In 2024, global debt surged to an alarming USD 250 trillion, equal to 237% of global GDP, as reported by the IMF’s 2024 Global Debt Monitor. Of this, USD 98 trillion was public debt (94% of GDP), and over USD 150 trillion was private debt (143% of GDP). These high levels of global debt—especially in public finances—create ripple effects for low-income countries like Tanzania, which recorded a public debt of 43.3% of GDP in the same year. While Tanzania’s debt remains below the average for Low-Income Developing Countries (50% of GDP), increasing global borrowing costs, tighter financial conditions, and slowing global growth (expected to fall from 2.7% to 2.2% over the next five years) pose challenges. These pressures may raise Tanzania’s external debt servicing costs, limit access to affordable financing, and affect government spending and private sector credit growth.

How Global Debt Trends Could Impact Tanzania's Economy and Public Debt

1. Rising Global Public Debt Creates External Pressure

• Global public debt reached USD 98 trillion (94% of global GDP in 2023/2024).
• Many low-income developing countries (LIDCs), including Tanzania, have seen public debt increase. LIDC public debt rose to 50% of GDP, the highest since early 2000s.
• Tanzania’s own public debt stood at about 43.3% of GDP in 2023/2024 (Bank of Tanzania data), below the LIDC average — but upward pressure is visible.

Implication:
As more countries compete for external financing, borrowing costs could rise for Tanzania, especially for external commercial debt. This could lead to higher debt servicing costs and reduce fiscal space for development spending.

2. Reduced Private Sector Borrowing Globally — Credit Squeeze Risk

• Global private debt fell to 143% of GDP, with household debt at 54% and corporate debt at 90%.
• In emerging and low-income economies, private debt growth has slowed or reversed.
• In Tanzania, private sector credit growth declined slightly in 2023/2024, and is mostly concentrated in trade, manufacturing, and personal loans.

Implication:
If global banks and investors become more risk-averse, Tanzania's private sector may face tighter access to credit — especially SMEs and startups that depend on microfinance or external funding.

3. Tight Global Financial Conditions — Impact on Debt Sustainability

• The IMF highlights that higher interest rates globally are not reducing debt levels significantly but are increasing servicing costs.
• Tanzania’s external debt service payments were over USD 1.5 billion in FY2022/23, and this will likely rise with any tightening in external financial markets.

Implication:
Tanzania may need to shift more toward concessional financing or domestic sources to avoid debt distress. Already, the country spends about 14–16% of government revenue on debt service, a figure that could increase if global rates stay high.

4. Risk of Slower Global Growth — Impacts on Tanzania’s Exports and Revenue

• Global medium-term growth expectations declined from 2.7% to 2.2% (5-year forecast).
• This implies reduced demand for Tanzanian exports such as minerals, tourism, and agricultural products.

Implication:
Lower global demand could mean slower foreign exchange earnings, potentially weakening the shilling, reducing government revenue, and making external debt more expensive to repay.

Summary for Tanzania:

Global vs. Tanzania Debt Figures (2023/2024)

What Tanzania Should Consider:

• Prioritize concessional borrowing and monitor external debt exposure.
• Strengthen domestic revenue mobilization to reduce dependency.
• Promote local financial inclusion and SME support to sustain private sector momentum.
• Maintain fiscal prudence to stay below LIDC risk levels (currently at 43.3% of GDP, still manageable).