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.

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:

1. 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).
2. 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.
3. 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).
4. 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.
5. 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).

In January 2025, Tanzania's central government recorded total revenue of TZS 2,697.8 billion, achieving 98.3% of the monthly target. Tax revenue reached TZS 2,222.3 billion, slightly exceeding the target by 0.3%, signaling strong tax administration. However, non-tax revenue underperformed at TZS 347.8 billion against a target of TZS 413.9 billion. Total expenditure stood at TZS 3,576.1 billion, with recurrent spending consuming TZS 2,358.0 billion and development expenditure totaling TZS 1,218.1 billion. This created a budget deficit of TZS 878.3 billion, underscoring growing fiscal pressure despite stable revenue performance.

Government Budgetary Operations in Tanzania focusing on Central Government Revenues, Expenditure, and the Budget Deficit

1. Central Government Revenues (January 2025)

• Total Revenue: TZS 2,697.8 billion
  • This was 98.3% of the monthly target.
• Central Government Revenue: TZS 2,570.1 billion
  • 97.7% of the target.
• Tax Revenue: TZS 2,222.3 billion
  • Exceeded the monthly target by 0.3% due to sustained tax administration efforts.
• Non-Tax Revenue: TZS 347.8 billion
  • Lower than the estimated TZS 413.9 billion.

This shows strong tax revenue collection but a shortfall in non-tax revenue.

2. Central Government Expenditure (January 2025)

• Total Expenditure: TZS 3,576.1 billion
  • Recurrent Expenditure: TZS 2,358.0 billion
  • Development Expenditure: TZS 1,218.1 billion
    • Includes infrastructure, social services, and development projects.

The government prioritized development while maintaining high recurrent spending.

3. Budget Deficit

To compute the budget deficit for January 2025:

Deficit = Total Expenditure - Total Revenue
= 3,576.1 billion - 2,697.8 billion
= TZS 878.3 billion

🧮 Budget Deficit: TZS 878.3 billion in January 2025
This suggests the government spent more than it collected, creating a financing gap.

Tanzania’s Government Budget Operation in January 2025:

Key Takeaways & Interpretation

1. Strong Revenue Performance – Especially in Taxes

• The government collected 97.7% of its revenue target, and tax revenue slightly exceeded its goal.
• ✅ This indicates effective tax collection efforts and a stable tax base, which is good for fiscal sustainability.
• ❌ However, non-tax revenues fell short, suggesting issues in collecting fees, dividends from state enterprises, or other sources.

2. High Government Spending

• The government spent TZS 3.6 trillion, higher than its revenue collection.
• A significant portion (TZS 2.36 trillion) went to recurrent expenditure (salaries, interest payments, etc.).
• Development spending was also strong, indicating continued investment in infrastructure and growth-supportive areas.

3. Large Budget Deficit

• The deficit of TZS 878.3 billion shows the government spent significantly more than it earned.
• This implies the need to borrow domestically or externally to cover the gap.

What It Means Overall:

• Positive: Tax administration is working well; government is prioritizing development.
• Risk: Persistent budget deficits, if not carefully managed, can lead to higher debt levels, more interest payments, and reduced room for future development spending.