In March 2025, Tanzania’s external sector recorded a significant improvement, with the current account deficit narrowing to USD 2.02 billion, down from USD 2.93 billion in March 2024, marking a 31.1% year-on-year reduction. The improvement was driven by robust export growth, as exports of goods and services rose to USD 16.51 billion, up from USD 14.08 billion a year earlier, representing a 17.2% increase. Within services, travel receipts—mainly tourism—accounted for 56.7% of total service earnings, reaching USD 3.93 billion, supported by a 12% rise in tourist arrivals to 2.15 million visitors. On the import side, service payments increased to USD 2.67 billion, up by 19.4%, largely due to higher freight and transport costs, which made up 53.3% of service imports. Meanwhile, foreign exchange reserves rose to USD 5.69 billion, enough to cover 4.6 months of imports, exceeding both the national (4.0 months) and EAC (4.5 months) benchmarks.

1. Current Account Performance (March 2025)

The current account deficit narrowed significantly by 31.1% year-on-year, driven by strong export growth, particularly in tourism, gold, and transport. Reserves now cover 4.6 months of imports, exceeding both national and EAC thresholds.

2. Export – Service Receipts by Category

*Includes construction, insurance, financial, telecom, computer services, IP charges, etc.

Travel receipts (tourism) dominate service exports, driven by a 12% increase in international arrivals, from 1.92 million in 2024 to 2.15 million in 2025.

3. Import – Service Payments by Category

Service payments rose sharply by 19.4%, mainly due to increased freight costs, reflecting rising import activity and global shipping rates.

As of March 2025, Tanzania’s external sector performance showed strong resilience. The current account deficit narrowed significantly to USD 2.02 billion, supported by a 17.2% increase in exports, especially in tourism and gold. On the import side, rising freight and service costs pushed service payments up by nearly 20%, yet the country maintained a healthy reserve position covering 4.6 months of imports.

Key Insights:

1. Current Account Deficit is Shrinking – A Positive Signal

• The current account deficit narrowed from USD 2.93 billion (March 2024) to USD 2.02 billion (March 2025) — an improvement of 31.1%.

This shows: Tanzania is earning more from exports, especially services like tourism and goods like gold, helping reduce reliance on foreign borrowing or reserve drawdowns.

2. Tourism is Driving Export Growth

• Service receipts rose to USD 6.92 billion, with tourism (travel services) accounting for 56.7%.
• Tourist arrivals increased from 1.92 million (2024) to 2.15 million (2025) — a 12% growth.

This shows: The tourism sector is rebounding strongly, contributing significantly to foreign exchange inflows and supporting the current account.

3. Higher Import Costs, Especially for Transport (Freight)

• Service payments jumped by 19.4%, from USD 2.24 billion to USD 2.67 billion, mainly due to rising freight/transport costs (53.3% of service imports).

This shows: While exports are improving, import-related costs are also rising, possibly due to increased import volumes and global shipping price pressures.

4. Foreign Reserves are Healthy

• Foreign reserves increased to USD 5.69 billion, covering 4.6 months of projected imports, above both:
  • The national benchmark (4.0 months)
  • The EAC benchmark (4.5 months)

This shows: Tanzania has a strong external buffer, allowing it to meet foreign obligations even under global shocks.

Conclusion

Tanzania’s external sector in March 2025 demonstrated improved stability with a shrinking current account deficit, strong tourism recovery, and growing exports. Despite rising freight costs increasing service import bills, the country maintains solid foreign reserves, ensuring resilience in external payments.