustainable debt, with a debt-to-GDP ratio of 47.8% in 2024, projected to decline to 40.84% by 2029 (). Reserves (USD 5,136.6 million, Document, Page 12) and concessional loans (72.5% of external debt,) mitigate risks. The fiscal deficit is projected at 3.0% of GDP in 2025/26.
• Economic Growth: Debt-funded projects (e.g., SGR, hydropower) drive 6% GDP growth in 2025 (), with exports (USD 16,994.7 million, Document, Page 14) and FDI (USD 3.7 billion in January–May 2025,) supporting stability.
• Risks: USD-denominated debt (67.4%) and TZS depreciation (3.82%, Document, Page 12) increase servicing costs. Low agriculture (5.1%) and tourism (1.6%) allocations () limit growth in key sectors. Geopolitical tensions and climate shocks (e.g., La Niña) pose risks.
• Outlook: The 2025/26 budget (TZS 56.49 trillion,) prioritizes revenue mobilization (16.7% of GDP) and infrastructure, with TZS 14.95 trillion in loans (TZS 8.68 trillion external, TZS 6.27 trillion domestic). Diversifying exports (e.g., manufacturing,) and reducing arrears will enhance sustainability

Tanzania National Debt - May 2025: Key Figures

Note: USD conversion based on exchange rate of TZS 2,698.42/USD (May 2025).

In April 2025, Tanzania’s external debt reached USD 35.51 billion, with the central government holding 76.7% (USD 27.22 billion) and the private sector 23.3% (USD 8.28 billion), including significant interest arrears of USD 1.63 billion. Funds were primarily allocated to transport and telecommunications (21.5%), balance of payments and budget support (20.2%), and social welfare and education (19.9%), reflecting priorities in infrastructure and human capital. The debt, predominantly denominated in USD (67.4%), exposes Tanzania to exchange rate risks, mitigated by USD 5.3 billion in reserves. The following table summarizes these key figures.

1. External Debt Stock by Borrowers (April 2025)

The external debt stock represents the total outstanding debt owed to foreign creditors, categorized by borrower type, providing insight into the distribution of debt obligations.

Key Figures:

• Total External Debt Stock: USD 35,505.9 million
• Breakdown by Borrower:

Analysis:

• Central Government Dominance: The central government accounts for 76.7% of the external debt stock (USD 27,224.0 million), with nearly all being disbursed outstanding debt (DOD) at USD 27,146.1 million. The low interest arrears (USD 78.0 million, 0.2%) indicate effective debt servicing, consistent with the Monthey Economic Review’s note of fiscal discipline and a fiscal deficit target below 3% of GDP. TICGL confirm the central government as the largest borrower, holding 78% of external debt in December 2019, a trend that persists into 2025.
• Private Sector Debt: The private sector’s share of 23.3% (USD 8,278.1 million) is significant, with USD 6,641.1 million in DOD and USD 1,637.0 million in interest arrears (4.6% of total debt). The high arrears suggest repayment challenges, possibly due to foreign exchange shortages, as the Tanzanian Shilling (TZS) depreciated by 3.9% annually to TZS 2,684.41/USD in April 2025 (previous responses). TICGL note private sector credit growth of 13.2% in February 2025, indicating active borrowing but potential liquidity constraints.
• Public Corporations: The negligible share of public corporations (USD 3.8 million, 0.0%) reflects minimal external borrowing by state-owned enterprises, likely due to reliance on central government funding or domestic financing. This aligns with TICGL noting public corporations’ 0.4% share in 2019.
• Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with the public debt-to-GDP ratio at 35% in 2024, well below the 55% benchmark. The total external debt of USD 35.51 billion in April 2025, up from USD 32.09 billion in January 2025, suggests rising borrowing but within sustainable limits, supported by gross official reserves of USD 5.3 billion (4.3 months of import cover, previous responses).

Insights:

• The central government’s dominant share (76.7%) reflects its role in financing infrastructure and budget deficits, as seen in the Monthey Economic Review’s mention of Treasury bond auctions (TZS 519.6 billion successful bids, previous responses). Low arrears (0.2%) indicate proactive debt management.
• The private sector’s high interest arrears (USD 1,637.0 million) highlight vulnerabilities to currency depreciation and foreign exchange constraints, consistent with the Monthey Economic Review’s note of lower seasonal foreign exchange inflows (previous responses).
• The negligible public corporation debt suggests a centralized borrowing strategy, reducing fiscal risks from state-owned enterprises.

2. Disbursed Outstanding Debt by Use of Funds (April 2025)

This breakdown shows how external debt funds are allocated across economic sectors, reflecting government priorities and economic development goals.

Key Figures:

• Total Disbursed Outstanding Debt (DOD): Included in the total external debt of USD 35,505.9 million.
• Breakdown by Sector/Use:

Analysis:

• Transport & Telecommunication (21.5%): The largest share reflects significant investments in infrastructure, such as the Standard Gauge Railway (SGR) and telecommunications upgrades, aligning with the Monthey Economic Review’s focus on flagship projects. TICGL note transport and telecom as the top sector for external debt allocation since 2019 (27%), indicating sustained priority.
• BoP & Budget Support (20.2%): This substantial share supports fiscal and macroeconomic stability, addressing balance of payments (BoP) needs and budget deficits. The Monthey Economic Review reports a March 2025 deficit of TZS 284.3 billion (previous responses), likely financed partly through external loans, as confirmed by IMF disbursements (USD 440.8 million under the ECF).
• Social Welfare & Education (19.9%): The high allocation to social sectors underscores Tanzania’s focus on human capital, aligning with the World Bank’s Country Partnership Framework (2025–2029) emphasizing education and health. This supports the Third Five-Year Development Plan’s goals for inclusive growth.
• Energy & Mining (13.6%): Investments in energy (e.g., Julius Nyerere Hydropower Project) and mining (e.g., gold, contributing USD 3.66 billion in exports) reflect strategic priorities for energy security and resource development. TICGL confirm this sector’s importance, with 15% of debt allocated in 2019.
• Smaller Sectors: Agriculture (5.1%), real estate (4.7%), industries (3.9%), finance & insurance (3.9%), and tourism (1.6%) receive smaller shares, indicating diversified but less prioritized investments. The Monthey Economic Review notes agricultural export growth, suggesting some debt supports this sector’s productivity.

Insights:

• The focus on hard infrastructure (transport, telecom, energy) supports Tanzania’s Vision 2050 goals of structural transformation and 8% GDP growth by 2026, as infrastructure drives economic activity (5.6% GDP growth in 2024).
• The significant BoP and budget support (20.2%) reflects reliance on external financing for fiscal stability, consistent with the IMF’s ECF and RSF programs.
• The 19.9% allocation to social welfare and education aligns with efforts to close human capital gaps, as highlighted by the IMF’s call for increased social spending.

3. Disbursed Outstanding Debt by Currency Composition (April 2025)

The currency composition of external debt indicates exposure to exchange rate risks and borrowing TICGL.

Key Figures:

• Breakdown by Currency:

Analysis:

• US Dollar Dominance (67.4%): The USD’s dominant share exposes Tanzania to exchange rate risks, as the TZS depreciated by 3.9% annually to TZS 2,684.41/USD in April 2025 (previous responses). TICGL confirm USD dominance at 68.1% in January 2025, consistent with historical trends (68.9% in 2023). This reflects borrowing from multilateral institutions (e.g., IMF, World Bank) and commercial creditors, who account for 53.9% and 36.3% of external debt, respectively.
• Euro (16.8%): The significant Euro share indicates borrowing from European institutions or bilateral creditors (e.g., EU partners). The stable Euro share (16.1% in January 2025) suggests consistent European financing, likely for infrastructure and social projects.
• Chinese Yuan (6.3%): The Yuan’s share reflects China’s role as a key bilateral creditor, likely tied to infrastructure projects like the SGR. TICGL note China as a top FDI source, with Yuan-denominated loans growing in importance.
• Other Currencies (9.5%): This includes currencies like the Japanese Yen or multilateral basket currencies (e.g., IMF’s SDRs), reflecting diversified borrowing. The Monthey Economic Review’s mention of reserves (USD 5.3 billion, previous responses) supports Tanzania’s capacity to manage multi-currency debt obligations.

Insights:

• The USD’s 67.4% share heightens vulnerability to TZS depreciation, as seen in the 1.3% monthly depreciation from March to April 2025 (previous responses). The BoT’s intervention (USD 6.25 million sold in April 2025) mitigates this risk (previous responses).
• The Euro and Yuan shares indicate diversified creditor relationships, reducing reliance on a single currency but requiring careful debt management to avoid currency mismatches.
• The Monthey Economic Review’s stable reserves (4.3 months of import cover) and IMF support provide a buffer against currency-related risks.

Conclusion

Tanzania’s external debt in April 2025, totaling USD 35.51 billion, is predominantly held by the central government (76.7%, USD 27.22 billion), with the private sector contributing 23.3% (USD 8.28 billion), including significant interest arrears (USD 1.63 billion). Funds are primarily allocated to transport and telecommunications (21.5%), BoP and budget support (20.2%), and social welfare and education (19.9%), reflecting priorities in infrastructure and human capital. The debt’s currency composition, dominated by the USD (67.4%), followed by the Euro (16.8%) and Yuan (6.3%), exposes Tanzania to exchange rate risks, mitigated by reserves of USD 5.3 billion and BoT interventions. The debt profile supports growth (projected at 6% in 2025) and fiscal stability, with a moderate risk of distress per the IMF’s DSA.

The following table summarizes these key figures.

The 8% depreciation of the Tanzanian shilling (TZS) in 2023 significantly impacts Tanzania’s external debt servicing, particularly since 68.9% of its external debt is denominated in USD. With Tanzania’s external debt reaching 34,056 USD Million (approximately TZS 91.29 trillion at an exchange rate of TZS 2,677/USD in March 2025), the depreciation increases the local currency cost of servicing USD-denominated debt, straining fiscal resources and limiting budgetary space for development priorities. Below, I explore the potential risks of this depreciation, supported by figures and calculations, focusing on debt servicing costs, fiscal space, and broader economic implications.

1. Increased Debt Servicing Costs in Local Currency

The 8% shilling depreciation in 2023 (from approximately TZS 2,315/USD at the end of 2022 to TZS 2,500/USD by the end of 2023) directly raises the cost of servicing USD-denominated debt in local currency terms. Since 68.9% of Tanzania’s external debt is USD-denominated, this affects a significant portion of the debt stock.

• USD-Denominated Debt:
  • Total external debt (Mar 2025): 34,056 USD Million.
  • USD-denominated portion: 68.9% = 34,056 × 0.689 = 23,465 USD Million (approximately TZS 62.83 trillion at TZS 2,677/USD in Mar 2025).
  • In 2022 (pre-depreciation, TZS 2,315/USD): 23,465 USD Million = TZS 54.32 trillion.
  • Post-8% depreciation (TZS 2,500/USD in 2023): 23,465 USD Million = TZS 58.66 trillion.
  • Increase in servicing cost: TZS 58.66 trillion - TZS 54.32 trillion = TZS 4.34 trillion (approximately USD 1,736 Million at TZS 2,500/USD) due to depreciation alone for 2023.
• Annual Debt Servicing:
  • External debt service is estimated at USD 1–2 billion annually (based on 2024/25 projections), with USD-denominated debt servicing at USD 689–1,378 Million (68.9% of USD 1–2 billion).
  • Pre-depreciation (2022): USD 1 billion = TZS 2.315 trillion; USD 1.378 billion = TZS 3.19 trillion.
  • Post-depreciation (2023): USD 1 billion = TZS 2.5 trillion; USD 1.378 billion = TZS 3.45 trillion.
  • Additional cost: TZS 185–260 billion (USD 74–104 Million) annually for USD-denominated debt servicing due to the 8% depreciation.

This increased cost directly reduces fiscal space, as debt servicing already absorbs ~40% of government expenditures (approximately TZS 19.74 trillion of the TZS 49.35 trillion FY 2024/25 budget).

2. Strain on Fiscal Space

The higher local currency cost of debt servicing due to depreciation limits Tanzania’s ability to fund critical sectors like health, education, and infrastructure, exacerbating fiscal pressures.

• Budget Context:
  • FY 2024/25 budget: TZS 49.35 trillion (USD 18.4 billion at TZS 2,677/USD).
  • Tax revenue: TZS 29.41 trillion (59.6%), with the deficit (TZS 19.94 trillion) financed by borrowing, including external loans.
  • Debt servicing (external + domestic): TZS 5.31 trillion for domestic debt and USD 1–2 billion (TZS 2.68–5.35 trillion) for external debt in 2024/25.
  • The additional TZS 185–260 billion from depreciation increases the external debt service burden by 3.5–4.9%, further crowding out development spending.
• Impact on Social Spending:
  • Health and education budgets in 2024/25 were TZS 1.4 trillion (health) and TZS 4.2 trillion (education), or 2.8% and 8.5% of the budget, respectively.
  • The additional TZS 185–260 billion in debt servicing costs is equivalent to 13–19% of the health budget or 4–6% of the education budget, potentially forcing cuts or reallocations.
• Fiscal Deficit: The fiscal deficit is projected to rise to 4% of GDP in FY 2025/26 (from 3.8% in 2022/23), partly due to increased servicing costs. This may necessitate further borrowing, creating a potential debt spiral.

3. Pressure on Foreign Exchange Reserves

The shilling’s depreciation exacerbates Tanzania’s foreign exchange constraints, as servicing USD-denominated debt requires more USD, straining reserves.

• Foreign Exchange Reserves:
  • Reserves in 2025: USD 5.7 billion, covering 3.8 months of imports (below the recommended 4 months for low-income countries).
  • Annual external debt service (USD 1–2 billion) consumes 17.5–35% of reserves, and the 8% depreciation increases USD demand by USD 74–104 Million annually.
  • Declining export revenues (e.g., -2% for coffee, -1.5% for sugar in 2023) and tourism receipts (USD 2.6 billion in 2023, down from pre-COVID peaks) limit reserve replenishment.
• Exchange Rate Risk:
  • With 67.7% of external debt in USD (slightly adjusted from 68.9% for 2025 data), a further 2.6% depreciation in 2024/25 adds TZS 1.62 trillion (USD 605 Million) to the USD-denominated debt’s local currency value.
  • If depreciation persists (e.g., another 5% in 2025 to TZS 2,813/USD), the USD-denominated debt (23,465 USD Million) would cost TZS 66.02 trillion, a further increase of TZS 3.19 trillion from 2023 levels.

4. Broader Economic Risks

The shilling’s depreciation amplifies economic vulnerabilities, particularly in the context of global and domestic pressures.

• Inflationary Pressure:
  • Depreciation fuels import-driven inflation, with Tanzania’s inflation rate rising to 4.1% in 2023 from 3.8% in 2022. This increases the cost of imported goods (e.g., fuel, machinery), indirectly raising project costs for debt-financed infrastructure like the SGR (USD 7.6 billion).
  • Higher inflation erodes purchasing power, potentially increasing domestic borrowing to fund social programs, further straining the budget.
• Global Economic Slowdown:
  • The IMF’s 2025 global growth forecast of 2.8% and rising global interest rates increase borrowing costs for non-concessional loans (36.3% of debt, USD 12.4 billion). This compounds the impact of depreciation on debt servicing.
• Election-Related Spending:
  • The 2025 general elections may drive populist spending, increasing the fiscal deficit and reliance on external borrowing. The FY 2025/26 budget projects a 13.4% spending increase to TZS 57.04 trillion, potentially exacerbating debt servicing pressures.

5. Mitigating Factors

Despite these risks, Tanzania’s debt profile remains sustainable, mitigating some impacts of depreciation:

• Concessional Loans: 53.9% of external debt (USD 18.3 billion) is from multilateral institutions with low interest rates (e.g., 0.75–2% for World Bank loans), reducing servicing costs compared to commercial loans (5–7% interest).
• Low Debt Distress Risk: The IMF’s 2024 Debt Sustainability Analysis classifies Tanzania’s external debt distress risk as low, with a debt-to-GDP ratio of ~32–35% (2025), below the 55% threshold for low-income countries.
• Economic Growth: Projected GDP growth of 6% in 2025 (vs. 5.6% in 2024) and a GDP of ~USD 100 billion help absorb debt servicing costs, maintaining sustainability.

Quantitative Summary

• USD-Denominated Debt (2025): 23,465 USD Million (68.9% of 34,056 USD Million).
• Servicing Cost Increase (2023): TZS 4.34 trillion (USD 1,736 Million) due to 8% depreciation (TZS 2,315 to TZS 2,500/USD).
• Annual Servicing Impact: Additional TZS 185–260 billion (USD 74–104 Million) for USD-denominated debt.
• Fiscal Space Impact: Equivalent to 13–19% of health budget or 4–6% of education budget in FY 2024/25.
• Reserve Pressure: Debt service consumes 17.5–35% of USD 5.7 billion reserves, worsened by depreciation-driven USD demand.

Conclusion

The 8% shilling depreciation in 2023 increases Tanzania’s USD-denominated debt servicing costs by TZS 4.34 trillion for the 23,465 USD Million debt stock, adding TZS 185–260 billion annually to servicing costs. This strains fiscal space, consuming ~40% of government expenditures and limiting social and development spending. Foreign exchange reserve pressures and inflationary risks further complicate the economic outlook, though concessional loans and strong GDP growth (6% in 2025) mitigate distress risks. Continued depreciation or global economic challenges could exacerbate these risks, necessitating prudent fiscal and monetary policies.

This table quantifies the impact of the 8% shilling depreciation in 2023 on Tanzania’s external debt servicing, highlighting increased costs (TZS 4.34 trillion for USD-denominated debt), fiscal strain (crowding out 13–19% of health spending), and reserve pressures (17.5–35% of reserves).

Notes:

• Depreciation Impact: The 8% shilling depreciation (TZS 2,315 to TZS 2,500/USD in 2023) increases the local currency value of 23,465 USD Million USD-denominated debt by TZS 4.34 trillion (USD 1,736 Million), raising annual servicing costs by TZS 185–260 billion (USD 74–104 Million).
• Fiscal Space: Additional servicing costs represent 13–19% of the TZS 1.4 trillion health budget and 4–6% of the TZS 4.2 trillion education budget, limiting social spending.
• Reserves Pressure: Debt service (USD 1–2 billion) consumes 17.5–35% of USD 5.7 billion reserves, with depreciation adding USD 74–104 Million in USD demand.
• Exchange Rates: 2022: TZS 2,315/USD; 2023: TZS 2,500/USD (post-8% depreciation); Mar 2025: TZS 2,677/USD (includes 2.6% depreciation in 2024/25).
• Mitigating Factors: Concessional loans (53.9%, USD 18.3 billion) and a low debt distress risk (per IMF 2024 DSA) offset some risks, with a ~32–35% debt-to-GDP ratio.

Tanzania’s external debt has surged from 2,469.7 USD Million in December 2011 to 34,056 USD Million in March 2025, representing a 13.8-fold increase over 14 years, or an average annual growth rate of approximately 20.8%. This dramatic rise reflects a combination of economic, infrastructural, and policy drivers that have fueled borrowing to support Tanzania’s development ambitions. Below, I outline the key factors driving this growth, supported by figures and data from available sources, including the Bank of Tanzania and other economic analyses.

1. Economic Drivers

Tanzania’s economic growth and structural transformation goals have necessitated significant external borrowing to bridge fiscal deficits and finance development projects. Key economic factors include:

• Fiscal Deficits and Revenue Shortfalls: Tanzania’s fiscal deficit has consistently required external financing, as tax revenues (e.g., 13% of GDP in 2024) remain low compared to regional peers. The fiscal deficit was 3.8% of GDP in 2022/23, up from 3.4% in 2021/22, driven by increased public spending. To cover this, external debt rose to USD 34.1 billion (TZS 91.29 trillion at TZS 2,677/USD) by March 2025, with 78.3% held by the central government.
• Foreign Exchange Needs: A 2.6% shilling depreciation in 2024/25 and an 8% depreciation in 2023 increased the cost of servicing USD-denominated debt (67.7% of external debt, or USD 23.1 billion). Declining export revenues from commodities like coffee (-2%) and sugar (-1.5%) strained foreign exchange reserves, necessitating borrowing to maintain import cover (e.g., USD 5.7 billion, 3.8 months of imports in 2025).
• Economic Growth Ambitions: Tanzania’s GDP grew from USD 33.2 billion in 2011 to USD 75.5 billion in 2022, with projections of 5.6% growth in 2024 and 6% in 2025. This growth, driven by agriculture, manufacturing, and tourism, required external financing to sustain investments in productive sectors. For example, foreign direct investment (FDI) rose to USD 922 million in 2021, supporting projects like the Kabanga Nickel Project, which increased borrowing needs.

2. Infrastructural Drivers

Tanzania’s ambitious infrastructure agenda has been a primary driver of external debt growth, with significant borrowing to fund transformative projects in transport, energy, and urban development. Key projects include:

• Standard Gauge Railway (SGR): The SGR, a flagship project to connect Dar es Salaam to inland regions and neighboring countries, has been a major contributor to debt growth. The project’s cost, estimated at USD 7.6 billion for multiple phases, has been largely financed through external loans, particularly from China and multilateral institutions.
• Energy Infrastructure: Investments in energy, such as the 532 km gas pipeline from Mnazi Bay to Dar es Salaam (completed in 2015, costing USD 1.2 billion) and plans to increase electricity capacity to 10,000 MW by 2025, have driven borrowing. In 2013, 49.7% of electricity came from natural gas, and projects like the Ntorya gas field (projected to produce 40 million cubic feet/day by 2025) required external financing.
• Port and Transport Upgrades: The modernization of Dar es Salaam Port, including a USD 250 million investment by DP World (UAE) in 2023, and the East African Crude Oil Pipeline (EACOP, USD 5 billion), have increased external debt. These projects aim to position Tanzania as a regional trade hub.
• World Bank Financing: As of March 2025, 48% of the World Bank’s USD 10 billion portfolio in Tanzania supports infrastructure, including roads, railways, and power projects, significantly contributing to the external debt stock.

3. Policy Drivers

Government policies aimed at economic diversification, poverty reduction, and structural reforms have shaped borrowing patterns, with a focus on concessional and non-concessional loans. Key policy drivers include:

• Concessional Borrowing from Multilateral Institutions: Multilateral creditors account for 53.9% of external debt (USD 18.3 billion) as of January 2025, with the World Bank, IMF, and African Development Bank providing concessional loans. In 2021, the IMF provided USD 567.25 million in emergency assistance for COVID-19 recovery, and the 2022–2025 Extended Credit Facility (ECF) program unlocked USD 150 million in 2025 to support fiscal sustainability.
• Non-Concessional Borrowing: External non-concessional borrowing has risen to finance infrastructure, accounting for 36.3% of external debt (USD 12.4 billion) in January 2025. Commercial creditors, including Chinese loans for projects like the SGR, have driven debt growth, increasing exposure to higher interest rates.
• Vision 2025 and Development Goals: Tanzania’s Vision 2025 aims for a GDP growth rate of 8% annually, requiring investments in infrastructure, education, and health. The FY 2024/25 budget of TZS 49.35 trillion (USD 18.4 billion) included TZS 29.41 trillion (59.6%) from tax revenue, with the deficit financed by external borrowing. The planned 13.4% spending increase to TZS 57.04 trillion in FY 2025/26 further drives borrowing.
• Business Environment Reforms: Policies to improve the investment climate, such as tax code revisions and the creation of the Tanzania Investment Centre, have attracted FDI but also increased borrowing for co-financed projects. For example, Chinese investments in the Mchuchuma coal and Liganga iron ore projects (USD 3 billion) in 2011 required complementary government borrowing.

Quantitative Insights

• Debt Growth Trajectory:
  • 2011: USD 2,469.7 million (Bank of Tanzania).
  • 2019: USD 22.4 billion (40% of GDP, 6% YoY increase from 2018).
  • 2023: USD 32,090 million (disbursed, January 2025).
  • March 2025: USD 34,056 million, a 6.1% increase from January 2025 (USD 32,090 million).

• Debt-to-GDP Ratio: Rose from 32.68% in 2013 to 46.87% in 2023 (total public debt), with external debt at ~32-35% of GDP in 2025, assuming a GDP of ~USD 100 billion.
• Debt Composition (January 2025):
  • Multilateral: 53.9% (USD 18.3 billion).
  • Commercial: 36.3% (USD 12.4 billion).
  • Bilateral: 4.2% (USD 1.4 billion).
  • Export Credit: 5.6% (USD 1.9 billion).
• Debt Servicing: Absorbs ~40% of government expenditures, with external debt service estimated at USD 1-2 billion annually and domestic at TZS 5.31 trillion in 2025.

Challenges and Risks

• Exchange Rate Risks: With 67.7% of external debt in USD, the 2.6% shilling depreciation in 2024/25 increases servicing costs by approximately TZS 2.38 trillion for the USD-denominated portion.
• Global Economic Pressures: The IMF’s global growth forecast of 2.8% for 2025 and rising interest rates elevate borrowing costs, particularly for non-concessional loans.
• Fiscal Space Constraints: High debt servicing limits investments in social sectors, with 3% of GDP spent on debt servicing in 2024.
• COVID-19 Impact: Emergency borrowing, including USD 567.25 million from the IMF in 2021, contributed to debt spikes to address health and economic costs.

Conclusion

The 13.8-fold increase in Tanzania’s external debt from 2,469.7 USD Million in 2011 to 34,056 USD Million in March 2025 is driven by economic needs (fiscal deficits, foreign exchange shortages), major infrastructure projects (SGR, energy, ports), and policy choices favoring concessional and non-concessional borrowing to achieve Vision 2025 goals. While debt remains sustainable (moderate risk per IMF DSA), with a debt-to-GDP ratio of ~32-35%, challenges like shilling depreciation and high debt servicing costs underscore the need for prudent fiscal management and revenue mobilization.

This table consolidates the key figures driving Tanzania’s external debt growth, highlighting economic factors (fiscal deficits, GDP growth), infrastructure projects (SGR, energy, ports), and policy decisions (concessional and non-concessional borrowing). The 13.8-fold increase reflects Tanzania’s development ambitions, balanced by a sustainable debt-to-GDP ratio of ~32-35% in 2025.

Notes:

• Debt Growth: From 2,469.7 USD Million (2011) to 34,056 USD Million (Mar 2025), driven by fiscal deficits, infrastructure, and policy goals.
• Infrastructure Costs: SGR (USD 7.6 billion), gas pipeline (USD 1.2 billion), and port upgrades (USD 250 million) are major contributors.
• Debt Composition: Multilateral (53.9%, USD 18.3 billion), commercial (36.3%, USD 12.4 billion), bilateral (4.2%, USD 1.4 billion), export credit (5.6%, USD 1.9 billion) as of Jan 2025.
• Economic Context: GDP growth from USD 33.2 billion (2011) to ~USD 100 billion (2025) supports debt sustainability, but shilling depreciation (8% in 2023, 2.6% in 2024/25) increases servicing costs.
• Policy Impact: Vision 2025 and FY 2024/25 budget (TZS 49.35 trillion, USD 18.4 billion) drive borrowing, with 59.6% funded by taxes and the rest by loans.

Tanzania’s external debt has shown a significant upward trend, reaching 35,039.8 USD Million in February 2025, up from 34,551.4 USD Million in January 2025, according to the Bank of Tanzania. This marks a month-on-month increase of approximately 488.4 USD Million or 1.41%. The external debt has grown steadily, averaging 20,062.78 USD Million from 2011 to 2025, with a record high of 34,936.5 USD Million in February 2025 and a low of 2,469.7 USD Million in December 2011. This reflects a substantial increase over the years, driven by investments in infrastructure, energy, and other development projects.

Tanzania’s External Debt in Context

Tanzania’s external debt is a critical indicator of its economic position within Africa and East Africa. To provide a comprehensive understanding, let’s compare Tanzania’s external debt to other African and East African countries, analyze its debt-to-GDP ratio, and explore the factors contributing to its debt profile.

Comparison with African Countries

The provided data lists external debt for several African countries, with figures converted to USD Million where necessary for comparison. Using the most recent data from the table and supplementing with additional context:

• South Africa: 168,379 USD Million (Dec 2024) – The highest external debt in the dataset, reflecting South Africa’s position as one of Africa’s largest economies.
• Egypt: 155,204 USD Million (Sep 2024) – Another major economy with significant external borrowing, driven by infrastructure and energy projects.
• Angola: 50,260 USD Million (Dec 2023) – High debt due to oil-related investments and reliance on external financing.
• Nigeria: 42,900 USD Million (Sep 2024) – A major oil-producing nation with considerable external debt, though lower than Tanzania’s relative to GDP.
• Tanzania: 34,056 USD Million (Mar 2025) – Ranks among the top tier of African countries in terms of external debt, reflecting its ambitious development agenda.
• Ghana: 28,300 USD Million (Dec 2024) – Lower than Tanzania, but Ghana faces higher debt distress risks due to a higher debt-to-GDP ratio.
• Rwanda: 7,916 USD Million (Dec 2023) – An East African neighbor with significantly lower external debt than Tanzania.
• Kenya: 5,057 KES Billion (approx. 37,173 USD Million at an exchange rate of 1 KES = 0.00735 USD, Dec 2024) – Comparable to Tanzania, but slightly higher, reflecting Kenya’s larger economy.
• Burundi: 1,873,263 BIF Million (approx. 650 USD Million at an exchange rate of 1 BIF = 0.000347 USD, Dec 2024) – Significantly lower, reflecting Burundi’s smaller economy.

Tanzania’s external debt of 34,056 USD Million (Mar 2025) places it among the top 10 African countries for external debt, behind economic giants like South Africa, Egypt, and Nigeria, but ahead of smaller economies like Rwanda and Burundi. This reflects Tanzania’s growing economic ambitions but also its increasing reliance on external financing.

Comparison with East African Community (EAC) Countries

Within East Africa, Tanzania’s external debt is significant but not the highest. Key EAC countries include:

• Kenya: Approximately 37,173 USD Million (Dec 2024) – Slightly higher than Tanzania, driven by large infrastructure projects like the Standard Gauge Railway (SGR).
• Tanzania: 34,056 USD Million (Mar 2025) – A close second, with debt growth tied to infrastructure, energy, and mining investments.
• Rwanda: 7,916 USD Million (Dec 2023) – Much lower, reflecting Rwanda’s smaller economy and more cautious borrowing.
• Uganda: Data not provided, but recent estimates suggest around 20,000 USD Million (2023), lower than Tanzania due to a less diversified economy.
• Burundi: 650 USD Million (Dec 2024) – Minimal debt, constrained by its small economy and political instability.

Tanzania’s external debt is comparable to Kenya’s, positioning it as a major borrower in the EAC. However, its debt-to-GDP ratio and risk profile are more favorable than some peers, as discussed below.

Debt-to-GDP Ratio and Sustainability

Tanzania’s external debt-to-GDP ratio provides insight into its debt sustainability. In 2023, Tanzania’s public debt (including external and domestic) was 46.87% of GDP, with external debt accounting for approximately 70.4% of total public debt (2023 data). Assuming a nominal GDP of 78 USD Billion in 2023 (projected to grow to 105.1 USD Billion in 2022, adjusting for inflation and growth), the external debt of 34,056 USD Million in March 2025 translates to roughly 32-35% of GDP, depending on GDP estimates for 2025.

• Comparison with African Peers:
  • South Africa: External debt at 168,379 USD Million with a GDP of approximately 405 USD Billion (2023) yields a debt-to-GDP ratio of ~41.6%, higher than Tanzania.
  • Egypt: 155,204 USD Million with a GDP of 393 USD Billion (2023) results in a ratio of ~39.5%, also higher.
  • Nigeria: 42,900 USD Million with a GDP of 362 USD Billion (2023) gives a ratio of ~11.8%, significantly lower due to Nigeria’s larger economy.
  • Ghana: 28,300 USD Million with a GDP of 76 USD Billion (2023) results in a ratio of ~37.2%, indicating higher distress risk.
  • Rwanda: 7,916 USD Million with a GDP of 14 USD Billion (2023) yields a ratio of ~56.5%, much higher than Tanzania, indicating greater vulnerability.
• East African Context:
  • Kenya: 37,173 USD Million with a GDP of 112 USD Billion (2023) results in a ratio of ~33.2%, similar to Tanzania.
  • Rwanda: As noted, ~56.5%, significantly higher.
  • Burundi: 650 USD Million with a GDP of 2.6 USD Billion (2023) yields a ratio of ~25%, lower but less relevant due to its small economy.

Tanzania’s external debt-to-GDP ratio of ~32-35% is moderate compared to peers, and its public debt-to-GDP ratio of 46.87% (2023) is below the regional benchmark of 55% for low-income countries, indicating sustainable debt levels. The IMF’s 2024 Debt Sustainability Analysis (DSA) classifies Tanzania’s risk of external debt distress as low, supported by prudent fiscal policies and concessional borrowing.

Composition of Tanzania’s External Debt

As of December 2019, Tanzania’s external debt was USD 22.4 Billion (40% of GDP), with the central government holding 78%, the private sector 21%, and public corporations 0.4%. The debt is primarily owed to:

• Multilateral institutions: 46% (e.g., World Bank, IMF, African Development Bank)
• Commercial sources: 34%
• Export credit: 11%
• Bilateral institutions: 9% (e.g., China, India).

By currency, 68.9% of external debt is denominated in USD, followed by the Euro, which reduces exposure to currency fluctuations but increases repayment burdens when the Tanzanian shilling depreciates (8% depreciation in 2023).

Drivers of External Debt

Tanzania’s external debt growth is driven by:

1. Infrastructure Investments: Large-scale projects like the Standard Gauge Railway (SGR), Dar es Salaam Port expansion, and energy projects (e.g., gas pipeline from Mnazi Bay to Dar es Salaam) require significant borrowing.
2. Economic Diversification: Investments in mining (gold, nickel, graphite), manufacturing, and tourism to reduce reliance on agriculture.
3. COVID-19 Response: Non-concessional borrowing during the pandemic to support the economy, increasing debt levels.
4. Foreign Direct Investment (FDI): FDI rose to USD 922 Million in 2021, with projects like the Kabanga Nickel Project requiring external financing.

Risks and Challenges

• Foreign Exchange Shortages: The Tanzanian shilling’s 8% depreciation in 2023 and 0.5% in 2022 increased debt servicing costs in local currency.
• Election-Related Pressures: The 2025 elections may increase fiscal spending, potentially pausing fiscal consolidation efforts.
• Global Economic Slowdown: Reduced tourism receipts and export demand could strain debt repayment capacity.
• Debt Service Burden: Debt service absorbs ~40% of government expenditures, limiting fiscal space for social spending.

Position in Africa and East Africa

• Africa: Tanzania ranks among the top 10 African countries for external debt, behind South Africa, Egypt, and Nigeria, but its moderate debt-to-GDP ratio and low distress risk make it a relatively stable borrower. Its diversified economy (agriculture, mining, tourism) and stable political environment enhance its attractiveness for FDI, unlike higher-risk countries like Ghana or Zambia.
• East Africa: Tanzania is a close second to Kenya in external debt, with a stronger growth outlook (6% projected GDP growth in 2025 vs. Kenya’s 5%). Its lower debt-to-GDP ratio compared to Rwanda and stable macroeconomic policies position it as a regional economic powerhouse, though Kenya’s larger economy gives it a slight edge.

Conclusion

Tanzania’s external debt of 34,056 USD Million in March 2025 reflects its ambitious development agenda but remains sustainable, with a debt-to-GDP ratio of ~32-35% and low distress risk. Compared to African peers, Tanzania’s debt is moderate, and within East Africa, it competes closely with Kenya while outperforming smaller economies like Rwanda and Burundi. Continued fiscal discipline, concessional borrowing, and economic diversification will be key to maintaining debt sustainability.

This table highlights Tanzania’s external debt of 34,056 USD Million (Mar 2025) as moderate within Africa, comparable to Kenya in East Africa, and sustainable relative to its GDP. Its debt-to-GDP ratio of ~32-35% is lower than peers like Rwanda (56.5%) and Angola (59.1%), positioning Tanzania favorably in terms of debt sustainability.

Notes:

• Tanzania: External debt increased from 34,551.4 USD Million (Jan 2025) to 35,039.8 USD Million (Feb 2025), with 34,056 USD Million reported for Mar 2025. Debt-to-GDP ratio estimated at 32-35% based on projected GDP growth to ~100 USD Billion by 2025.
• Kenya: Converted from 5,057 KES Billion using 1 KES = 0.00735 USD (Dec 2024).
• Burundi: Converted from 1,873,263 BIF Million using 1 BIF = 0.000347 USD (Dec 2024).
• GDP Estimates: Sourced from IMF/World Bank 2023 data, adjusted for inflation/growth where necessary.
• Debt-to-GDP Ratio: Calculated as (External Debt / GDP) * 100. Ratios are approximate due to varying reference dates and GDP projections.

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).

In 2024, global debt reached a staggering USD 250 trillion, equivalent to 237% of global GDP, according to the IMF’s 2024 Global Debt Monitor. Although this marks a slight decline from the previous year, the level remains significantly higher than the pre-pandemic ratio of 229% in 2019. The overall decline in global debt is mainly attributed to a drop in private debt, which fell by 2.8 percentage points to 143% of GDP, amounting to over USD 150 trillion. This includes household debt at 54% of GDP and non-financial corporate debt at 90% of GDP. Meanwhile, public debt rose by 2 percentage points to 94% of GDP, reaching USD 98 trillion, reflecting a return to its upward trajectory after the pandemic. The data highlights diverging debt trends across countries—with reductions in private debt seen in advanced economies and the US, while China and low-income developing countries experienced significant increases in both public and private debt levels.

Global Debt Overview (2024)

• Total Global Debt (Public + Private):
  📊 USD 250 trillion
  📉 237% of global GDP (down from 238% in 2022/2023)
  ⚠️ Still 8 percentage points above pre-pandemic level (229% in 2019)

Private Debt

• Total Private Debt:
  💵 > USD 150 trillion
  📉 143% of GDP (↓ 2.8 percentage points from 2022/2023)
  ✅ Now below 2019 level (pre-COVID)
• Composition:
  • Households: 📉 54% of GDP
  • Non-financial corporates: 📉 90% of GDP
• By Country:
  • 🇺🇸 United States:
    • ↓ 6 percentage points to 150% of GDP
    • Household ↓ 3.4%, Corporate ↓ 2.5%
  • 🇨🇳 China:
    • ↑ 6.5 percentage points to 205% of GDP
    • Corporate ↑ 5%, Household ↑ 2%
  • 🌍 Emerging Markets (excl. China): Stable at 69% of GDP
  • 🌐 Advanced Economies (excl. US):
    • ↓ 6% to 168% of GDP

Public Debt

• Total Public Debt:
  💰 USD 98 trillion
  📈 Increased by 2 percentage points to 94% of GDP
  ↪️ Returned to pre-pandemic rising trend
• By Country:
  • 🇺🇸 US: ↑ to 123% of GDP
  • 🇨🇳 China: ↑ to 84% of GDP
  • 🌍 EMDEs (excluding China): ↑ to 57% of GDP
  • 🌐 Advanced Economies (excl. US): ↓ to 103% of GDP
  • 🌍 Low-Income Developing Countries (LIDCs):
    • ↑ to 50% of GDP (new high)
    • Private debt ↓ to 38%, but still 4% higher than in 2019

What Drove the Decline in Private Debt?

1. Lower Future Growth Expectations
   ➤ Global 5-year growth forecast fell from 2.7% (2022) to 2.2% (2023/2024)
2. Inflation Surprises
   ➤ Helped reduce real debt ratios:
   • Emerging Markets: Surprise inflation fell from 6% → 2.3%
   • Advanced Economies: Fell from 5.5% → 1.5%
3. Eased Economic Uncertainty (except in the US due to elections)

📌 Notable Highlights

• China has the highest debt-to-GDP ratio globally: 289% of GDP
• The US and Advanced Economies led the global debt decline
• Global debt ratio declined by 20 percentage points since 2020, correcting about two-thirds of the pandemic surge

what the global debt data is telling us:

1. The World Is Still Heavily in Debt

• Total global debt is USD 250 trillion, equal to 237% of global GDP.
• Although this is slightly lower than in 2022, it’s still much higher than before the COVID-19 pandemic (229% in 2019).
• This means countries, companies, and households still carry a very heavy debt burden.

2. Private Sector Is Cleaning Up

• The decline in global debt is mainly due to a drop in private debt (households and companies).
• People and firms are borrowing less or paying back loans, especially in the US and Europe.
• In the US, private debt fell a lot — households and companies reduced borrowing.
• But in China, private debt surged. Companies are borrowing more, despite weak economic signals.

3. Governments Are Borrowing More Again

• After stabilizing, public debt rose again in 2023/2024.
• It’s now at 94% of global GDP, close to COVID levels.
• Countries like China and many low-income nations increased public borrowing, which raises concerns about debt sustainability.

4. Why Is Private Debt Falling?

• Low future growth expectations — people and businesses don’t see big growth coming, so they avoid debt.
• Inflation — when prices rise, the value of old debt falls.
• Less uncertainty — the global economy is more stable than during COVID, so people aren’t borrowing as a precaution.

5. Warnings & Opportunities

• Although private debt is falling, public debt is rising, shifting the risk to governments.
• Some countries, like LIDCs, are hitting dangerously high debt levels again.
• Policymakers may need to focus more on public debt management going forward.

In short:

✅ Households and companies are being cautious
⚠️ Governments are borrowing more again
📉 Global debt is slowly improving, but risks remain

Summary global debt figures:

Global Debt Summary (2023/2024)

Debt by Region or Country (2023/2024)

Tanzania's external debt reached USD 33.91 billion in January 2025, placing it among the top 10 most indebted African countries. This marks a significant rise from USD 2.47 billion in 2011, reflecting increased borrowing for infrastructure and economic development. The central government holds 77.4% of the debt, with USD 185.4 million paid for debt servicing in December 2024. Despite this, Tanzania’s debt-to-GDP ratio remains at 47.2%, below the IMF’s 55% risk threshold. However, careful debt management is crucial to ensure economic stability and sustainable growth.

​As of January 2025, Tanzania's external debt stood at approximately USD 33,905.10 million, a slight decrease from USD 34,075.50 million in December 2024. This positions Tanzania among the top ten African countries with substantial external debt.​

Historical Context: Over the years, Tanzania's external debt has exhibited significant growth:​

• December 2011: USD 2,469.70 million​
• December 2023: USD 29,541.7 million ​
• November 2024: USD 33,137.7 million ​
• December 2024: USD 34,075.50 million​
• January 2025: USD 33,905.10 million​

Composition of External Debt: The central government holds the majority of this debt, accounting for approximately 77.4% as of December 2024. The remaining portion is attributed to the private sector. ​

Debt Service and Disbursements: In December 2024, Tanzania received external loan disbursements totaling USD 376.8 million, primarily allocated to the central government. During the same period, the country serviced its external debt with payments amounting to USD 185.4 million, which included USD 111.2 million in principal repayments and USD 74.2 million in interest payments. ​

Public Debt Relative to GDP: As of November 2024, Tanzania's total public debt, encompassing both external and domestic obligations, was USD 38,243.5 million. This figure represents approximately 47.2% of the nation's Gross Domestic Product (GDP). ​

International Financial Support: In December 2024, the International Monetary Fund (IMF) completed a review under the Extended Credit Facility arrangement with Tanzania, resulting in an immediate disbursement of about USD 148.6 million. Additionally, the IMF approved a disbursement of approximately USD 55.9 million under the Resilience and Sustainability Facility, totaling USD 204.5 million in financial support. ​

These figures underscore Tanzania's significant external debt position within Africa, highlighting the importance of ongoing fiscal management and international financial collaborations.

Top ten African countries with high external debt based on 2025 data:

1. South Africa – USD 176,314 million (Sep 2024)
2. Egypt – USD 155,204 million (Sep 2024)
3. Tunisia – TND 128,856 million (Sep 2024)
4. Mauritius – MUR 96,713 million (Dec 2024)
5. Angola – USD 50,260 million (Dec 2023)
6. Nigeria – USD 42,900 million (Sep 2024)
7. Namibia – NAD 36,036 million (Jun 2024)
8. Tanzania – USD 33,905 million (Jan 2025)
9. Malawi – MWK 5,887,049 million (Dec 2023)
10. Burundi – BIF 1,873,263 million (Dec 2024)

Tanzania’s external debt and its position among African countries with significant debt levels:

1. Tanzania’s Debt Growth is Significant

• Tanzania's external debt has increased dramatically from USD 2.47 billion in 2011 to USD 33.91 billion in January 2025.
• This consistent rise reflects increased borrowing for infrastructure, public services, and economic projects but also raises concerns about debt sustainability.

2. Tanzania is Among Africa’s Top 10 Most Indebted Countries

• At USD 33.91 billion, Tanzania ranks 8th in Africa for external debt.
• While this debt level is high, it is still lower than economies like South Africa (USD 176.3B), Egypt (USD 155.2B), and Nigeria (USD 42.9B).

3. Most of Tanzania’s Debt is Public

• 77.4% of Tanzania’s external debt is held by the central government, meaning the government is the primary borrower.
• This suggests reliance on international loans for development, infrastructure, and fiscal needs.

4. Debt Servicing is a Major Challenge

• In December 2024, Tanzania borrowed USD 376.8M but also had to repay USD 185.4M (including interest payments).
• This means that a significant portion of revenues is spent on debt servicing, which could limit spending on public services.

5. IMF and International Financial Support Play a Key Role

• The IMF provided USD 204.5M in December 2024 to support Tanzania’s financial stability.
• This suggests Tanzania relies on international financial institutions to manage its debt obligations and sustain economic programs.

6. Tanzania’s Debt-to-GDP Ratio is Still Manageable

• Tanzania’s total public debt (domestic + external) was USD 38.24 billion, accounting for 47.2% of GDP in November 2024.
• While below the IMF’s 55% risk threshold, continued borrowing without sufficient economic growth could lead to debt distress.

7. Comparison with Other African Countries

• South Africa and Egypt have the highest external debts, but their economies are larger and more diversified.
• Nigeria has slightly higher debt than Tanzania, but its economy benefits from oil revenues.
• Tanzania’s debt is higher than Malawi, Burundi, and Namibia, suggesting it is borrowing at a faster rate.

Final Conclusion

Tanzania's rising external debt reflects ambitious economic growth plans but also poses risks of debt distress if borrowing continues at this rate without sufficient revenue growth. Proper debt management, economic diversification, and increased exports are crucial to ensuring sustainability.

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.