The Tanzania Shilling's dramatic strengthening to TZS 2,631.56 per USD in June 2025 from TZS 2,698.42 in May delivered immediate and substantial fiscal relief for Tanzania's external debt management, generating savings of approximately TZS 70 billion for every USD 1 billion in debt serviced during the month. This currency appreciation, which reduced the annual depreciation rate from a concerning 12.5% in June 2024 to just 0.21% in June 2025—a remarkable 60-fold improvement—provided critical breathing room for a country carrying external debt of USD 33.9-35.0 billion representing 72.1% of its total national debt stock. The strengthening was underpinned by robust market fundamentals, including enhanced foreign exchange market liquidity with IFEM turnover rising to USD 121.50 million from USD 110.8 million in May, while Bank of Tanzania intervention needs plummeted to USD 6.3 million from USD 53 million, demonstrating market-driven stability. With 67.4% of external debt denominated in USD, this currency performance significantly reduced the local currency burden of debt service obligations, while foreign exchange reserves maintaining 4.5+ months of import coverage provided additional buffer against payment shocks, positioning Tanzania favorably for sustained debt sustainability amid its medium-term development objectives.

1. Currency Strengthening and National Debt Context

In June 2025, the Tanzania Shilling demonstrated remarkable resilience, strengthening to an average of TZS 2,631.56 per USD from TZS 2,698.42 in May, representing a significant improvement that drove the annual depreciation rate down dramatically to 0.21% from 3.82% in May and a concerning 12.5% in June 2024. This currency performance occurred within the context of Tanzania's substantial national debt profile, with external debt reaching USD 35,039.80 million in February 2025, while recent data indicates external debt stood at USD 33,905.1 million in January 2025, reflecting a 0.5% decline from December 2024. The total national debt structure shows the government holding 76.4% (USD 25,896.7 million) of the total external debt, while the private sector's share dropped to 23.6% (USD 8,004.7 million).

Recent Debt Profile Analysis:

• External Debt Composition: As of November 2024, Tanzania's total external debt stock stood at USD 33,137.7 million, representing 72.1% of the country's total national debt
• Domestic Debt Position: Total Domestic Debt Stock (Sept 2024): TZS 32,615.7 billion, with Treasury Bonds comprising 78.9% – dominating domestic debt instruments, preferred for their longer maturity periods
• Currency Exposure: The debt portfolio shows significant USD exposure at 67.4%, followed by Euro at 16.6%, Chinese Yuan at 6.3%, and Other Currencies at 9.7%

2. Drivers of Currency Strengthening and Enhanced FX Market Liquidity

A. Seasonal Export Performance and FX Inflows:

Agricultural and Commodity Exports: The onset of Tanzania's cash crop export season provided substantial foreign exchange supply, with traditional exports including coffee, cashew nuts, and tobacco contributing to currency stability. Gold exports remained a critical driver, with stable growth but high USD exposure characterizing the external debt portfolio.

Tourism and Service Receipts: Strong performance in the service sector, particularly tourism, contributed significantly to foreign currency availability and supported the shilling's appreciation trajectory.

B. Interbank Foreign Exchange Market (IFEM) Development:

Enhanced Market Liquidity: The IFEM demonstrated improved functioning with turnover rising to USD 121.50 million in June from USD 110.8 million in May, indicating deeper market liquidity and more efficient price discovery mechanisms.

Reduced Central Bank Intervention: The Bank of Tanzania's intervention needs decreased dramatically to USD 6.3 million in June compared to USD 53 million in May, demonstrating market-driven stability and reduced pressure on official reserves. This aligns with the BoT Act requirement to maintain adequate official foreign exchange reserve equivalent to at least four months imports.

C. Reserve Management and Import Coverage:

Adequate Reserve Position: The Bank of Tanzania aims to strengthen the management of foreign exchange reserves, ensuring at least four months of import cover by 2029/30, while reserves declined from 4.7 months of import cover in 2022 to 4.5 months in 2023, explained by the authorities' response to the foreign exchange shortage.

3. Impact on National Debt Management and Servicing Costs

A. External Debt Servicing Benefits:

Reduced Local Currency Costs: With the majority of Tanzania's external debt denominated in USD (67.4% of external debt portfolio), the stronger shilling significantly reduced the local currency cost of debt servicing. For illustration:

• June 2025 Exchange Rate Impact: Servicing USD 1 billion of external debt in June cost approximately TZS 2.63 trillion compared to TZS 2.70 trillion in May
• Monthly Savings: This represents a nominal saving of approximately TZS 70 billion per USD 1 billion of debt serviced
• Budget Protection: The stronger currency helps shield the government budget from exchange rate-driven debt service escalations

B. Domestic Debt Market Stability:

Government Securities Performance: Currency stability supported investor confidence in government securities, helping to contain pressure on domestic interest rates. Most of the domestic debt stock is held by commercial banks with a share of 33.1 percent, followed by social security funds with holdings of 26.7 percent.

Long-term Bond Market: With Treasury Bonds comprising 78.9% of domestic debt instruments, exchange rate stability helps anchor inflation expectations, which in turn supports manageable domestic borrowing costs and maintains investor appetite for government securities.

C. Inflation and Interest Rate Dynamics:

Inflation Expectations: The stable currency contributed to controlled inflation expectations, supporting the central bank's target of maintaining inflation within the 3-5% range. The Bank of Tanzania's Strategic Plan 2025–2030 targets 3%–5% inflation.

Interest Rate Environment: The overall T-Bills interest rate rose significantly over the past 12 months from 5.8 percent in March, but currency stability helped moderate further increases in borrowing costs.

4. Debt Sustainability and Risk Assessment

A. Positive Sustainability Indicators:

Enhanced Repayment Capacity: The combination of stronger currency and improved foreign exchange inflows enhanced Tanzania's short-term capacity to meet external debt obligations without aggressive drawdown of reserves.

Reserve Buffer: With foreign exchange reserves providing adequate import coverage, Tanzania maintains a buffer against debt payment shocks and external sector volatility.

Institutional Support: The IMF and Tanzania authorities reached staff-level agreement, with Tanzania gaining access to US$441 million in financing once approved by the IMF Executive Board, providing additional financial backstop.

Economic Growth Foundation: Economic conditions have continued to improve, with robust growth and macrofinancial stability underpinned by prudent macroeconomic management. The medium-term outlook is favorable, contingent on sustained reform implementation.

B. Ongoing Risk Factors:

Debt Stock Magnitude: Despite currency improvements, the overall debt stock remains substantial, with external debt representing over 70% of total national debt, requiring sustained export growth and fiscal discipline.

Export Dependency: The heavy reliance on commodity exports (particularly gold) and tourism makes currency stability vulnerable to global price volatility and external demand shocks.

Reform Implementation: Downside risks remain, including from an uncertain external environment or reform delays. Challenges to meet SDG targets and reduce poverty are daunting, especially considering that the population size is expected to double by 2050.

Banking Sector Exposure: The banking sector, which accounts for 71% of financial assets, remained sound with the ratio of nonperforming loans to gross loans declining, but continued monitoring is essential given significant government securities holdings.

5. Strategic Debt Management Implications

A. Currency Risk Mitigation:

Natural Hedging: The strong export base in USD-earning sectors (gold, tourism, agricultural commodities) provides natural hedging against USD-denominated debt obligations.

Policy Coordination: Effective coordination between monetary policy (exchange rate management) and fiscal policy (debt issuance strategy) supports overall debt sustainability objectives.

B. Market Development Benefits:

Capital Market Deepening: Stable currency conditions support domestic capital market development, enhancing the government's ability to finance development through local currency bonds.

Investor Confidence: Reduced exchange rate volatility attracts both domestic and foreign investors to Tanzania's debt instruments, potentially lowering borrowing costs over time.

C. Fiscal Space Preservation:

Debt Service Efficiency: Lower debt servicing costs due to currency appreciation preserve fiscal space for development spending and poverty reduction programs.

Budget Predictability: Exchange rate stability enhances budget planning and execution, reducing the need for contingency allocations for currency-related debt service variations.

Summary Assessment

Strategic Recommendations

Short-term Actions:

1. Capitalize on Currency Strength: Use the favorable exchange rate environment to prepay or restructure high-cost external debt where feasible
2. Strengthen Reserve Management: Build on current reserve adequacy to enhance buffer against external shocks
3. Optimize Debt Issuance: Take advantage of stable domestic market conditions to extend debt maturity profile

Medium-term Strategies:

1. Diversify Export Base: Reduce dependency on gold and tourism through manufacturing and service sector development
2. Develop Local Currency Markets: Enhance domestic capital market depth to reduce foreign exchange exposure
3. Implement Fiscal Consolidation: Maintain debt sustainability through prudent fiscal management and revenue enhancement

Conclusion

The strengthening of the Tanzania Shilling in June 2025—driven by improved foreign exchange market liquidity, robust seasonal export inflows, and reduced central bank intervention—provided immediate and significant relief in external debt servicing costs while supporting stable domestic borrowing conditions. With external debt of approximately USD 33.9-35.0 billion representing 72.1% of total national debt, the currency appreciation delivered substantial fiscal benefits, reducing the local currency cost of USD-denominated debt service by approximately TZS 70 billion per USD 1 billion serviced.

While this performance bodes well for short-term debt sustainability and supports Tanzania's medium-term economic outlook, the long-term ability to meet debt obligations will depend on sustained reform implementation, particularly to strengthen the business environment and support a more dynamic private sector. The combination of adequate foreign exchange reserves (4.5+ months import cover), institutional support from the IMF (USD 441 million financing access), and a stable domestic debt market dominated by long-term bonds (78.9%) provides a solid foundation for debt sustainability, contingent on maintaining export competitiveness, fiscal discipline, and continued macroeconomic stability.

Key Figures – June 2025 Shilling Strength & Debt Impact

The Tanzania government’s fiscal performance in 2025, as evidenced by April 2025 data and the proposed 2025/26 budget, reflects a commitment to balancing fiscal discipline with development priorities. Domestic revenue collection of TZS 2,544.1 billion in April 2025, with tax revenue at TZS 2,105.3 billion (1.5% above target), indicates robust revenue mobilization (Bank of Tanzania, 2025). However, expenditure of TZS 3,287.3 billion suggests a monthly fiscal deficit. The proposed 2025/26 budget of TZS 56.49 trillion, with a fiscal deficit of 3% of GDP and 31% allocated to development spending, underscores efforts to fund infrastructure and social sectors while adhering to regional fiscal benchmarks. This analysis evaluates whether Tanzania maintains fiscal discipline while addressing development needs, focusing on the sustainability of its fiscal path and the balance between recurrent and development spending.

Tanzania Fiscal Discipline and Development Needs Analysis (2025)

Sustainability of Fiscal Path

Fiscal Discipline

• Revenue Mobilization:
  • April 2025 domestic revenue (TZS 2,544.1 billion) was nearly on target, with tax revenue (TZS 2,105.3 billion) exceeding projections by 1.5%, reflecting improved tax administration and compliance (BoT). The 2025/26 budget projects domestic revenue at TZS 40.47 trillion (71.6% of the budget), with tax revenue at TZS 32.31 trillion. This aligns with a tax-to-GDP ratio of 12.6% (2024/25), though still below the Sub-Saharan average of ~16%.
  • Strong revenue performance reduces reliance on external grants (TZS 1.07 trillion, ~1% of revenue by 2026), signaling greater fiscal self-reliance. However, low domestic tax collection signals weak consumer demand, potentially limiting revenue growth.
• Deficit Management:
  • The monthly fiscal deficit in April 2025 (~TZS 743.2 billion) reflects expenditure (TZS 3,287.3 billion) outpacing revenue (BoT). However, the proposed 2025/26 fiscal deficit of 3% of GDP aligns with the East African Community (EAC) and Southern African Development Community (SADC) benchmarks, indicating disciplined borrowing.
  • Financing through domestic borrowing (TZS 6.27 trillion) and external loans (TZS 8.68 trillion) avoids excessive external debt reliance, with public debt projected to decline from 46.3% of GDP in 2025 to 45% by 2027 under the IMF program (). Domestic debt stood at TZS 34.26 trillion in March 2025, with 29% held by commercial banks.
• Debt Sustainability:
  • Public debt at 46.3% of GDP (2025) is below the SADC threshold of 60%, supported by concessional borrowing and grants. Interest payments (TZS 6.49 trillion in 2025/26) are rising but manageable, reflecting improved debt management.
  • The government’s strategy to prioritize concessional loans and limit non-concessional borrowing mitigates debt distress risks, unlike earlier periods when the deficit reached 7% of GDP in 2022/23.

Balance Between Recurrent and Development Spending

• Recurrent Expenditure (69%):
  • The 2025/26 budget allocates TZS 38.98 trillion (69%) to recurrent spending, including TZS 9.17 trillion for salaries and pensions and TZS 6.49 trillion for interest payments. High recurrent costs, particularly wages (TZS 936.4 billion in January 2025), ensure public sector stability but constrain fiscal space for discretionary spending.
  • The share of “other charges” in recurrent expenditure has declined from 68% (2003/04) to 34% (2020/21), limiting flexibility for productivity-enhancing expenditures. This trend risks undermining operational budgets for infrastructure maintenance.
• Development Expenditure (31%):
  • Development spending of TZS 17.51 trillion (31%) in 2025/26, including TZS 7.72 trillion for capital payments, supports infrastructure (e.g., SGR, hydropower), agriculture, and health. This is a significant increase from TZS 15.96 trillion in 2024/25, aligning with priorities like the Third Five-Year Development Plan (FYDP III) and Vision 2025.
  • However, development budget execution rates have historically lagged at 67% (2017–2021), potentially slowing infrastructure growth. Reduced development spending in some years (e.g., TZS 1,393.3 billion in January 2025) could hinder long-term economic expansion.
• Sustainability Concerns:
  • Positive Trends: The 3% GDP deficit and declining debt-to-GDP ratio (46.3% to 45%) reflect fiscal discipline, supported by stable inflation (3.2% in May 2025) and robust reserves (USD 5,360 million, 4.2 months of import cover) (BoT). Strong revenue collection (99.5% of target) and controlled deficit spending enhance fiscal stability.
  • Challenges: High recurrent spending (69%) limits fiscal space for development projects, risking underinvestment in human capital (e.g., education at 3.3% of GDP, health at 1.2% vs. LMIC averages of 4.4% and 2.3%). Domestic borrowing may crowd out private sector credit, as seen with 29% of domestic debt held by commercial banks. Low budget execution rates and weak consumer demand further threaten development outcomes.

Conclusion

The Tanzania government maintains fiscal discipline through strong revenue mobilization (TZS 2,544.1 billion in April 2025, TZS 40.47 trillion projected for 2025/26), a controlled fiscal deficit (3% of GDP), and a sustainable debt profile (46.3% of GDP). Development spending (31% of the budget) supports critical sectors like infrastructure and agriculture, aligning with Vision 2025 and FYDP III. However, high recurrent expenditure (69%), particularly on salaries and interest, constrains fiscal flexibility, while low budget execution rates and potential crowding-out of private credit pose risks to long-term growth. To enhance sustainability, the government should improve budget execution, rationalize tax expenditures, and prioritize social spending to boost human capital, ensuring a balanced fiscal path that supports inclusive development.

1. External Debt Stock by Borrower

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

2. Disbursed Outstanding Debt by Use of Funds

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

3. Disbursed Outstanding Debt by Currency Composition

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

Summary Snapshot

Additional Insights and Outlook

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

Tanzania External Debt Overview - May 2025: Key Figures

As of February 2025, Tanzania’s total public debt reached TZS 109.92 trillion (approximately USD 42.68 billion), with external debt accounting for 73.4% (TZS 80.73 trillion) and domestic debt 26.6% (TZS 29.19 trillion). Given a population of around 69–70 million, this translates to an average debt burden of TZS 1.57–1.59 million per citizen. The high proportion of external debt—largely denominated in USD—underscores the importance of prudent fiscal management to ensure long-term sustainability amid exchange rate and global interest rate fluctuations.

Tanzania's total debt (external + domestic) as of February 2025, including figures in Tanzania shillings (TZS), along with an estimate of debt per citizen based on a population of 69–70 million:

Tanzania’s Total Public Debt Profile – February 2025

🔸 1. Total Public Debt

• Total Public Debt Stock:
  • USD: $42.68 billion
  • TZS: Approx. TZS 109.98 trillion
    (Using an exchange rate of TZS 2,577.35/USD, as reported in Feb 2025)

🔹 2. Breakdown of Public Debt

Debt per Citizen Estimate

Assuming a population between 69 million and 70 million, here’s how much debt is effectively held per Tanzanian:

What This Tells Us

• Tanzania’s public debt is growing, driven mainly by external borrowing (over 73% of total).
• The average debt burden per Tanzanian citizen is around TZS 1.57–1.59 million, showing the scale of fiscal responsibility required over time.
• While this debt has supported key infrastructure and development projects, it also raises questions about long-term repayment capacity and debt sustainability, especially with most external debt denominated in USD (over 65%).

The total public debt figures and debt per citizen tell us about Tanzania’s current financial situation:

What It Tells Us

1. High Debt Burden
   With total public debt reaching TZS 109.92 trillion (≈USD 42.68 billion), Tanzania has a substantial financial obligation—mostly owed to external creditors (73.4% of the total). This shows that the country relies heavily on foreign borrowing, which exposes it to currency risks, especially if the shilling weakens further.
2. Heavy Debt per Capita
   At an average of TZS 1.57–1.59 million per citizen, the debt burden per person is significant, especially considering that Tanzania’s GDP per capita is under TZS 4 million. This implies that each citizen would owe nearly 40% of their annual income if the national debt were to be evenly distributed—a high ratio for a developing economy.
3. Growing Domestic Financing
   While still smaller than external debt, domestic debt (26.6%) is increasing steadily. This shows that the government is also tapping into local capital markets and institutional investors, such as commercial banks and pension funds, which can strengthen domestic financial systems but also crowd out private sector lending.
4. Debt Sustainability Is Crucial
   The current debt size is manageable if the borrowed funds are used for productive investments—like infrastructure, health, and education—that generate future returns. However, the growing reliance on debt financing calls for tight fiscal discipline and improved revenue collection to maintain debt sustainability and avoid excessive repayment pressures.