Tanzania’s debt development, as outlined in the April 2025 Monthly Economic Review and recent data, influences economic growth through fiscal constraints and resource allocation. Below, we analyze the debt structure, including domestic and external debt figures, percentage changes, and their implications for growth, using specific figures to illustrate impacts.
Debt Structure and Figures
Figures:
Domestic Debt: TZS 34.26 trillion in March 2025, with 29% held by commercial banks and 26.5% by pension funds.
External Debt: USD 34.1 billion (approximately TZS 91.29 trillion at TZS 2,677/USD, based on a 2.6% year-on-year exchange rate depreciation, Page 30), with 78.3% held by the central government and 67.7% denominated in US dollars.
Total National Debt: TZS 91.7 trillion in 2024/25 budget context.
Public Debt (Historical): 45.5% of GDP in 2022/23, up from 43.6% in 2021/22.
Percentage Change: Exact year-on-year percentage changes for March 2025 debt are not provided in the document or search results. However, domestic debt uptake increased through treasury bills and bonds, and external debt grew to USD 34.1 billion (), suggesting continued borrowing. For context, public debt rose by 4.4% (45.5% - 43.6% of GDP) from 2021/22 to 2022/23.
Explanation:
Domestic Debt: The TZS 34.26 trillion domestic debt finances fiscal deficits, with significant holdings by commercial banks (TZS 9.93 trillion, 29%) and pension funds (TZS 9.08 trillion, 26.5%). Increased borrowing indicates rising deficits, potentially driven by a 13.4% planned spending increase to TZS 57.04 trillion in FY 2025/26.
External Debt: The USD 34.1 billion (TZS 91.29 trillion) external debt supports development projects, with 78.3% (USD 26.7 billion) held by the central government. The 67.7% USD denomination (USD 23.1 billion) exposes Tanzania to exchange rate risks, amplified by a 2.6%-shilling depreciation.
Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with public debt at 35% of GDP in 2024, below the 55% benchmark (). Total debt service was 2.89% of GNI in 2023.
Impact on Economic Growth
Figures and Explanation:
Fiscal Space Constraints: Limited fiscal space, noted globally, restricts Tanzania’s ability to fund growth. The FY 2024/25 budget of TZS 49.35 trillion includes TZS 29.41 trillion (59.6%) from tax revenue, leaving a deficit financed by domestic (TZS 34.26 trillion) and external (USD 34.1 billion) borrowing. A planned 13.4% spending increase to TZS 57.04 trillion in FY 2025/26 will further rely on debt, with TZS 16.07 trillion (28.2%) from borrowing.
Debt Servicing Costs: Debt servicing absorbs significant resources. Historically, external debt servicing consumed 40% of government expenditures. In 2023, total debt service was 2.89% of GNI. For March 2025, servicing TZS 34.26 trillion domestic debt (at, e.g., 15.5% lending rates,) and USD 34.1 billion external debt (at concessional rates,) could cost TZS 5.31 trillion and USD 1-2 billion annually, diverting funds from investments. The 2.6%-shilling depreciation increases external debt costs by TZS 2.37 trillion.
Crowding-Out Effect: Domestic borrowing of TZS 34.26 trillion (29% by banks) raises lending rates to 15.5%, crowding out private investment. Credit to the private sector weakened in Q4 2024, limiting business growth. The 6% Central Bank Rate mitigates this, but high government borrowing (TZS 4,362 billion average,) strains liquidity.
Growth Projections: GDP growth is projected at 5.4% in 2024 and 6% in 2025, driven by agriculture (26.5% of GDP), construction (13.2%), and mining (9%). However, debt servicing and fiscal constraints could cap growth below the 6.4% potential by 2026.
Global and Domestic Economic Context
Figures and Explanation:
Global Risks: The IMF’s global growth forecast of 2.8% for 2025 and rising interest rates increase external borrowing costs. Tanzania’s USD 34.1 billion external debt, with 67.7% in USD, faces higher servicing costs amid global tightening.
Commodity Impacts: Declining coffee (-2%) and sugar (-1.5%) prices reduce export revenues, straining foreign exchange for debt repayment (Page 3). Gold prices at USD 2,983.25/ounce (+3%) and exports at USD 16.1 billion bolster reserves (USD 5.7 billion, 3.8 months of imports,), easing debt pressures.
Inflation and Policy: Headline inflation at 3.3% and food inflation at 5.4% (Page 4) increase household costs, potentially slowing consumption. The 6% Central Bank Rate and 587,062-tonne food reserves (32,598 tonnes released) stabilize prices, supporting growth.
Opportunities and Mitigation
Figures and Explanation:
Development Projects: External debt of USD 34.1 billion funds infrastructure (48% of World Bank’s USD 10 billion portfolio,), like the Standard Gauge Railway, boosting long-term growth. Projects worth TZS 14.81 trillion (30% of FY 2024/25 budget,) enhance connectivity and trade.
Debt Management: The moderate debt distress risk and concessional financing keep debt sustainable. Revenue mobilization (TZS 2.47 trillion collected in March 2025,) and IMF’s USD 441 million ECF/RSF support () reduce reliance on costly borrowing.
Fiscal Reforms: Plans to raise tax revenue to TZS 29.41 trillion (10% increase,) and reduce the fiscal deficit to 2.5% of GDP by 2024/25 () enhance fiscal space, freeing resources for growth.
Conclusion
Tanzania’s debt, at TZS 34.26 trillion domestic and USD 34.1 billion (TZS 91.29 trillion) external in March 2025, impacts growth by constraining fiscal space and diverting resources to servicing costs (e.g., TZS 5.31 trillion domestic, USD 1-2 billion external annually). A 2.6%-shilling depreciation and high lending rates (15.5%) exacerbate pressures, crowding out private investment. While debt fuels infrastructure (TZS 14.81 trillion in projects), declining exports (coffee -2%) and global risks (2.8% growth) challenge repayment. Prudent policy (6% CBR, USD 5.7 billion reserves) and revenue growth (TZS 29.41 trillion) mitigate risks, supporting 5.4%-6% GDP growth, but fiscal discipline is crucial.
Key Figures: Tanzania’s Debt Development and Economic Growth (March 2025)
Indicator
Key Figure
Domestic Debt
TZS 34.26 trillion (Mar 2025, 29% by banks, 26.5% by pension funds)
External Debt
USD 34.1 billion (TZS 91.29 trillion, Mar 2025, 78.3% central gov., 67.7% USD)
Tanzania's external debt reached USD 33.91 billion in January 2025, placing it among the top 10 most indebted African countries. This marks a significant rise from USD 2.47 billion in 2011, reflecting increased borrowing for infrastructure and economic development. The central government holds 77.4% of the debt, with USD 185.4 million paid for debt servicing in December 2024. Despite this, Tanzania’s debt-to-GDP ratio remains at 47.2%, below the IMF’s 55% risk threshold. However, careful debt management is crucial to ensure economic stability and sustainable growth.
As of January 2025, Tanzania's external debt stood at approximately USD 33,905.10 million, a slight decrease from USD 34,075.50 million in December 2024. This positions Tanzania among the top ten African countries with substantial external debt.
Historical Context: Over the years, Tanzania's external debt has exhibited significant growth:
December 2011: USD 2,469.70 million
December 2023: USD 29,541.7 million
November 2024: USD 33,137.7 million
December 2024: USD 34,075.50 million
January 2025: USD 33,905.10 million
Composition of External Debt: The central government holds the majority of this debt, accounting for approximately 77.4% as of December 2024. The remaining portion is attributed to the private sector.
Debt Service and Disbursements: In December 2024, Tanzania received external loan disbursements totaling USD 376.8 million, primarily allocated to the central government. During the same period, the country serviced its external debt with payments amounting to USD 185.4 million, which included USD 111.2 million in principal repayments and USD 74.2 million in interest payments.
Public Debt Relative to GDP: As of November 2024, Tanzania's total public debt, encompassing both external and domestic obligations, was USD 38,243.5 million. This figure represents approximately 47.2% of the nation's Gross Domestic Product (GDP).
International Financial Support: In December 2024, the International Monetary Fund (IMF) completed a review under the Extended Credit Facility arrangement with Tanzania, resulting in an immediate disbursement of about USD 148.6 million. Additionally, the IMF approved a disbursement of approximately USD 55.9 million under the Resilience and Sustainability Facility, totaling USD 204.5 million in financial support.
These figures underscore Tanzania's significant external debt position within Africa, highlighting the importance of ongoing fiscal management and international financial collaborations.
Top ten African countries with high external debt based on 2025 data:
South Africa – USD 176,314 million (Sep 2024)
Egypt – USD 155,204 million (Sep 2024)
Tunisia – TND 128,856 million (Sep 2024)
Mauritius – MUR 96,713 million (Dec 2024)
Angola – USD 50,260 million (Dec 2023)
Nigeria – USD 42,900 million (Sep 2024)
Namibia – NAD 36,036 million (Jun 2024)
Tanzania – USD 33,905 million (Jan 2025)
Malawi – MWK 5,887,049 million (Dec 2023)
Burundi – BIF 1,873,263 million (Dec 2024)
Tanzania’s external debt and its position among African countries with significant debt levels:
1. Tanzania’s Debt Growth is Significant
Tanzania's external debt has increased dramatically from USD 2.47 billion in 2011 to USD 33.91 billion in January 2025.
This consistent rise reflects increased borrowing for infrastructure, public services, and economic projects but also raises concerns about debt sustainability.
2. Tanzania is Among Africa’s Top 10 Most Indebted Countries
At USD 33.91 billion, Tanzania ranks 8th in Africa for external debt.
While this debt level is high, it is still lower than economies like South Africa (USD 176.3B), Egypt (USD 155.2B), and Nigeria (USD 42.9B).
3. Most of Tanzania’s Debt is Public
77.4% of Tanzania’s external debt is held by the central government, meaning the government is the primary borrower.
This suggests reliance on international loans for development, infrastructure, and fiscal needs.
4. Debt Servicing is a Major Challenge
In December 2024, Tanzania borrowed USD 376.8M but also had to repay USD 185.4M (including interest payments).
This means that a significant portion of revenues is spent on debt servicing, which could limit spending on public services.
5. IMF and International Financial Support Play a Key Role
The IMF provided USD 204.5M in December 2024 to support Tanzania’s financial stability.
This suggests Tanzania relies on international financial institutions to manage its debt obligations and sustain economic programs.
6. Tanzania’s Debt-to-GDP Ratio is Still Manageable
Tanzania’s total public debt (domestic + external) was USD 38.24 billion, accounting for 47.2% of GDP in November 2024.
While below the IMF’s 55% risk threshold, continued borrowing without sufficient economic growth could lead to debt distress.
7. Comparison with Other African Countries
South Africa and Egypt have the highest external debts, but their economies are larger and more diversified.
Nigeria has slightly higher debt than Tanzania, but its economy benefits from oil revenues.
Tanzania’s debt is higher than Malawi, Burundi, and Namibia, suggesting it is borrowing at a faster rate.
Final Conclusion
Tanzania's rising external debt reflects ambitious economic growth plans but also poses risks of debt distress if borrowing continues at this rate without sufficient revenue growth. Proper debt management, economic diversification, and increased exports are crucial to ensuring sustainability.
