1. Macroeconomic Overview

Tanzania's economy demonstrated robust stability and resilience during October-November 2025, as highlighted in the Bank of Tanzania's November 2025 Monthly Economic Review. Key supports included prudent monetary policy anchoring inflation and liquidity, strong export performance, improved fiscal revenues, and a narrowing external imbalance.

Economic Implications

This stability fosters predictable conditions for investment and consumption, supporting poverty reduction with a target of less than 25% by 2030 and substantial job creation. The narrowing deficits bolster reserves, mitigating shocks from global commodity volatility and enabling AfCFTA integration with USD 1 billion trade potential. Positive fundamentals attracted USD 1.5 billion in FDI during Q3, representing a 10% year-on-year increase and adding approximately 1% to GDP via spillovers.

However, food-driven pressures and interest costs accounting for 6.5% of the budget risk exacerbating inequality. Targeted agricultural reforms could unlock 0.5-1% additional growth, enhancing medium-term prospects toward upper-middle-income status.

2. Inflation Developments

Headline inflation remained firmly anchored within the Bank of Tanzania's 3-5% target and EAC/SADC convergence criteria of less than 8%, despite upward pressures from food items amid seasonal supply constraints and regional harvests.

Key Inflation Indicators

November 2025 Update (Preliminary)

Headline inflation eased to 3.4%, with food inflation declining to 6.6% due to harvest relief, while core inflation remained stable at 2.1%.

Economic Implications

Anchored inflation preserves purchasing power for 60 million consumers, with 60% of budgets allocated to food, sustaining consumption-led growth at 3.5% and enabling accommodative policy with the Central Bank Rate at 5.75%. Food volatility poses risks to welfare for low-income households, potentially adding 0.3% to poverty if prolonged. NFRA interventions help mitigate these risks, supporting rural stability with agriculture contributing 24% to GDP.

Energy relief lowers production costs in manufacturing by 3.5%, aiding competitiveness. However, persistent food issues underscore the need for climate and agricultural investment, with irrigation improvements potentially reducing inflation by 1 percentage point and adding 0.5% to GDP.

3. Monetary and Credit Conditions

The Bank of Tanzania adopted an accommodative yet cautious stance, maintaining the Central Bank Rate at 5.75% to balance growth and stability, with liquidity remaining adequate as the 7-day interbank rate stood at 6.28%, within the plus or minus 2% corridor.

Monetary Policy Indicators

Credit Allocation by Fastest Growing Sectors

Economic Implications

Robust credit growth at 16.1%, exceeding the 15% target, fuels productive sectors, contributing 1.5-2% to GDP through mining and tourism multipliers and creating jobs, with 1 in 5 jobs linked to tourism. Broad money supply growth of 21.5% supports investment without overheating the economy, as evidenced by low core inflation, aligning with the 6.2% GDP growth target.

The sector focus enhances economic diversification, with gold representing 50% of exports. However, MSME dominance in credit allocation poses risks if non-performing loans rise from the current 3.2% level. Credit guarantee schemes could unlock TZS 2 trillion in additional lending, boosting inclusive growth and youth employment, which currently stands at 13.4% unemployment.

4. Interest Rates

Interest rates remained stable, with marginal easing observed in negotiated segments, providing support to borrowers.

Selected Interest Rates (%)

Economic Implications

Rate stability aids predictability in financial markets, sustaining credit demand growth at 16.1% and supporting consumption and investment growth of 3.5% from the private sector. The easing of negotiated rates to 12.40% particularly benefits large firms, potentially adding 0.5% to GDP through increased capital expenditure.

However, the high average lending rate of 15.19% constrains SME access to credit. Narrowing the interest rate spread to 5% through enhanced competition could mobilize TZS 1 trillion in additional productive lending, reducing income inequality and supporting medium-term growth targets of 7%.

5. Government Budgetary Operations

Fiscal performance strengthened considerably, with revenues remaining buoyant amid increased economic activity. The most recent detailed data available is from September 2025.

Central Government Operations (September 2025, TZS Billion)

Economic Implications

Strong revenue collection at 13.1% of GDP funds development expenditure, which has a 65% bias in the FY2025/26 budget, driving infrastructure multipliers that contribute approximately 2% to GDP. Tax buoyancy reduces aid dependency from 5%, enhancing fiscal sovereignty and policy independence.

However, expenditure under-execution at 76.4% in October delays critical projects. Improving budget absorption to 90% could add 1% to growth through enhanced job creation and productivity gains. The strong fiscal position supports development objectives while maintaining macroeconomic stability.

6. Debt Developments

National debt is being managed prudently, with external debt experiencing a slight decline due to scheduled amortizations.

National Debt Stock (End-October 2025)

External Debt Composition

Economic Implications

The sustainable debt level at 49.6% of GDP funds growth-enhancing projects without causing debt distress, with multilateral creditors providing low-cost financing that aids reserve accumulation. The decline in external debt combined with shilling strength saves approximately TZS 3 trillion year-on-year in debt servicing costs, freeing up budget resources for social spending, which accounts for 21.5% of the budget.

However, the rising share of commercial debt introduces interest rate sensitivity risks. Diversification strategies, including the potential issuance of green bonds, could lower borrowing costs by 0.5%, supporting the 6% growth objective while maintaining fiscal sustainability.

7. External Sector Performance

The external sector showed significant improvement, with a surplus in services offsetting the goods trade deficit.

Current Account Balance

Exports and Imports (Year Ending Oct 2025, USD Billion)

Economic Implications

The narrowed current account deficit at 2.4% of GDP, combined with reserve buildup, cushions the economy against external shocks while stabilizing the shilling and supporting low inflation. The export surge, with services accounting for 40% of total exports, promotes economic diversification and creates tourism-related jobs for 1 in 5 workers, contributing approximately 2% to GDP and supporting AfCFTA integration.

Moderation in the goods deficit eases the import bill burden. However, heavy reliance on gold exports introduces volatility risks. Diversification toward value-added exports could generate an additional USD 1 billion in export earnings, enhancing economic resilience and reducing dependence on commodity price fluctuations.

8. Overall Assessment and Outlook

Late 2025 economic conditions featured stable inflation, productive credit allocation, improved balance of payments, and strong foreign reserves, signaling positive medium-term growth prospects in the range of 6-7%.

Economic Implications and Forward Outlook

The robust fundamentals underpin economic resilience amid global uncertainties, fostering an attractive environment for foreign direct investment and supporting Vision 2050 objectives. Food price pressures appear temporary with harvest relief evident in November data, though rising production costs warrant continued vigilance to prevent inflation from undermining purchasing power.

Policy coordination between monetary, fiscal, and structural reforms ensures continued stability, positioning Tanzania as an economic leader in the East African Community. With accelerated agricultural reforms and improved budget execution, Tanzania has the potential to achieve upper-middle-income status by 2030.

The combination of strong export performance, prudent debt management, robust credit growth to productive sectors, and stable macroeconomic conditions creates a solid foundation for sustained inclusive growth. Continued focus on economic diversification, infrastructure development, and human capital investment will be critical to maintaining this positive trajectory and achieving long-term development goals.

Tanzania’s external sector showed robust improvement in April 2025, with the current account deficit narrowing by 18.6% to USD 2,224.9 million from USD 2,733.4 million in April 2024, driven by a 7.3% increase in services receipts to USD 6,940.8 million, led by tourism (USD 3,842.6 million, 56.0%) due to 2,162,487 arrivals. Services payments rose 22.8% to USD 2,842.6 million, primarily for transport (USD 1,444.2 million, 53.3%), reflecting higher freight costs. Supported by USD 5.3 billion in reserves, this performance underscores Tanzania’s growing role as a tourism and trade hub. The following table summarizes these key figures.

1. Current Account Performance

The current account balance reflects the net flow of goods, services, primary income (e.g., investment income), and secondary income (e.g., remittances). A narrowing deficit indicates improved external sector performance, driven by export growth outpacing imports.

Key Figures:

• Current Account Deficit (Year ending April 2025): USD -2,224.9 million
• Current Account Deficit (Year ending April 2024): USD -2,733.4 million
• Improvement: Deficit narrowed by USD 508.5 million, or 18.6% year-on-year.
• Reason for Improvement: Higher export earnings outpacing growth in imports.

Analysis:

• Deficit Reduction: The 18.6% improvement in the current account deficit (from USD -2,733.4 million to USD -2,224.9 million) reflects robust export performance, particularly in services, and a relatively moderate increase in imports. TICGL confirm this trend, noting a 31.1% deficit reduction to USD 2,021.5 million in the year ending January 2025, driven by strong export earnings from gold, agriculture, and tourism. The Monthey Economic Review highlights stable foreign exchange reserves of USD 5.3 billion (4.3 months of import cover, previous responses), supporting external balance stability.
• Export-Driven Growth: The narrowing deficit aligns with a 15.1% increase in total exports of goods and services to USD 16,093.1 million in the year ending January 2025, with services exports (e.g., tourism) playing a significant role. Gold exports (USD 3,369.7 million, 36.8% of goods exports) and tourism receipts (USD 3,842.6 million, see below) were key drivers.
• Import Dynamics: Imports of goods and services grew moderately to USD 17,511.8 million in the year ending February 2025 from USD 16,040.6 million in 2024, driven by industrial transport equipment and freight payments, but tempered by lower imports of petroleum, machinery, and wheat. The Monthey Economic Review notes a 3.9% annual TZS depreciation to TZS 2,684.41/USD (previous responses), which may have increased import costs but was offset by export growth.
• Macro Context: The deficit reduction supports Tanzania’s macroeconomic stability, with inflation at 3.2% in February 2025 and GDP growth projected at 6% in 2025. The IMF’s Extended Credit Facility (ECF, USD 1,046.4 million) and foreign exchange interventions (USD 6.25 million sold in April 2025, previous responses) further bolster external balances.

Insights:

• The 18.6% deficit reduction reflects a strong recovery in services exports, particularly tourism, which grew due to a 11.5% increase in tourist arrivals (2,162,487 in April 2025 vs. 1,938,875 in April 2024). This aligns with TICGL reporting 2,106,870 arrivals in the year ending November 2024.
• The moderate import growth (see below) suggests effective management of import bills, particularly for petroleum, amid favorable global commodity prices.
• The deficit, at approximately 2.8% of GDP (based on 2024 GDP of USD 79.2 billion), is sustainable, below the 4.2% projected for 2025, supported by reserves and IMF financing.

2. Exports – Services Receipts by Category

Services receipts are a critical component of Tanzania’s export earnings, driven by tourism and transport, reflecting the country’s role as a regional tourism hub and trade gateway.

Key Figures:

• Total Services Receipts (Year ending April 2025): USD 6,940.8 million
• Total Services Receipts (Year ending April 2024): USD 6,466.0 million
• Growth: +7.3% (USD +474.8 million)
• Breakdown by Category:

Analysis:

• Travel (Tourism, 56.0%, USD 3,842.6 million): Tourism is the largest contributor to services receipts, driven by a 11.5% increase in international arrivals (2,162,487 in April 2025 vs. 1,938,875 in April 2024). TICGL confirm this trend, with arrivals reaching 2,106,870 in the year ending November 2024, boosting travel receipts to USD 3,680 million. The Monthey Economic Review notes tourism’s role as a top foreign exchange earner, supported by Tanzania’s rich wildlife and Vision 2025’s focus on tourism. The sector contributes ~10% to GDP and is projected to reach 19.5% by 2025/26.
• Transport Services (35.2%, USD 2,444.6 million): Receipts from freight and passenger movement grew by 6.5% from ~USD 2,296.0 million in 2024, reflecting Tanzania’s role as a trade hub via Dar es Salaam port, serving six landlocked neighbors. TICGL report transport earnings at USD 2,720 million in November 2024, driven by improved infrastructure (e.g., TAZARA Railway upgrades). The Monthey Economic Review highlights increased trade with neighboring countries (previous responses).
• Other Services (8.8%, USD 653.6 million): This category, including construction, insurance, financial, ICT, government, IP rights, and professional services, grew modestly. Web TICGL note steady growth in ICT and financial services, aligning with the Monthey Economic Review’s emphasis on financial sector digitalization (e.g., mobile money transactions up 26.73%).
• Growth Context: The 7.3% increase in services receipts aligns with a 14% rise in services exports to USD 6,980 million in November 2024, driven by global tourism recovery and regional trade. The African Continental Free Trade Agreement (ratified 2022) and agreements with Angola and the UAE bolster export growth.

Insights:

• Tourism’s 56.0% share underscores its critical role in foreign exchange earnings, supported by a record 2,162,487 arrivals, approaching pre-pandemic levels (1,527,230 in 2019). Investments in tourism infrastructure (e.g., World Bank’s REGROW Project) drive this growth.
• Transport services benefit from Tanzania’s strategic port and railway upgrades (e.g., USD 1.4 billion for TAZARA), enhancing regional trade with landlocked neighbors.
• The modest growth in “Other Services” reflects emerging sectors like ICT, supported by digital payment growth (84% of SMEs adopted digital payments).

3. Imports – Services Payments by Category

Services payments represent expenditures on foreign services, primarily driven by transport costs linked to goods imports, reflecting Tanzania’s import-dependent economy.

Key Figures:

• Total Services Payments (Year ending April 2025): USD 2,842.6 million
• Total Services Payments (Year ending April 2024): USD 2,314.6 million
• Growth: +22.8% (USD +528.0 million)
• Breakdown by Category:

Analysis:

• Transport Services (53.3%, USD 1,444.2 million): The largest category, transport payments grew by 13.2% from ~USD 1,276.2 million in 2024, driven by freight costs linked to goods imports (USD 1,377.9 million in February 2025). TICGL note a 15.8% increase in services payments to USD 2,605.7 million in February 2025, with freight accounting for 53.3%. The Monthey Economic Review attributes this to increased imports of industrial transport equipment (previous responses), reflecting manufacturing and construction activity (GDP contributions of 9% and 16%).
• Travel (19.0%, USD 540.6 million): Payments for Tanzanians traveling abroad for tourism, business, or education grew moderately. TICGL indicate stable travel payments, with services payments rising to USD 2,533.8 million in January 2025, driven by business travel and education abroad. The Monthey Economic Review notes foreign exchange pressures from import payments (previous responses), including travel.
• Other Services (27.7%, USD 857.8 million): This category, including telecom, insurance, royalties, business services, and construction, remained stable (~0% growth). TICGL highlight increased payments for telecom and business services, but overall moderation due to lower global commodity prices. The Monthey Economic Review supports this with stable non-tax revenue (TZS 347.8 billion), indicating controlled service imports.
• Growth Context: The 22.8% increase in services payments outpaced services receipts (7.3%), contributing to the current account deficit. TICGL note a moderate rise in total imports to USD 17,511.8 million in February 2025, driven by industrial supplies but offset by lower petroleum imports.

Insights:

• Transport payments’ dominance (53.3%) reflects Tanzania’s reliance on imported goods, with freight costs tied to Dar es Salaam port’s role as a regional hub. The 13.2% growth aligns with increased construction and manufacturing.
• Stable “Other Services” payments suggest cost management in non-essential services, supported by favorable global prices and BoT’s exchange rate interventions.
• Travel payments (19.0%) indicate growing outbound activity, but their smaller share compared to tourism receipts (USD 3,842.6 million) highlights a net positive services balance.

Conclusion

Tanzania’s external sector performance in April 2025 showed significant improvement, with the current account deficit narrowing by 18.6% to USD 2,224.9 million from USD 2,733.4 million, driven by a 7.3% rise in services receipts to USD 6,940.8 million, led by tourism (USD 3,842.6 million, 56.0%) and transport (USD 2,444.6 million, 35.2%). Services payments grew faster at 22.8% to USD 2,842.6 million, primarily due to transport costs (USD 1,444.2 million, 53.3%), reflecting increased goods imports. The tourism sector, bolstered by 2,162,487 arrivals, and regional trade via improved infrastructure (e.g., TAZARA upgrades) were key drivers, supported by reserves of USD 5.3 billion and IMF financing.

The following table summarizes these key figures.