Between 2021/22 and 2025/26, Tanzania's debt service costs surged by 42–58%, from an estimated TZS 9–10 trillion to a confirmed TZS 14.22 trillion—now accounting for 25.2% of the national budget (TZS 56.49 trillion). Over this period, total public debt rose to approximately 46% of GDP, driven largely by external borrowing, which reached USD 33.9 billion in 2025/26 and remains 67.7% USD-denominated, exposing the country to exchange rate risks, especially following a 2.6% shilling depreciation in 2024/25. Domestic debt also expanded significantly to TZS 34.26 trillion, with the majority held by commercial banks and pension funds. Despite a stabilizing debt-to-GDP ratio and a manageable debt service-to-GNI ratio of 2.89% (2023), the growing reliance on non-concessional and foreign currency debt underscores fiscal vulnerabilities that require prudent debt management strategies to ensure long-term sustainability.
Escalating Service Costs
Tanzania's debt servicing landscape has undergone significant transformation over the past five years, reflecting the country's economic growth trajectory and evolving fiscal priorities. The most striking development is the substantial increase in debt service costs, which have risen from an estimated TZS 9-10 trillion in 2021/22 to TZS 14.22 trillion in 2025/26 – representing a 42-58% increase over the five-year period.
Key Performance Indicators at a Glance:
Current Debt Service (2025/26): TZS 14.22 trillion (25.2% of national budget)
Total Public Debt: Approximately 46% of GDP (2025/26)
The 2021/22 period established the baseline for Tanzania's modern debt management framework. With debt service costs estimated at TZS 9-10 trillion, the government maintained a relatively moderate debt burden at 43.6% of GDP. The debt composition showed a balanced approach with domestic debt at 15.9% of GDP and external debt forming the larger portion. Notably, domestic arrears stood at a manageable 1.8% of GDP, indicating effective short-term debt management.
The present value debt-to-GDP ratio of 31% remained well below the 55% benchmark, positioning Tanzania in the low-to-moderate debt distress risk category. External borrowing was predominantly concessional, reducing the overall cost burden and exchange rate exposure.
2022/23 Financial Year: Strategic Expansion
The government allocated TZS 9.1 trillion for debt servicing within a total budget of TZS 44.4 trillion, with TZS 7.4 trillion successfully disbursed by April 2023. This period marked a strategic shift as public debt increased to 45.7% of GDP (46.7% including domestic arrears), reflecting increased infrastructure investment.
External debt composition rose to 63.3% of total debt, indicating a pivot toward international financing for development projects. The shift toward non-concessional borrowing began during this period, driven by infrastructure financing needs. Despite this increase, the present value debt-to-GDP ratio remained sustainable at 31.8%.
2023/24 Financial Year: Acceleration Phase
Debt servicing allocation reached TZS 10.48 trillion, representing a 15% increase from the previous year. This increase occurred within a Ministry of Finance budget of TZS 15.94 trillion, highlighting debt service as a major fiscal priority. Total public debt climbed to 47.36% of GDP, with external debt reaching USD 30.533 billion by July 2023.
The debt structure showed concerning trends with external debt comprising 73% of total obligations, significantly increasing Tanzania's exposure to exchange rate fluctuations. Total national debt reached approximately TZS 69.44 trillion in 2022, continuing its upward trajectory through 2023.
2024/25 Financial Year: Consolidation Efforts
Debt service costs are estimated at TZS 11-12 trillion within a national budget of TZS 49.35 trillion. External debt peaked at USD 32.89 billion in September 2024, subsequently reaching USD 33.905 billion by January 2025. The central government held 78.1% of external debt, indicating concentrated fiscal responsibility.
Domestic debt stabilized at TZS 32.62 trillion in September 2024, with Treasury bonds dominating at 78.9% of domestic obligations. The debt-to-GDP ratio showed signs of stabilization, with projections indicating a gradual decline to 40.84% by 2029, suggesting improved debt sustainability measures.
2025/26 Financial Year: Current Trajectory
The current budget allocation confirms TZS 14.22 trillion for debt servicing, including TZS 6.49 trillion specifically for interest payments. This represents the highest debt service allocation in the five-year period, occurring within a total budget of TZS 56.49 trillion. External debt stands at USD 33.905 billion, with the government holding 76.4% of these obligations.
Domestic debt has grown to TZS 34.26 trillion as of March 2025, primarily held by commercial banks (29-33%) and pension funds (26.5-27.6%). The USD-dominated debt structure (67.7-68.1%) continues to pose exchange rate risks, particularly given the 2.6% depreciation of the Tanzanian Shilling in 2024/25.
Tanzania National Debt Service Costs (2021/22–2025/26)
Year
Debt Service Costs (TZS)
Total Budget (TZS)
Public Debt (% of GDP)
External Debt (USD)
Domestic Debt (TZS)
Notes
2021/22
9–10 trillion (estimated)
34.85–41.82 trillion (est.)
43.6%
28.51
22.17 trillion (est.)
Estimated based on 25–30% of expenditure (GDP: TZS 139.4 trillion); limited data on exact budget and external debt.
2022/23
9.1 trillion
44.4 trillion
45.7%
~30.533 billion
25.47 trillion (est.)
TZS 7.4 trillion paid by April 2023; domestic debt estimated as 36.7% of total debt (~TZS 69.44 trillion).
2023/24
10.48 trillion
44.39 trillion
47.36%
30.533 billion
32.62 trillion
15% increase in debt service costs; total budget reflects national budget, not just Ministry of Finance (TZS 15.94 trillion).
2024/25
11–12 trillion (estimated)
49.35 trillion
~46% (projected)
32.89–33.905 billion
32.62–34.26 trillion
Estimated based on 25–30% of revenue/expenditure, 10–15% increase from 2023/24; budget confirmed.
2025/26
14.22 trillion
56.49 trillion
~46% (projected)
33.905 billion
34.26 trillion
Debt service confirmed by Ministry of Finance (includes TZS 6.49 trillion interest); GDP estimated at TZS 165.9 trillion.
Key Observations
Trend in Debt Service Costs: Debt service costs have increased steadily, from an estimated TZS 9–10 trillion in 2021/22 to TZS 9.1 trillion in 2022/23, TZS 10.48 trillion in 2023/24, an estimated TZS 11–12 trillion in 2024/25, and a confirmed TZS 14.22 trillion in 2025/26. This reflects growing borrowing, particularly external debt (73% of total debt in 2024), and larger budgets (TZS 44.4 trillion in 2022/23 to TZS 56.49 trillion in 2025/26). The 18–29% jump from 2024/25 to 2025/26 is driven by increased interest payments (TZS 6.49 trillion in 2025/26) and a higher debt stock.
Debt Composition: External debt, predominantly USD-denominated (67.7–68.1%), reached USD 33.905 billion in 2025, exposing Tanzania to exchange rate risks, with a 2.6% shilling depreciation in 2024/25 increasing repayment costs. Domestic debt, mainly Treasury bonds (78.9% in 2024), rose from an estimated TZS 22.17 trillion in 2021/22 to TZS 34.26 trillion in 2025/26, held primarily by commercial banks (29–33%) and pension funds (26.5–27.6%).
Sustainability: Tanzania’s debt-to-GDP ratio increased from 43.6% in 2021/22 to 47.36% in 2023/24, stabilizing at ~46% in 2024/25–2025/26, with a projected decline to 40.84% by 2029. The debt service-to-GNI ratio was 2.8915% in 2023, indicating moderate debt distress risk per IMF and World Bank analyses. However, reliance on non-concessional borrowing and USD exposure poses challenges, particularly with shilling depreciation.
Tanzania’s debt-to-GDP ratio rose significantly from 32.68% in 2013 to 47.30% in 2024, reflecting a 184% increase in national debt outpacing 92% GDP growth over the period. This 14.62 percentage point increase, peaking at 53.4% mid-2023, was driven by aggressive infrastructure borrowing (e.g., TZS 14.81 trillion for SGR in 2024/25), a shift to high-cost commercial loans (30.5% of 2022/23 disbursements), low tax revenue (13% of GDP), and TZS depreciation (2.6% in 2024), highlighting the fiscal challenges of balancing development ambitions with economic sustainability.
Explanation of Figures:
2013: Debt-to-GDP ratio of 32.68%, sourced from Statista and IMF.
2024: Ratio of 47.30% per Statista and estimated GDP.
Debt Growth: 184% increase (USD 14.93 billion to USD 42.36 billion), driven by external debt (USD 34.1 billion, 71.3% of total in 2024).
GDP Growth: 92% increase (USD 44 billion to USD 84.40 billion), averaging 5.5% annually (World Bank, IMF).
Infrastructure: TZS 14.81 trillion (USD 5.43 billion) for projects in 2024/25, per BoT.
Commercial Loans: 30.5% of new disbursements in 2022/23 at 6–7% rates (TICGL).
Tax Revenue: 13% of GDP (TZS 29.41 trillion in 2024/25), per World Bank.
TZS Depreciation: 2.6% in 2024, increasing external debt’s TZS value by ~TZS 2.37 trillion.
Debt-to-GDP Ratio Trend
The debt-to-GDP ratio, Below are the key figures for national debt and GDP from 2013 to 2024, sourced from Statista, IMF, World Bank, and TICGL, with estimates for intermediate years based on trends.
Year
National Debt (USD Billion)
GDP (USD Billion)
Debt-to-GDP Ratio (%)
2013
14.93
44.00
32.68
2014
17.20
46.20
33.80
2015
19.60
48.51
35.10
2016
21.90
50.94
36.50
2017
24.30
53.49
37.90
2018
26.70
56.16
39.20
2019
29.10
59.85
40.50
2020
31.50
62.84
41.00
2021
33.00
69.24
41.30
2022
33.27
75.94
44.85
2023
37.09
80.00
46.87
2024
42.36
84.40
47.30
Notes:
Debt: Statista provides 2013 (USD 14.93 billion), 2022 (USD 33.27 billion), 2023 (USD 37.09 billion), and 2024 (USD 42.36 billion). Intermediate years (2014–2021) are estimated from IMF data, showing a ~184% increase from 2013 to 2024.
GDP: IMF (2013: USD 44 billion), World Bank (2019–2022), and estimates for 2014–2018 and 2023–2024 assume 4–6% annual growth (92% total increase).
Ratio: From Statista, rising from 32.68% (2013) to 47.30% (2024). TICGL notes a peak of 53.4% mid-2023 (USD 42.68 billion/USD 79.16 billion), but 47.30% aligns with year-end 2024 estimates.
Key Figures
Debt Growth: National debt increased by 184% (USD 14.93 billion to USD 42.36 billion) from 2013 to 2024, growing at ~6% annually (TICGL).
GDP Growth: GDP grew by 92% (USD 44 billion to USD 84.40 billion), averaging 5.5% annually (IMF, World Bank).
Ratio Increase: The debt-to-GDP ratio rose by 14.62 percentage points (32.68% to 47.30%), as debt growth (6%) outpaced GDP growth (5.5%).
Reasons for the Increase in Debt-to-GDP Ratio
The increase in Tanzania’s debt-to-GDP ratio from 32.68% in 2013 to 47.30% in 2024 is primarily due to debt growing faster than GDP, driven by a combination of economic and policy factors. Below, we outline the key reasons with supporting figures.
A. Rapid Debt Accumulation
Infrastructure Investments: Tanzania prioritized large-scale infrastructure projects, such as the Standard Gauge Railway (SGR) and Dar es Salaam Port expansion, funded by external borrowing (USD 34.1 billion in 2024, 71.3% of total debt). These projects consumed TZS 14.81 trillion (30% of the 2024/25 budget). Example: The World Bank’s USD 10 billion portfolio allocated 48% to infrastructure, boosting debt stock (e.g., USD 14.93 billion in 2013 to USD 42.36 billion in 2024).
External Debt Growth: External debt surged 13.8x from USD 2.47 billion (2011) to USD 34.06 billion (March 2025), per X posts, driven by multilateral (47.2%) and commercial creditors (30.5% of new disbursements in 2022/23).
Domestic Debt: Domestic debt grew to TZS 34.26 trillion (USD 12.57 billion) by March 2025, with 29% held by commercial banks at high rates (15.5% average). This added to the debt stock, increasing from USD 6.3 billion (11% of GDP) in 2019 to 17.2% of GDP in 2022/23.
B. Slower GDP Growth Relative to Debt
GDP Growth Rate: GDP grew at 5.5% annually (2012–2021), reaching USD 84.40 billion in 2024, but slowed from a peak of 7.9% (2011) to 4.6–5.6% (2022–2024). This was insufficient to offset the 6% annual debt growth.
Informal Economy: The informal sector contributes ~46.7% of GDP (USD 82 billion at PPP, World Economics) but minimally to tax revenue (13% of GDP in 2024), limiting fiscal capacity to absorb debt.
Impact: Debt grew from USD 14.93 billion (2013) to USD 42.36 billion (2024), while GDP grew from USD 44 billion to USD 84.40 billion, causing the ratio to rise as debt outpaced economic output.
C. TZS Depreciation
Exchange Rate Impact: The TZS depreciated by 29% from 2014 to 2024, with a 2.6% depreciation in 2024/25 and 8% in 2023. This increased the cost of USD-denominated external debt (67.7% of external debt, USD 23.1 billion in 2024).
Impact: A 2.6% depreciation in 2024 raised external debt’s TZS value by ~TZS 2.37 trillion (USD 34.1 billion × 2.6%), inflating the debt-to-GDP ratio when GDP is measured in USD.
Economic and Policy Factors Contributing to the Trend
The following economic and policy factors drove the increase in the debt-to-GDP ratio, supported by figures and sources:
Policy-Driven Infrastructure Spending:
Policy: The Tanzania government’s Mini-Tiger Plan and Five-Year Development Plans (FYDP III) prioritized infrastructure to boost trade and industrialization (e.g., SGR, TZS 14.81 trillion in projects).
Impact: External borrowing for transport and telecommunications (27% of debt allocation) and energy/mining (15%) increased debt stock (e.g., USD 28.6 billion in 2019 to USD 42.36 billion in 2024).
Figure: Infrastructure projects accounted for 30% of the 2024/25 budget (TZS 14.81 trillion), funded largely by external debt (USD 34.1 billion).
Shift to Commercial Borrowing:
Policy: Increased reliance on commercial creditors (30.5% of new external disbursements in 2022/23) versus concessional loans (47.2% from multilateral institutions). Commercial loans carry higher rates (6–7% vs. 1–2% for concessional).
Impact: Higher interest costs (e.g., T-bills rose from 5.8% to 11.7% by March 2024) increased debt servicing (TZS 9.09 trillion in 2022/23, 28.9% of recurrent budget), contributing to debt stock growth.
Figure: External debt rose from USD 16.4 billion (2016) to USD 34.1 billion (2024), with commercial borrowing driving ~30% of new debt.
Low Revenue Mobilization:
Economic Factor: Tax revenue remains low at 13% of GDP (2024, World Bank), compared to Sub-Saharan peers, due to a large informal sector (46.7% of GDP). This limits fiscal space, necessitating borrowing.
Policy: Efforts to raise tax revenue (e.g., TZS 29.41 trillion in 2024/25, 10% increase) are underway but insufficient to cover fiscal deficits (2.5% of GDP in 2023/24).
Impact: Borrowing financed deficits (e.g., TZS 16.07 trillion, 28.2% of 2025/26 budget), increasing debt-to-GDP from 38.3% (2022) to 47.30% (2024).
Economic Shocks and Recovery Needs:
Economic Factor: The COVID-19 pandemic (2020) reduced tourism’s GDP contribution (10.6% in 2019 to 5.3% in 2020), prompting borrowing (e.g., USD 14.3 million IMF relief) to address balance of payments needs.
Impact: Debt rose from USD 31.50 billion (2020) to USD 33.27 billion (2022), pushing the ratio from 41.00% to 44.85%. Recovery efforts sustained borrowing.
Monetary Policy and Exchange Rate:
Policy: The Bank of Tanzania maintained a 6% Central Bank Rate (2024/25), stabilizing inflation (3.1%) but not countering TZS depreciation (2.6% in 2024).
Impact: Depreciation increased the TZS value of external debt (e.g., USD 34.1 billion became TZS 91.29 trillion), raising the debt-to-GDP ratio.
Explanation with Figures
Debt Growth Outpacing GDP: Debt grew by 184% (USD 14.93 billion to USD 42.36 billion) at 6% annually, while GDP grew by 92% (USD 44 billion to USD 84.40 billion) at 5.5%. This differential drove the ratio from 32.68% to 47.30%.
2022–2023 Spike: The ratio jumped from 38.3% (2022, USD 33.27 billion ÷ USD 75.94 billion) to 53.4% mid-2023 (USD 42.68 billion ÷ USD 79.16 billion, TICGL), reflecting rapid debt accumulation (USD 4.41 billion increase) and slower GDP growth. Year-end 2023 adjusted to 46.87% with GDP growth to USD 80 billion.
Infrastructure Impact: TZS 14.81 trillion (USD 5.43 billion) in 2024/25 infrastructure spending fueled debt growth, with external debt (USD 34.1 billion) funding 48% of World Bank projects.
Depreciation Effect: A 2.6% TZS depreciation in 2024 increased external debt’s TZS value by ~TZS 2.37 trillion, contributing ~0.5% to the ratio increase (e.g., 46.8% to 47.3%).
Fiscal Constraints: Low tax revenue (TZS 29.41 trillion, 13% of GDP) and a 2.5% fiscal deficit forced borrowing (TZS 16.07 trillion in 2025/26), sustaining the ratio’s rise.
Summary
Tanzania’s debt-to-GDP ratio increased from 32.68% in 2013 (USD 14.93 billion ÷ USD 44 billion) to 47.30% in 2024 (USD 42.36 billion ÷ USD 84.40 billion) due to debt growing faster (184%, 6% annually) than GDP (92%, 5.5% annually). Key drivers include:
Infrastructure Investments: TZS 14.81 trillion (USD 5.43 billion) in projects like SGR, funded by external debt (USD 34.1 billion, 71.3% of total).
Commercial Borrowing: Increased reliance on commercial loans (30.5% of 2022/23 disbursements, 6–7% rates) raised debt costs.
Low Revenue Mobilization: Tax revenue at 13% of GDP (TZS 29.41 trillion in 2024/25) forced borrowing to cover deficits (2.5% of GDP).
TZS Depreciation: 2.6% depreciation in 2024 increased external debt’s TZS value (USD 34.1 billion to TZS 91.29 trillion), inflating the ratio.
Economic Shocks: COVID-19 reduced tourism (5.3% of GDP in 2020), prompting borrowing (e.g., USD 14.3 million IMF relief).
