Bank of Tanzania · Monthly Economic Review · April 2026
Tanzania Interest Rates: Lending & Deposit Rate Analysis
A detailed examination of Tanzania's commercial bank lending and deposit interest rate structure for March 2026 — covering overall lending rates, term-specific rates, negotiated rates, deposit products, the interest rate spread, and sector-level credit pricing signals.
📅 Data: March 2026🏦 Source: Bank of Tanzania✍️ Analysis: TICGL Research📋 Section 2.4 — Interest Rates
Overall rate structure, stability signals, and transmission dynamics
Rate Stability Amid Global Uncertainty March 2026
Tanzania's bank interest rates remained largely unchanged month-on-month in March 2026, despite the challenging global environment arising from the escalation of geopolitical conflicts in the Middle East.
The overall lending rate held steady at 15.11 percent, identical to February 2026, while negotiated lending rates for prime customers remained around 12 percent. The stability in lending rates suggests limited immediate transmission of the Bank of Tanzania's monetary policy changes to retail credit conditions — a common phenomenon in emerging market banking systems where institutional and competitive frictions slow the pass-through of policy rate adjustments.
Overall Lending Rate
15.11%
All terms, all banks
◆ Unchanged Feb → Mar
Negotiated Lending Rate
12.21%
Prime / large corporates
▲ from 12.19% (Feb)
Short-Term Rate (≤1yr)
15.45%
Up to 1-year loans
▲ from 15.41% (Feb)
Long-Term Rate (3–5yr)
13.95%
3 to 5-year term loans
◆ Unchanged
Policy Transmission Note: The CBR was cut from 6.00% to 5.75% in July 2025 (a 25 bps reduction), yet the overall lending rate has moved from 15.50% (March 2025) to 15.11% (March 2026) — a 39 bps reduction spread over 12 months. This suggests that while policy transmission is occurring, it is gradual and partial, with structural factors such as credit risk premiums, operational costs, and market concentration in the banking sector moderating the full pass-through.
📤
Lending Interest Rates
Overall, negotiated, and term-specific lending rate breakdown — March 2025 to March 2026
Lending Rate Trend Mar 2025 – Mar 2026
Overall lending rate has edged downward over 12 months from 15.50% to 15.11%, while negotiated rates for prime clients show a more pronounced decline from 12.94% to 12.21%.
Overall Lending Rate
Negotiated Lending Rate (Prime Customers)
Source: Bank of Tanzania, Table A4 Interest Rates Structure, 2025–2026.
Lending Rates by Term Structure Full Historical Data
Comprehensive breakdown of lending rates across all maturities, demonstrating the yield curve shape within bank lending portfolios.
Rate Category
Mar-25
Apr-25
Jul-25
Sep-25
Nov-25
Dec-25
Jan-26
Feb-26
Mar-26
12M Chg
Overall Lending Rate
15.50%
15.16%
15.16%
15.18%
15.27%
15.24%
15.10%
15.11%
15.11%
▼ 39 bps
Short-Term (≤ 1 year)
15.83%
16.15%
15.51%
15.52%
15.53%
15.46%
15.49%
15.41%
15.45%
▼ 38 bps
Medium-Term (1–2 years)
16.56%
16.33%
16.41%
16.26%
16.42%
16.42%
16.73%
16.70%
16.53%
▼ 3 bps
Medium-Term (2–3 years)
16.44%
15.25%
15.22%
15.19%
15.18%
15.43%
14.97%
15.27%
15.31%
▼ 113 bps
Long-Term (3–5 years)
14.32%
13.88%
14.39%
14.26%
14.43%
14.29%
14.05%
13.95%
13.95%
▼ 37 bps
Term Loans (> 5 years)
14.36%
14.19%
14.28%
14.66%
14.79%
14.61%
14.24%
14.20%
14.30%
▼ 6 bps
Negotiated Rate (Prime)
12.94%
12.88%
12.56%
12.84%
12.61%
12.38%
12.25%
12.19%
12.21%
▼ 73 bps
Source: Bank of Tanzania, Table A4 Interest Rates Structure.
Structural Observation: Tanzania exhibits an inverted lending term premium at the medium term — 1–2 year rates (16.53%) exceed short-term rates (15.45%) and long-term rates (13.95%). This is characteristic of markets where medium-term credit risk is perceived as highest (businesses under revenue uncertainty), while long-term project finance (often collateralised) and short-term working capital (with quick recovery mechanisms) carry lower premium rates.
Lending Rate by Maturity Bracket March 2026 Snapshot
Visualising the shape of Tanzania's lending rate curve — from short to ultra-long tenors — showing the inverted medium-term premium.
Short-Term (≤ 1 year)
15.45%
Medium-Term (1–2 years) ⭐ Highest
16.53%
Medium-Term (2–3 years)
15.31%
Long-Term (3–5 years)
13.95%
Term Loans (> 5 years)
14.30%
Negotiated (Prime Clients)
12.21%
Overall Weighted Average
15.11%
Scale based on max 18%. Source: BOT Table A4, March 2026.
Foreign Currency Lending Rates USD-Denominated
Banks also offer foreign currency lending, typically at rates linked to international benchmarks plus a country risk premium.
Maturity Bracket
Mar-25
Jul-25
Sep-25
Dec-25
Feb-26
Mar-26
Overall USD Lending Rate
8.93%
8.82%
8.43%
8.61%
8.61%
8.70%
Short-Term (≤ 1 year)
9.99%
9.91%
9.89%
9.91%
10.00%
10.00%
Medium-Term (1–2 years)
7.94%
8.23%
7.49%
7.68%
7.72%
7.69%
Medium-Term (2–3 years)
8.28%
7.03%
7.25%
8.31%
8.23%
8.19%
Long-Term (3–5 years)
8.61%
9.42%
9.16%
8.50%
8.83%
9.09%
Term Loans (> 5 years)
9.83%
9.52%
8.35%
8.66%
8.28%
8.50%
Source: Bank of Tanzania, Table A4 — Section B: Foreign Currency Rates.
USD vs TZS Lending Premium: Foreign currency (USD) lending rates average approximately 8.70% vs 15.11% for TZS-denominated loans — a differential of ~6.4 percentage points. This premium on TZS borrowing reflects Tanzania's inflation risk, currency depreciation expectations, and domestic market liquidity premiums. Borrowers with USD revenue streams (e.g. exporters, tourism operators) benefit significantly from accessing foreign currency credit.
🏦
Deposit Interest Rates
Savings, time deposits, and negotiated deposit rates — structure and trends
Savings Deposit Rate
2.89%
Demand / savings accounts
▼ from 2.98% (Feb)
Overall Time Deposit
8.33%
Weighted all tenors
◆ Unchanged (Feb)
12-Month Deposit
9.60%
Most common term
▼ from 9.82% (Feb)
Negotiated Deposit
11.57%
Large / institutional
▲ from 11.48% (Feb)
Time Deposit Rates by Tenor Full Structure
Tanzania's time deposit market offers a range of tenors. The 6-month and 12-month rates are most widely offered, while negotiated large-value deposits command substantially higher returns.
Deposit Product
Mar-25
Apr-25
Jul-25
Sep-25
Nov-25
Dec-25
Jan-26
Feb-26
Mar-26
12M Change
Savings Deposit Rate
2.86%
2.89%
2.90%
2.92%
2.88%
3.02%
2.94%
2.98%
2.89%
▲ 3 bps
1-Month Time Deposit
9.88%
7.94%
11.50%
9.65%
9.31%
9.35%
8.96%
9.10%
8.65%
▼ 123 bps
2-Month Time Deposit
8.81%
8.78%
10.75%
9.28%
9.67%
9.34%
9.56%
9.16%
9.34%
▲ 53 bps
3-Month Time Deposit
9.42%
9.43%
10.19%
9.61%
9.42%
9.70%
9.43%
9.03%
9.56%
▲ 14 bps
6-Month Time Deposit
9.68%
9.36%
10.28%
10.12%
10.01%
9.96%
10.20%
10.26%
10.51%
▲ 83 bps
12-Month Time Deposit ★
8.14%
9.27%
9.88%
9.84%
10.02%
9.58%
9.70%
9.82%
9.60%
▲ 146 bps
24-Month Time Deposit
6.90%
6.66%
5.99%
7.63%
7.92%
7.21%
7.11%
7.35%
7.03%
▲ 13 bps
Overall Time Deposit Rate
8.00%
7.82%
8.83%
8.50%
8.54%
8.36%
8.33%
8.32%
8.33%
▲ 33 bps
Negotiated Deposit Rate
10.35%
10.52%
10.72%
11.05%
11.67%
11.66%
11.74%
11.48%
11.57%
▲ 122 bps
Source: Bank of Tanzania, Table A4 Interest Rates Structure, 2025–2026.
Deposit Savers Note: The 12-month deposit rate has risen significantly from 8.14% to 9.60% over the 12-month period — an increase of 146 basis points — making it one of the most improved deposit products for savers. The 6-month deposit has also climbed to 10.51%. Negotiated large deposits now command 11.57%, approaching the returns available on short-term government T-bills (5.69%), though with bank credit risk rather than sovereign risk exposure.
Key Deposit Rates Trend Mar 2025 – Mar 2026
Tracking the divergence between savings rates (low, sticky) and negotiated/time deposit rates (rising), revealing the growing gap in returns available to different depositor categories.
Negotiated Deposit Rate
12-Month Time Deposit
Overall Time Deposit
Savings Deposit Rate
Source: Bank of Tanzania, Table A4.
Foreign Currency Deposit Rates USD-Denominated
USD deposit rates reflect international money market conditions plus a country-specific liquidity premium.
Product
Mar-25
Jul-25
Sep-25
Dec-25
Feb-26
Mar-26
USD Savings Deposit
0.77%
0.83%
0.98%
0.87%
0.70%
1.22%
1-Month USD Deposit
3.01%
2.50%
2.46%
2.45%
2.45%
2.47%
3-Month USD Deposit
2.23%
4.31%
2.56%
4.92%
4.94%
4.69%
6-Month USD Deposit
3.81%
4.94%
5.10%
4.82%
4.80%
4.97%
12-Month USD Deposit
3.50%
4.00%
4.61%
3.19%
4.43%
4.35%
Source: Bank of Tanzania, Table A4 — Section B: Foreign Currency Rates.
↔️
Interest Rate Spread
The gap between lending and deposit rates — implications for bank profitability and financial inclusion
Short-Term Interest Rate Spread Widening in Mar 2026
The short-term interest rate spread — defined as the difference between the short-term lending rate and the negotiated deposit rate — widened to 5.85 percentage points in March 2026, from 5.59 percentage points in February 2026.
11.57%Negotiated Deposit
5.85 ppSpread
→ 15.45%ST Lending
Metric
Mar-25
Apr-25
Jul-25
Sep-25
Nov-25
Dec-25
Jan-26
Feb-26
Mar-26
Short-Term Lending Rate
15.83%
16.15%
15.51%
15.52%
15.53%
15.46%
15.49%
15.41%
15.45%
Negotiated Deposit Rate
10.35%
10.52%
10.72%
11.05%
11.67%
11.66%
11.74%
11.48%
11.57%
Overall Lending Rate
15.50%
15.16%
15.16%
15.18%
15.27%
15.24%
15.10%
15.11%
15.11%
Overall Time Deposit Rate
8.00%
7.82%
8.83%
8.50%
8.54%
8.36%
8.33%
8.32%
8.33%
Overall Lending–Deposit Spread
7.50pp
7.34pp
6.33pp
6.68pp
6.73pp
6.88pp
6.77pp
6.79pp
6.78pp
Short-Term Interest Spread
7.69pp
6.88pp
5.00pp
4.47pp
3.86pp
5.88pp
5.79pp
5.59pp
5.85pp
Source: Bank of Tanzania, Table A4. ST Spread = Short-term lending minus negotiated deposit rate.
Source: Bank of Tanzania, Table A4. Short-Term Spread = Short-term lending rate minus negotiated deposit rate.
Financial Inclusion Concern: The short-term spread of 5.85 percentage points — while below the peak of 7.69pp seen in March 2025 — remains structurally wide by East African standards. This spread creates a significant "financial intermediation cost" for businesses seeking short-term working capital finance. For comparison, sub-Saharan Africa's average lending-deposit spread has been declining toward 5–6pp, but Tanzania's spread recovery in late 2025/early 2026 (after compression to ~3.86pp in October 2025) suggests banks are protecting margins rather than passing CBR reductions to borrowers. This has implications for SME credit access and the competitiveness of Tanzania's credit market.
📊
Credit Growth by Economic Sector
Where bank credit is flowing — sector-by-sector annual growth rates to March 2026
Annual Credit Growth by Sector Mar-26 vs Mar-25
Private sector credit grew by 24.1% in the year ending March 2026. Credit growth was broad-based but highly uneven across sectors, with mining and quarrying leading at 78.4%, driven by government initiatives to improve artisanal and small-scale miner financing.
⛏️ Mining & Quarrying
78.4%
🛒 Trade
43.3%
🚛 Transport & Communication
39.5%
🌾 Agriculture
28.5%
🏗️ Building & Construction
21.8%
👤 Personal Loans
20.7%
🏨 Hotels & Restaurants
4.4%
🏭 Manufacturing
-4.9%
Total Private Sector Credit
24.1%
Scale: 0–100%. Source: Bank of Tanzania Section 2.3, Table 2.3.2. March 2026 annual growth rates.
Sector
Mar-25
Apr-25
Dec-25
Jan-26
Feb-26
Mar-26
Trend
⛏️ Mining & Quarrying
-24.8%
-10.5%
91.1%
91.4%
103.9%
78.4%
⬆ Turnaround
🛒 Trade
12.7%
14.4%
49.7%
50.0%
48.7%
43.3%
▲ Expanding
🚛 Transport & Comms
22.4%
23.8%
29.4%
34.2%
39.4%
39.5%
▲ Accelerating
🌾 Agriculture
36.3%
29.8%
28.9%
27.9%
31.9%
28.5%
◆ Stable growth
🏗️ Building & Construction
35.1%
39.2%
25.6%
29.5%
28.1%
21.8%
▼ Moderating
👤 Personal Loans
9.4%
14.7%
17.7%
17.8%
18.9%
20.7%
▲ Accelerating
🏨 Hotels & Restaurants
5.4%
7.0%
2.5%
1.6%
5.2%
4.4%
▼ Slowing
🏭 Manufacturing
10.9%
7.7%
-8.2%
-7.7%
-8.5%
-4.9%
⚠ Contracting
Source: Bank of Tanzania, Table 2.3.2 Annual Growth of Credit to Select Economic Activities.
Manufacturing Credit Contraction — TICGL Alert: The manufacturing sector recorded a -4.9% contraction in credit for the second consecutive year (after -8.2% in December 2025). This is a structural concern for Tanzania's industrialisation agenda. Banks may be applying tighter credit standards to manufacturers facing margin pressure from higher global commodity input costs and supply chain disruptions from the Middle East crisis. If sustained, this risks hollowing out the industrial base at precisely the moment when domestic value-added production should be scaling up.
Credit Portfolio Share by Sector March 2026
Personal loans continue to dominate the credit portfolio at 35.3% of total private sector credit, followed by trade (14.6%) and agriculture (13.4%).
Personal 35.3%Trade 14.6%Agriculture 13.4%Construction 7.4%Transport 4.8%Manufacturing 5.0%Hotels 4.4%Others 15.1%
Sector
Mar-25
Jun-25
Sep-25
Dec-25
Jan-26
Feb-26
Mar-26
Personal Loans
36.4%
36.0%
36.4%
35.8%
35.8%
35.6%
35.3%
Trade
12.7%
14.2%
13.2%
15.3%
14.9%
14.7%
14.6%
Agriculture
13.0%
13.2%
12.9%
13.0%
13.2%
13.1%
13.4%
Building & Construction
9.7%
8.6%
8.3%
7.2%
7.3%
7.2%
7.4%
Manufacturing
4.9%
4.4%
4.5%
4.5%
4.8%
4.9%
5.0%
Transport & Communication
4.5%
4.4%
4.6%
4.5%
4.7%
4.7%
4.8%
Hotels & Restaurants
4.1%
5.2%
4.8%
4.4%
4.5%
4.3%
4.4%
Source: Bank of Tanzania, Chart 2.3.6 Share of Credit to Select Economic Activities.
🔍
TICGL Summary: Tanzania Rate Environment
Complete rate structure at a glance — March 2026
Complete Interest Rate Structure — March 2026 Quick Reference
All key interest rates across monetary policy, lending, deposit, and government securities markets as at March 2026.
Rate Category
Description
Mar-25
Mar-26
12M Change
Policy & Reference Rates
Central Bank Rate (CBR)
MPC policy signal rate
6.00%
5.75%
▼ 25 bps
Lombard Rate
Overnight facility ceiling
8.00%
7.75%
▼ 25 bps
Discount Rate
T-bill discounting rate
8.50%
8.25%
▼ 25 bps
Lending Rates (TZS)
Overall Lending Rate
Weighted all maturities
15.50%
15.11%
▼ 39 bps
Short-Term Lending (≤1yr)
Up to 1 year
15.83%
15.45%
▼ 38 bps
Medium-Term (1–2yr)
1 to 2 years — highest rate
16.56%
16.53%
▼ 3 bps
Long-Term (3–5yr)
3 to 5 years
14.32%
13.95%
▼ 37 bps
Negotiated Lending Rate
Prime / large corporates
12.94%
12.21%
▼ 73 bps
Deposit Rates (TZS)
Savings Deposit Rate
Demand / savings accounts
2.86%
2.89%
▲ 3 bps
Overall Time Deposit
Weighted all tenors
8.00%
8.33%
▲ 33 bps
12-Month Deposit Rate
Most common term
8.14%
9.60%
▲ 146 bps
Negotiated Deposit Rate
Large institutional deposits
10.35%
11.57%
▲ 122 bps
Spread Indicators
Short-Term Interest Spread
ST lending minus neg. deposit
7.69pp
5.85pp
▼ 184 bps (narrowed)
Overall Lending–Deposit Spread
Overall lending minus time dep.
7.50pp
6.78pp
▼ 72 bps (narrowed)
Source: Bank of Tanzania, Table A4 Interest Rates Structure & Table 2.4.1 Lending and Deposit Interest Rates.
Data Sources & Attribution
All data is sourced from the Bank of Tanzania Monthly Economic Review, April 2026 (covering data through March 2026). Tables referenced: Table A4 (Interest Rates Structure), Table 2.4.1 (Lending and Deposit Interest Rates), Table 2.3.2 (Annual Growth of Credit to Select Economic Activities), Chart 2.3.6 (Share of Credit to Select Economic Activities). Analysis and editorial commentary by TICGL Economic Research, May 2026. This page is for informational purposes only and does not constitute financial, investment, or credit advice.
Inflation Trend in Tanzania March 2026 | TICGL Economic Analysis
🇹🇿 TICGL – Tanzania Investment and Consultant Group Ltd | Economic Research Unitticgl.com ↗
TICGL Economic Analysis · March 2026
Inflation Trend in Tanzania March 2026 — Full Report
A detailed breakdown of Tanzania's inflation dynamics, Consumer Price Index movements, exchange rate stability, and monetary policy settings — covering January 2025 through March 2026.
📅 Published: March 16, 2026📊 Source: Bank of Tanzania & NBS🏦 TICGL Research Unit🕐 ~10 min read
3.2%
Headline Inflation
▼ Feb 2026
2.1%
Core Inflation
▼ from 2.7% (Jan 2025)
5.7%
Food Inflation
▲ Highest category
122.01
CPI Index (Feb 2026)
▲ from 118.28 (Feb 2025)
2,555
TZS/USD (Mar 2026)
▲ Mild depreciation
5.75%
Central Bank Rate
– Stable (BoT)
Executive Summary
Tanzania's macroeconomic environment in early 2026 reflects controlled price growth and relative currency stability.
Headline inflation eased to 3.2% in February 2026 — the lowest since July 2025 — comfortably within the Bank of Tanzania's (BoT) 3–5% policy target.
The Consumer Price Index (CPI) climbed modestly from 118.28 (February 2025) to 122.01 (February 2026), indicating manageable cost-of-living pressures.
The Tanzania Shilling depreciated by only ~0.97–1.75% annually, supported by USD 6.3 billion in foreign reserves and robust export earnings.
Food inflation, however, remains the key pressure point at 5.7%, requiring continued vigilance.
The BoT's Central Bank Rate (CBR) is held at 5.75%, anchoring banking liquidity and investment conditions.
Section 01
Headline Inflation Trend (2025–2026)
Inflation measures the increase in prices of goods and services, directly affecting the purchasing power of the Tanzania Shilling (TZS).
Tanzania's headline inflation exhibited a modest oscillation throughout 2025 before declining to a relative low by February 2026.
The country sustained inflation within the national target range of 3–5% for the entire period reviewed. The decline from 3.6% in December 2025 to 3.3% in January 2026 signalled improved price stability, with further easing to 3.2% in February 2026. This trajectory reflects the effectiveness of BoT's monetary tools and moderating food price pressures.
Headline Inflation Rate — Monthly Trend (%)
Tanzania, January 2025 – February 2026 | Source: NBS / Bank of Tanzania
Table 1.1 — Headline Inflation Rate (%), Tanzania 2025–2026
Period
Inflation Rate (%)
Monthly Change
Policy Status
Notes
January 2025
3.1%
—
Within Target
Stable start to the year
December 2025
3.6%
▲ +0.5pp
Within Target
Peak — seasonal food price surge
January 2026
3.3%
▼ –0.3pp
Within Target
Decline following Dec peak
February 2026 ★
3.2%
▼ –0.1pp
Within Target
Lowest since July 2025
✅
Policy Target Met
Inflation stayed within the BoT's 3–5% target throughout the entire reviewed period, demonstrating effective monetary governance.
📉
Downward Trajectory
Inflation declined from the December 2025 peak of 3.6% to 3.2% in February 2026 — a positive signal for purchasing power protection.
⚠️
Seasonal Risks
The December 2025 spike to 3.6% highlights exposure to seasonal food price surges, requiring proactive supply-side management.
Section 02
Consumer Price Index (CPI) Trend
The Consumer Price Index (CPI) measures the cost of a standardised basket of goods and services purchased by Tanzanian households. With a base year of 2020 = 100, the CPI provides a consistent benchmark for tracking cost-of-living changes over time.
Tanzania's national CPI increased from 118.28 in February 2025 to 122.01 in February 2026 — a 3.15-point (2.7%) increase over 12 months. This moderate growth reflects a relatively stable price environment in the economy, consistent with the low single-digit inflation rates observed during this period.
National CPI Index (Base 2020 = 100)
Feb 2025 – Feb 2026 | NBS Tanzania
CPI Growth vs. Headline Inflation
Overlay comparison | 2025–2026
Table 2.1 — National Consumer Price Index (Base 2020 = 100), Tanzania
Period
CPI Index
Year-on-Year Change
Interpretation
February 2025
118.28
—
Baseline for comparison
January 2026
121.41
▲ +3.13 pts
Moderate cost-of-living increase
February 2026 ★
122.01
▲ +3.73 pts (+3.15%)
Stable growth, purchasing power preserved
✅
Stable CPI Growth Supports the Tanzania Shilling
The narrow, predictable movement of Tanzania's CPI (only +3.15% over 12 months) indicates controlled purchasing power erosion, reinforcing confidence in the Tanzania Shilling's domestic value.
Section 03
Composition of Inflation — January 2026
Inflation is not a monolithic measure — it is shaped by price changes across multiple household spending categories. Understanding the sectoral composition of inflation allows policymakers, investors, and households to identify which sectors are driving cost pressures and which remain contained.
In January 2026, food and non-alcoholic beverages exerted the largest inflationary force at 5.7%, reflecting the dominant share of food in household expenditure for most Tanzanian families. Transport came in second at 4.2%, influenced by fuel costs and logistics. Clothing, health, and restaurant categories remained well-contained below 2%.
Inflation by Category (January 2026)
Horizontal bar chart | NBS Tanzania
Category Share — Inflation Distribution
Relative contribution | January 2026
Visual Breakdown — Category Inflation Rates vs. 5% Target Line
Food & Non-Alcoholic Beverages
5.7%
Transport
4.2%
Housing, Water, Electricity & Gas
2.3%
Clothing & Footwear
1.2%
Health
1.1%
Restaurants & Accommodation
1.1%
Table 3.1 — Inflation by Major Category (%), Tanzania — January 2026
Category
Inflation Rate (%)
Status
Key Driver
Food & Non-Alcoholic Beverages
5.7%
Above Target
Seasonal supply constraints, staple food prices
Transport
4.2%
Elevated
Fuel costs, logistics chain pressures
Housing, Water, Electricity & Gas
2.3%
Moderate
Utility tariffs, urban housing demand
Clothing & Footwear
1.2%
Contained
Import prices, domestic textile production
Health
1.1%
Contained
Pharmaceutical costs, medical services
Restaurants & Accommodation
1.1%
Contained
Service sector competition, food input costs
⚠️
Food Inflation Remains the Primary Pressure Point
At 5.7%, food inflation exceeds the BoT's 5% ceiling for sub-components and disproportionately affects lower-income households in Tanzania, where food spending constitutes 50–60% of total household expenditure.
Section 04
Core Inflation & Energy Inflation
Core inflation strips out volatile food and energy prices to reveal the underlying demand-driven price trend in the economy. It is a critical indicator for central bank policy decisions, as it reflects persistent structural price pressures rather than temporary supply-side shocks.
In January 2026, core inflation fell to 2.2% from 2.7% in January 2025 — a significant 0.5 percentage point decline indicating reduced underlying price pressures and successful demand management. By February 2026, core inflation eased further to approximately 2.1–2.2%.
Conversely, energy and utilities inflation surged to 5.2%, driven primarily by rising prices of charcoal and firewood — key energy sources for the majority of Tanzanian households, particularly in rural areas. This presents a targeted structural challenge that cannot be addressed by monetary policy alone.
Table 4.1 — Key Inflation Indicators Comparison, Tanzania 2025–2026
Indicator
Jan 2025
Dec 2025
Jan 2026
Feb 2026
Trend
Notes
Headline Inflation
3.1%
3.6%
3.3%
3.2%
▼ Declining
Lowest since July 2025
Core Inflation
2.7%
2.5%
2.2%
2.1–2.2%
▼ Declining
Reduced underlying pressures
Food Inflation
—
6.7%
5.7%
5.7%
▲ Elevated
Peaked in Dec 2025
Energy & Utilities Inflation
—
—
5.2%
2.8%
▼ Easing
Charcoal/firewood key drivers
Inflation Decomposition — Headline vs. Core vs. Food vs. Energy (%)
Multi-indicator comparison across key periods | NBS / BoT Tanzania
📉
Core Inflation Under Control
Core inflation declining from 2.7% to 2.2% shows BoT's interest rate discipline is working — fundamental demand pressures are easing.
🔥
Energy Inflation at 5.2%
Charcoal and firewood price increases drive energy inflation — a structural issue tied to deforestation pressures and limited clean energy access in rural Tanzania.
🌾
Food Price Persistence
Food inflation remains elevated at 5.7% despite easing from 6.7% in December 2025, requiring agricultural supply chain interventions beyond monetary tools.
🎯
Policy Divergence Challenge
The gap between low core inflation (2.2%) and high food/energy inflation (5–6%) presents a targeting challenge: a single interest rate cannot address supply-side sectoral shocks.
Section 05
Tanzania Shilling Exchange Rate Stability
The exchange rate of the Tanzania Shilling (TZS) against major currencies — particularly the US Dollar (USD) — is a critical macroeconomic variable that influences import costs, external debt servicing, investor sentiment, and inflationary dynamics (through imported inflation).
Data shows the TZS experienced a mild and manageable depreciation trajectory from December 2025 through March 2026. The average rate moved from TZS 2,452.76 per USD in December 2025 to approximately TZS 2,554.67 per USD in March 2026 (up to March 14). On an annual basis, depreciation stands at only 0.97–1.75%, reflecting considerable relative stability given global economic pressures.
This stability is underpinned by Tanzania's USD 6.3 billion in foreign exchange reserves, consistent export earnings from gold and agriculture, and the BoT's active market interventions.
TZS/USD Exchange Rate — Monthly Average Trend
December 2025 – March 2026 | Source: Bank of Tanzania
Table 5.1 — TZS/USD Exchange Rate Trend, December 2025 – March 2026
Period
Avg Rate (TZS/USD)
Monthly Change (%)
Annual Depreciation
Notes
December 2025
2,452.76
—
—
End-year low; strong close
January 2026
2,477.94
+1.0%
0.97%
Seasonal FX demand pressures
February 2026 (avg)
2,581.04
+4.2%
—
Slight upward pressure
March 2026 (up to 14th) ★
2,554.67 (avg) High: 2,609.85 on 13th
–0.09% (monthly)
0.95–1.75%
Stable amid global pressures; reserves buffer absorbing shock
🛡️
Reserve Buffer: USD 6.3 Billion
Tanzania's substantial foreign exchange reserves provide strong insulation against external shocks and seasonal FX demand pressures.
📊
Annual Depreciation: ~1%
At only 0.97–1.75% annual depreciation, the TZS demonstrates remarkable stability relative to many peer African currencies facing 5–15% annual depreciation.
📈
February Spike Watch
The 4.2% monthly move in February 2026 warrants monitoring. Sustained TZS weakness could increase import costs and add to domestic inflation pressures.
ℹ️
Low Inflation Supports Exchange Rate Stability
Tanzania's controlled inflation (3.2%) reduces currency erosion risk. Countries with lower inflation relative to trading partners generally see their currencies appreciate or hold value more effectively — a virtuous cycle the BoT is actively cultivating.
📚 TICGL Economic Research — Related Resources
Explore more in-depth economic intelligence from the TICGL Research Unit
📋 Data Sources: Bank of Tanzania (BoT), National Bureau of Statistics Tanzania (NBS), TICGL Research Unit. |
📅 Period Covered: January 2025 – March 14, 2026. |
⚠️ Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. TICGL — Tanzania Investment and Consultant Group Ltd.
Section 06
Monetary Policy & Inflation Control
The Bank of Tanzania (BoT) is the primary institution responsible for managing inflation and preserving currency stability through its monetary policy framework. The BoT deploys a combination of interest rate tools, open market operations, and liquidity management instruments to keep inflation within the national target range of 3–5%.
In early 2026, the BoT maintained its Central Bank Rate (CBR) at 5.75% — a deliberate decision to balance inflation control against the need to sustain credit growth and economic activity. The interbank market rate settled at approximately 6.40%, reflecting efficient monetary transmission within Tanzania's banking system.
Notably, the BoT injected TZS 976.4 billion in reverse repo liquidity support to ensure adequate banking sector liquidity. This action prevented a credit squeeze while keeping the shilling and inflation trajectory anchored within policy bounds — a calibrated dual mandate operation.
Table 6.1 — Key Monetary Policy Indicators, Bank of Tanzania — Early 2026
Indicator
Value
Function
Impact on Economy
Status
Central Bank Rate (CBR)
5.75%
Signals monetary policy stance; benchmark for all lending rates
Reflects real-time liquidity conditions in the banking system
Near Target
Reverse Repo Liquidity Support
TZS 976.4 Billion
BoT injects liquidity into the banking system via reverse repurchase agreements
Prevents credit contraction; supports SME and private sector lending
Active
Government Securities — 10-Year Bond Yield
~11.30%
Reflects long-term borrowing cost for government; benchmark for private credit
Low yields attract domestic investors; fund infrastructure without inflating money supply
Moderately Elevated
Credit Growth (Private Sector)
16–20% (target)
Rate of new credit extended to businesses and households
Enables SME expansion, investment; risks inflation if excessive
On Track
Monetary Policy Rates Comparison — Tanzania Early 2026
CBR vs. Interbank Rate vs. 10-Year Bond Yield vs. Headline Inflation | Bank of Tanzania
Liquidity Injection Impact — Reverse Repo Support (TZS Billion)
BoT reverse repo operations and their role in maintaining banking sector stability
🏦
CBR Steady at 5.75%
The BoT's decision to hold the CBR at 5.75% signals confidence in Tanzania's inflation trajectory while supporting continued economic activity and private sector credit growth.
💧
TZS 976.4 Bn Liquidity Injection
Reverse repo support of nearly TZS 1 trillion ensures commercial banks maintain sufficient lending capacity, preventing the kind of credit squeeze that could stall economic momentum.
📐
Transmission Gap: CBR to Interbank
The ~0.65pp spread between the CBR (5.75%) and the interbank rate (6.40%) indicates normal monetary transmission — though persistent gaps can signal liquidity stress.
🎯
Dual Mandate Balance
The BoT is simultaneously managing price stability (3.2% inflation) and financial stability (credit growth 16–20%) — a complex balancing act underpinned by adequate reserve buffers.
ℹ️
Securities Market Connection
Low inflation and the stable CBR environment have enabled Tanzania's government bond auctions to be oversubscribed by up to 34%, with bids reaching TZS 840 billion in January 2026 — reflecting strong domestic investor confidence and providing low-cost financing for national infrastructure development.
Section 07
Relationship Between Shilling Stability & Inflation
The relationship between inflation and currency value is one of the most fundamental dynamics in macroeconomics. For Tanzania, understanding this interplay is essential for investors, importers, exporters, and policymakers — as movements in either variable directly affect the other through multiple transmission channels.
When domestic inflation remains low and stable, the Tanzania Shilling retains its domestic purchasing power, reduces imported inflation risk, and supports investor confidence in TZS-denominated assets. Conversely, persistent inflation — particularly in food and energy — erodes household purchasing power, puts downward pressure on the shilling, and can create a self-reinforcing depreciation cycle if unchecked.
Since Tanzania's inflation remains around 3–4%, the Shilling has maintained moderate stability despite significant global economic pressures — including elevated global commodity prices, USD strength, and supply chain disruptions that have severely destabilised currencies in peer African economies.
Table 7.1 — Inflation–Currency Transmission Matrix, Tanzania
Economic Factor
Mechanism
Impact on TZS
Current Status (2026)
Low Headline Inflation (3.2%)
Preserves real interest rate differential; attracts portfolio investment
✅ Supports Stability
Active — inflation within BoT target
High Food Inflation (5.7%)
Increases import food demand; strains FX reserves; reduces rural purchasing power
⚠️ Depreciation Risk
Persistent pressure — supply-side challenge
Stable Exchange Rate (~0.97% annual depreciation)
Limits pass-through of import prices into domestic CPI; controls imported inflation
✅ Inflation Anchor
Active — rate stable, reserves buffer strong
Energy Inflation (5.2%)
Raises production costs; increases demand for USD to fund fuel imports
⚠️ Modest Pressure
Easing — fell to 2.8% in Feb 2026
USD 6.3 Bn FX Reserves
BoT can intervene to smooth excessive TZS volatility; signals creditworthiness
✅ Strong Buffer
Robust — covers 4–5 months of imports
CBR at 5.75%
Keeps real rates positive relative to inflation; reduces speculative TZS selling
✅ Supports Shilling
Stable — no change expected near-term
Inflation Rate vs. TZS/USD Exchange Rate — Parallel Trend
Raises input costs; increases USD demand for fuel imports
→ Mild TZS Pressure
Section 08
Key Indicators of Shilling Stability vs. Inflation (2026)
This section consolidates all major macroeconomic indicators into a unified dashboard view, enabling investors, researchers, and policymakers to assess Tanzania's economic health at a glance. Together, these metrics paint a picture of an economy that is maintaining macroeconomic discipline while navigating residual pressures from food prices, energy costs, and a gradually depreciating currency.
The interconnection between these indicators is critical: the CBR anchors inflation expectations, stable inflation supports bond auction oversubscription, low yields fund infrastructure without fiscal pressure, and robust GDP growth sustains export capacity — reinforcing Shilling stability in a virtuous cycle that BoT is actively cultivating.
Table 8.1 — Comprehensive Macroeconomic Dashboard, Tanzania — 2026
Indicator
Value
Period
Benchmark / Target
Assessment
Headline Inflation
3.2%
Feb 2026
BoT Target: 3–5%
✅ Within Target
Core Inflation
2.1–2.2%
Feb 2026
Below Headline (healthy)
✅ Declining
Food Inflation
5.7%
Jan–Feb 2026
Below 5% (goal)
⚠️ Elevated
Energy & Utilities Inflation
2.8% (Feb) / 5.2% (Jan)
Feb 2026
Below 5% (goal)
⚡ Easing
CPI Index (Base 2020=100)
122.01
Feb 2026
Moderate growth pace
✅ Stable Growth
TZS/USD Exchange Rate (avg)
~TZS 2,554.67
Mar 2026 (to 14th)
Low annual depreciation
✅ Relatively Stable
Annual TZS Depreciation
0.97–1.75%
2025–2026
<5% (peer benchmark)
✅ Well Contained
Central Bank Rate (CBR)
5.75%
Early 2026
Aligned with inflation target
✅ Appropriate
Interbank Market Rate
~6.40%
Early 2026
Near CBR (efficient transmission)
✅ Normal
FX Reserves
USD 6.3 Billion
2026
>3 months import cover
✅ Adequate Buffer
10-Year Government Bond Yield
~11.30%
Jan 2026
Below 12% (stable)
📊 Moderate
GDP Growth Forecast
6.0–6.3%
2026
SSA average: ~4%
✅ Above Regional Average
Agriculture Sector Growth
+10%
2025–2026
Key inflation moderator
✅ Strong
FDI Target
USD 15 Billion
2026
Stability-driven
📈 Under pursuit
Macroeconomic Health Radar — Tanzania 2026
Composite stability index across 6 dimensions | Score: 0 (poor) → 10 (excellent)
3.2%
Headline Inflation
✅ Within 3–5% Target
2.1%
Core Inflation
✅ Below Headline
5.7%
Food Inflation
⚠️ Key Risk Factor
122.01
CPI Index
📊 Moderate Growth
2,478
TZS/USD Rate
🔒 Stable Trajectory
5.75%
Central Bank Rate
🏦 Steady BoT Stance
Section 09
Economic Implications for Growth & Development
Tanzania's inflation and currency dynamics in early 2026 have far-reaching implications that extend well beyond price levels. The interplay between low inflation, a relatively stable Shilling, government securities market performance, and long-term development goals creates a complex web of opportunity and risk that investors, policymakers, and development practitioners must carefully navigate.
Low inflation preserves household purchasing power and stimulates consumer spending — a key engine for Tanzania's 6.0–6.3% GDP growth forecast in 2026. Shilling stability reduces FX risk for foreign direct investors, helping Tanzania pursue its USD 15 billion FDI target. Meanwhile, oversubscribed government bond auctions (e.g., 34% oversubscription in January 2026 with TZS 840 billion in bids) provide the government with low-cost domestic financing for Vision 2050 infrastructure priorities — including hydropower projects expected to contribute 1–1.5% to GDP growth.
However, if food inflation (5.7%) and energy pressures remain unchecked, the risks of purchasing power erosion among lower-income households, increased external borrowing costs, and crowding out of private investment could slow the pace of inclusive growth needed to achieve Tanzania's poverty reduction targets (below 20% by 2030).
The interplay of stable prices, a managed Shilling, and active BoT policy fosters a resilient medium-term growth trajectory of 6.5–6.9%. Vigilant policy — particularly BoT's liquidity management tools — will be key to sustaining securities market appeal and preserving Shilling stability as global conditions evolve in 2026.
Conclusion
Summary & Outlook
🎯 Key Findings — Tanzania Inflation Trend, March 2026
Headline inflation eased to 3.2% in February 2026 — the lowest level since July 2025 — remaining firmly within the Bank of Tanzania's 3–5% policy target, reflecting effective monetary governance and moderating price pressures.
Core inflation declined from 2.7% (January 2025) to 2.1–2.2% (February 2026), indicating reduced underlying demand pressures and successful interest rate transmission through the banking system.
The Consumer Price Index (CPI) rose modestly from 118.28 to 122.01 over 12 months — a 3.15% increase that confirms stable, predictable cost-of-living growth rather than disruptive price volatility.
Food inflation (5.7%) remains the single largest inflationary pressure and the primary risk to inclusive growth, disproportionately affecting lower-income households where food spending constitutes the majority of budgets.
The Tanzania Shilling depreciated by only 0.97–1.75% annually against the USD — a testament to Tanzania's strong USD 6.3 billion FX reserve buffer, robust export performance, and credible BoT monetary policy.
The Central Bank Rate (CBR) held at 5.75% with TZS 976.4 billion in reverse repo liquidity support, maintaining an accommodative credit environment that supports the 16–20% private sector credit growth target.
Tanzania's macroeconomic stability is enabling oversubscribed government bond auctions (up to 34% oversubscription), providing low-cost domestic financing for Vision 2050 infrastructure — without fuelling inflation or currency volatility.
The medium-term GDP growth potential of 6.5–6.9% positions Tanzania as one of East Africa's strongest-performing economies, though sustained vigilance on food and energy inflation is required to ensure growth is sufficiently inclusive.
Tanzania Macro Stability Scorecard — Full Indicator Overview
All key metrics plotted against their respective benchmarks | TICGL Research, March 2026
Government Securities Market in Tanzania 2025–2026 | Treasury Bills & Bonds Analysis | TICGL
TICGL Economic Research·Tanzania Investment & Consultant Group Ltd·Published March 2026
📊 Financial Markets Analysis
Government Securities Market in Tanzania: 2025–2026
An in-depth analysis of Tanzania's Treasury Bills, Treasury Bonds, and Interbank Cash Market —
covering auction performance, monetary policy transmission, and economic implications for Tanzania's growth trajectory.
Published byTICGL Research
Data PeriodOct 2025 – Mar 2026
MarketTanzania (TZS)
SourceBank of Tanzania (BoT)
11.30%
10-Yr Bond Yield
January 2026 Auction
TZS 2,869B
IBCM Turnover
January 2026
34%
Bond Oversubscription
Jan 2026 10-Yr Auction
73.2%
7-Day Interbank Share
Dominant Tenor
5.75%
Central Bank Rate
BoT CBR Q1 2026
6.3%
GDP Growth Forecast
Tanzania 2026
Section 01
Government Securities Market — Overview
The Government Securities Market is where the Tanzanian government raises domestic funds by issuing
Treasury Bills (short-term) and Treasury Bonds (long-term) through competitive auctions
conducted by the Bank of Tanzania (BoT). It serves as the primary mechanism for non-inflationary budget
financing and development project funding.
As of early 2026, Tanzania's government securities market exhibits remarkable resilience: auctions remain consistently
oversubscribed, yields have stabilized within the 9–12% range, and institutional demand continues to grow — reflecting
investor confidence underpinned by stable inflation at 3.2% and projected GDP growth of 6.0–6.3%.
Key Context
Tanzania's domestic debt stock reached TZS 38,114.8 billion in October 2025 (~17% of GDP),
with Treasury Bonds comprising ~70% of the total, reflecting a deliberate strategy toward longer-duration, more stable financing.
Main Market Instruments
📋
Treasury Bills
Maturity: 35 · 91 · 182 · 364 Days
Short-term government debt instruments used for liquidity management and immediate budget financing. Auctioned weekly by the Bank of Tanzania via competitive bidding.
🏛️
Treasury Bonds
Maturity: 2 – 25 Years
Long-term government securities issued to finance development projects: infrastructure, hydropower, roads, and agriculture. Provide stable, predictable debt servicing costs.
Typical Buyers of Government Securities
Commercial Banks
Pension Funds
Insurance Companies
Institutional Investors
Why the Government Securities Market Matters
Importance of Government Securities Market in Tanzania
Function
Explanation
Impact
Government Financing
Supports budget deficits and development projects without printing money
High
Monetary Policy Tool
Used by Bank of Tanzania (BoT) for open-market liquidity management
High
Benchmark Interest Rate
Treasury yields serve as reference rates for loans, mortgages, and other instruments
Medium
Safe Investment Asset
Low-risk option for institutional investors — pension funds, banks, insurers
Medium
Debt Sustainability
Reduces reliance on external (foreign currency) borrowing, mitigating FX risk
High
Source: Bank of Tanzania; TICGL Analysis 2026
2
Section 02
Treasury Bills — Auction Performance
Treasury Bill auctions are conducted weekly by the Bank of Tanzania across four tenors: 35-day, 91-day,
182-day, and 364-day instruments. From October 2025 through January 2026, every auction was oversubscribed,
a clear signal of sustained institutional confidence in short-term government paper.
Yields edged slightly upward from the 9–10% range in October 2025 to 11–12% by January 2026 — a reflection of
tightening liquidity conditions and evolving market expectations ahead of the central bank's
policy decisions. Crucially, this yield movement occurred within an orderly market, with the
government consistently absorbing its full tender each auction cycle.
Treasury Bills Auction Results (Oct 2025 – Jan 2026)
Month
Tender Size (TZS Bn)
Bids Submitted (TZS Bn)
Successful Bids (TZS Bn)
Wtd. Avg. Yield
Oversubscription
Oct 2025
~560
~740
~560
9.0 – 10.0%
+32%
Nov 2025
~560
~720
~560
~10.0%
+29%
Dec 2025
~560
~800
~560
~11.0%
+43%
Jan 2026
~560
~840
~560
11.0 – 12.0%
+50%
Source: Bank of Tanzania Auction Reports, TICGL compilation. Bids submitted and tender sizes are approximations based on BoT data.
Treasury Bills: Demand vs. Tender Size & Yield Trend
Monthly auction performance — Oversubscription and weighted average yield movement
Oct 2025 – Jan 2026
Bid Oversubscription Rate — Monthly Trend
Percentage by which bids submitted exceeded the government's tender size
Investor Demand Indicator
✅ Key Observation
Every Treasury Bill auction from October 2025 to January 2026 was oversubscribed — meaning the market offered more funds
than the government required. This indicates exceptionally high investor confidence in Tanzanian government debt instruments.
The rise in oversubscription from ~32% (Oct 2025) to ~50% (Jan 2026) signals deepening domestic capital markets.
3
Section 03
Treasury Bonds — 10-Year Auction Analysis
Alongside the weekly Treasury Bill auctions, the Bank of Tanzania conducts periodic Treasury Bond auctions
for longer tenors ranging from 2 to 25 years. These bonds are critical instruments for financing Tanzania's
long-term development agenda — hydropower, roads, industrial zones, and social infrastructure.
The January 2026 10-year Treasury Bond auction stands as a landmark result: oversubscribed by approximately
34%, with a weighted average yield of 11.30% — a borrowing cost that remains favorable by regional standards.
The high demand reflects growing pension fund and insurance company allocations to domestic long-duration paper.
10-Year Treasury Bond Auction — January 2026
Indicator
Value (TZS Billion)
Interpretation
Tender Size
144.6
Government's target raise for this auction
Total Bids Received
194.1
Market offered TZS 49.5 billion above the tender
Successful Bids
118.9
Government accepted below tender — managing yield levels
Weighted Average Yield
11.30%
Favorable long-term borrowing cost for the government
Oversubscription Rate
~34%
Strong institutional demand for long-duration GoT paper
Source: Bank of Tanzania, January 2026 Bond Auction Results
10-Year Treasury Bond: Tender vs. Bids vs. Successful Allocations
Visual breakdown of the January 2026 auction — government's strategic acceptance below tender
Jan 2026
Yield Comparison: Treasury Bills vs. 10-Year Treasury Bond
Tanzania's yield curve — risk-return relationship across maturities
Yield Curve Snapshot
⚠️ Strategic Note
The government accepted TZS 118.9 billion — below the TZS 144.6 billion tender — to maintain favorable
yield levels and avoid upward pressure on long-term borrowing costs. This disciplined approach to debt management
demonstrates sound fiscal stewardship by the Ministry of Finance and BoT.
4
Section 04
Interbank Cash Market — IBCM Analysis
The Interbank Cash Market (IBCM) is where commercial banks lend and borrow short-term funds
among themselves to manage daily liquidity positions. It serves as a critical transmission mechanism
for monetary policy — interest rates here respond quickly to the Central Bank Rate (CBR) set by the Bank of Tanzania.
In January 2026, total IBCM turnover reached TZS 2,868.9 billion, a slight decline from December's
TZS 3,481.9 billion — reflecting post-year-end normalisation rather than market stress. The dominant tenor was
7-day transactions, accounting for 73.2% of all interbank activity.
IBCM Market Activity — January 2026
Indicator
Value
Context
Total Market Turnover (Jan 2026)
TZS 2,868.9 Bn
Active market — supports smooth bank liquidity operations
Previous Month Turnover (Dec 2025)
TZS 3,481.9 Bn
Higher Dec activity driven by year-end liquidity demand
Month-on-Month Change
–17.6%
Normalisation post year-end, not a sign of market stress
Dominant Tenor
7-Day Transactions
Banks prefer 7-day instruments for predictable short-term management
Share of 7-Day Transactions
73.2%
Signals preference for medium short-term over overnight borrowing
Source: Bank of Tanzania Monthly Economic Review, January 2026
Interbank Transaction Tenor Breakdown
~15%
Overnight
~12%
2–6 Days
73.2%
7 Days
Chart: IBCM transaction share by tenor — January 2026. The 7-day rate serves as a benchmark indicator of overall banking system liquidity.
Interbank Cash Market — Monthly Turnover Trend
TZS Billion — estimated turnover Q4 2025 through January 2026
IBCM Activity
IBCM Transaction Structure by Tenor — January 2026
Share of interbank lending by maturity bucket
Tenor Distribution
Monetary Policy Transmission Chain
BoT Sets
CBR: 5.75%
→
IBCM Responds
7-Day Rate
→
Banks Price
Lending Rates
→
Economy
Credit Growth
Bank of Tanzania Liquidity Management Instruments
Instrument
Direction
Purpose
Effect on IBCM
Reverse Repo
Inject ↑
BoT buys securities from banks — adds liquidity
Pushes IBCM rate down toward CBR floor
Repo
Absorb ↓
BoT sells securities to banks — drains liquidity
Pushes IBCM rate up within policy corridor
Government Securities (OMO)
Dual
Open Market Operations — fine-tune liquidity
Anchors overnight and short-term rates
Standing Lending Facility
Emergency ↑
Emergency liquidity backstop for commercial banks
Sets ceiling on IBCM rates
Source: Bank of Tanzania Monetary Policy Framework; TICGL Analysis 2026
How Government Securities and Interbank Market Interact
🏛️ Government Securities Market
▸ Used for government borrowing and fiscal financing
▸ Provides safe, liquid investment assets for banks
▸ Influences banking system liquidity when banks buy securities
▸ Sets the benchmark yield curve for the economy
🏦 Interbank Cash Market (IBCM)
▸ Used for bank-to-bank short-term liquidity management
▸ Responds to liquidity changes caused by T-Bill purchases
▸ Transmits BoT monetary policy to the real economy
💡 The Feedback Loop Explained
When banks purchase large volumes of Treasury Bills, their available cash reserves fall. To meet reserve requirements or fund daily operations,
these banks then borrow from the interbank market. This raises IBCM demand and can push short-term rates higher —
creating a direct feedback loop between the government securities market and interbank liquidity conditions.
5
Section 05
Key Market Indicators — Tanzania, January 2026
The table below synthesizes the most critical data points from Tanzania's financial markets as of January 2026,
drawing from Bank of Tanzania publications and TICGL research. Together, these indicators paint a picture of a
stable, well-functioning domestic financial system.
Indicator
Value
Status
Signal
Treasury Bill Demand
Oversubscribed every auction
✅ Strong
High investor confidence in short-term GoT debt
T-Bill Weighted Avg. Yield (Jan 2026)
11.0 – 12.0%
Elevated
Tight liquidity; slight upward yield pressure
10-Year Bond Yield
11.30%
✅ Stable
Favorable long-term borrowing cost
10-Year Bond Oversubscription
~34%
✅ Strong
Deep institutional appetite for long-duration GoT bonds
IBCM Turnover (Jan 2026)
TZS 2,868.9 Bn
Active
Healthy bank-to-bank liquidity trading
Dominant IBCM Tenor
7-Day
Normal
Short-term focus reflects standard liquidity management
Share of 7-Day Transactions
73.2%
Dominant
Market benchmark for system-wide liquidity
Central Bank Rate (CBR)
5.75%
✅ Stable
Accommodative stance supporting growth targets
Domestic Debt / GDP
~17%
✅ Sustainable
Well within international thresholds
Tanzania Inflation (Feb 2026)
3.2%
✅ Within Target
BoT target range: 3–5%
Source: Bank of Tanzania; National Bureau of Statistics; TICGL Research, March 2026
Tanzania Financial Market Health — Multi-Metric Overview
Composite assessment across six dimensions — January 2026 (scores are illustrative normalised ratings)
Market Dashboard
Related TICGL Resources
Explore more from Tanzania's leading economic intelligence platform
Economic Implications — Tanzania's Growth & Development
The government securities market is far more than a financing mechanism — it is a strategic lever
for Tanzania's macroeconomic management. Its performance directly shapes the country's fiscal space,
monetary policy effectiveness, investor confidence, and long-run growth potential.
Tanzania's economy is forecast to grow at 6.0–6.3% in 2026, up from 5.9% in 2025, with the government
securities market playing a central enabling role. Domestic securities fund approximately 34% of the FY 2025/26
budget (TZS 49.2 trillion), channelling resources into infrastructure, agriculture, mining, and construction —
the four pillars of Tanzania's current growth model.
Tanzania GDP Growth Trajectory
2023
5.1%
Actual GDP Growth
2024
5.5%
Actual GDP Growth
2025
5.9%
Actual GDP Growth
2026 F
6.3%
Forecast (BoT/IMF)
2027+ F
6.9%
Medium-Term Target
Tanzania GDP Growth Rate — Historical & Forecast (2021–2027)
Percentage annual growth — shaded area represents government securities market contribution period
Growth Trajectory
📌 Context
Tanzania's public debt stands at approximately 40.6% of GDP in FY 2025/26 — well below the
IMF/World Bank risk threshold of 55% for low-income countries. This fiscal headroom enables the government
to continue accessing domestic capital markets without triggering debt sustainability concerns.
7
Implication 01
Financing Development Projects — Fiscal Space & Budget Support
The government securities market funds ~34% of Tanzania's FY 2025/26 national budget (TZS 49.2 trillion),
providing non-inflationary financing for critical development priorities. Low average yields of approximately
10.8% keep annual debt servicing at a manageable ~6.5% of the budget — freeing significant
fiscal resources for productive investment.
Major beneficiaries include the hydropower sector (planned additions of 1.2–1.5% to GDP), road infrastructure,
and agricultural programmes — which together generated ~160,000 new jobs from new investments in 2025.
The government's Vision 2050 industrialisation goals depend critically on this market's continued depth and stability.
FY 2025/26 Government Budget — Financing Sources
Estimated share of TZS 49.2 trillion budget by funding mechanism
Fiscal Structure
Domestic Borrowing & Debt Metrics — Tanzania 2025/26
Metric
FY 2025/26
FY 2026/27 (Projected)
Assessment
Total Domestic Borrowing
~TZS 12.8 Tn
TZS 15.24 Tn
Increasing
Domestic Debt Stock
TZS 38,114.8 Bn
Est. TZS 42,000+ Bn
Manageable
Domestic Debt / GDP
~17%
~18–19%
Sustainable
Total Public Debt / GDP
~40.6%
~42%
Below 55% threshold
Debt Service / Budget
~6.5%
~7–8%
Moderate
Bonds Share of Domestic Debt
~70%
~72%
Longer-duration stability
Avg. Weighted Yield (T-Bills)
~10.8%
~11–12%
Slight upward pressure
Source: Bank of Tanzania; Ministry of Finance Tanzania; TICGL Analysis, March 2026
Key Sectors Financed Through Government Securities — FY 2025/26
Estimated allocation of domestically-financed development expenditure by sector
Sectoral Allocation
✅ Development Impact
Tanzania's domestic securities market financed a hydropower expansion program expected to add
1.2–1.5 percentage points to GDP. Combined with road infrastructure spending,
this domestically-financed investment created approximately 160,000 new jobs in 2025 —
demonstrating the market's direct link to inclusive growth.
8
Implication 02
Monetary Policy Transmission — Stability & Inflation Control
Government securities are the primary instrument through which the Bank of Tanzania conducts
Open Market Operations (OMO) — injecting or absorbing liquidity as needed to keep the banking
system in balance. This transmission chain runs from the Central Bank Rate (CBR at 5.75% in Q1 2026)
through the interbank market, to commercial lending rates, and ultimately to the real economy.
The effectiveness of this chain is validated by Tanzania's inflation performance: at 3.2% in
February 2026, inflation sits squarely within the Bank of Tanzania's 3–5% target band —
shielding households from price instability and supporting real consumer purchasing power.
Private credit growth of 16.1% year-on-year further attests to the health of
monetary transmission.
Monetary Policy & Stability Indicators — Q1 2026
Indicator
Value
Target / Benchmark
Status
Central Bank Rate (CBR)
5.75%
Policy corridor anchor
Accommodative
Tanzania Inflation Rate (Feb 2026)
3.2%
BoT target: 3–5%
✅ On Target
Private Sector Credit Growth (YoY)
16.1%
Target: 20%+
Below target
T-Bill Yield Serving as Benchmark
11.0–12.0%
Market lending rate reference
Elevated
Bank Holdings of Gov. Securities
~70% of IBCM assets
—
Crowding-out risk
Foreign Exchange Reserves
USD 6.3 Billion
Min. 4 months import cover
~5 months cover
Source: Bank of Tanzania Monetary Policy Statement Q1 2026; NBS Tanzania; TICGL Research
Inflation vs. Private Sector Credit Growth — Tanzania 2023–2026
Dual-axis comparison: inflation control (left) vs. credit expansion (right)
Monetary Indicators
⚠️ Crowding-Out Risk
Commercial banks' heavy allocation to government securities (~70% of liquid assets) may
restrict credit availability for private sector SMEs. Private sector credit growth
at 16.1% YoY remains below the 20%+ target needed to drive job creation among Tanzania's youth
(unemployment ~13.4%). Policymakers must balance fiscal needs with private-sector lending capacity.
9
Implication 03
Investor Confidence — Domestic Capital Mobilisation & FDI
Consistent oversubscription of government securities sends a powerful signal to both domestic and
international investors: Tanzania's financial system is credible, stable, and deepening.
This confidence effect radiates beyond the bond market — contributing to a favourable environment
for Foreign Direct Investment (FDI), which reached approximately USD 11 billion in 2025,
with a target of USD 15 billion for 2026.
Pension funds, insurance companies, and other institutional investors — whose domestic savings are
channelled into government paper — represent significant untapped capital. Analysts
estimate that redirecting excess auction capacity (TZS 50–100 billion per auction above government needs)
toward green bonds or SME guarantee facilities could add 0.5–1.0 percentage points
to annual GDP growth.
Tanzania FDI & Investment Confidence — Key Metrics
Indicator
2024
2025
2026 Target
Driver
FDI Inflows
~USD 9.5 Bn
~USD 11 Bn
USD 15 Bn
Policy reforms, stable macro environment
New Investment Projects Approved
~780
927
1,000+
TIC facilitation, lower regulatory friction
Jobs from New Investments
~130,000
~160,000
180,000+
Infrastructure-led investment expansion
Household Savings Rate
~11%
~12%
13–14%
Deepening financial sector access
External Debt Share of Total Debt
~71%
~69.5%
68%
Shift toward domestic financing
Foreign Reserves (Import Cover)
~4.7 months
~5.0 months
5+ months
Strong gold & export earnings
Source: Tanzania Investment Centre (TIC); Bank of Tanzania; IMF Article IV 2025; TICGL Analysis
Tanzania FDI Inflows vs. New Investment Projects — 2021–2026
USD Billion inflows (bars) and number of approved projects (line) — reflects market confidence signal
Investment Climate
✅ Capital Market Opportunity
Excess bids in Treasury Bill and Bond auctions (TZS 50–100 billion above tender per cycle) signal significant
untapped domestic capital. Structured products such as green bonds, housing bonds, or SME
guarantee instruments could redirect this liquidity into higher-impact productive investment — potentially
adding 0.5–1.0% to annual GDP growth and accelerating Tanzania's transition to self-reliant, inclusive development.
10
Implication 04
Risks & Challenges — Headwinds to Sustained Growth
While Tanzania's government securities market performs strongly, it is not without risks.
The primary concern is the crowding-out effect: as the government borrows more
domestically to fund a projected TZS 15.24 trillion in FY 2026/27, it competes directly with
private sector borrowers for the same pool of bank funds. This dynamic can constrain SME lending,
slow private investment diversification, and limit youth employment opportunities.
External shocks — particularly oil price volatility and tightening global financial conditions —
could raise yields beyond the current 11–12% range, increasing debt-servicing costs and squeezing
fiscal space. Analysts note Tanzania's strong buffers (USD 6.3 billion reserves, stable gold export
earnings) provide meaningful protection, but sustained vigilance remains essential.
Opportunities vs. Risks — Balanced Assessment
✅ Opportunities
▸ Deepening domestic capital markets through longer-tenor issuance (25-year bonds)
▸ Green bond issuance to fund climate-resilient infrastructure
▸ SME guarantee facilities funded by excess auction liquidity
▸ Pension fund diversification into productive sectors
▸ Reducing external borrowing dependence — lower FX risk
▸ Continued oversubscription signals room for larger tender sizes
Anchors inflation at 3.2%; supports 6.3% GDP forecast; low external risk
External debt risks if global rates rise, though domestic focus mitigates
Net Positive
Investment Attraction
927 new projects in 2025 (~USD 11B); stable credit ratings; policy reforms
Youth unrest or policy gaps could deter FDI; job creation may slow
Net Positive
Monetary Policy
Effective OMO tool; inflation within target; reserves at 5 months cover
Bank-heavy holdings (~70%) risk reducing SME lending if liquidity tightens
Moderate
Debt Sustainability
Total debt-to-GDP ~40.6% — well below 55% IMF threshold
FY 2026/27 borrowing (TZS 15.24 Tn) increases pressure on sustainability
Sustainable
Employment & Inclusion
~160,000 jobs from infrastructure-linked investments in 2025
Crowding-out limits SME finance; youth unemployment persists at ~13.4%
Watch
Source: TICGL Economic Analysis; Bank of Tanzania; IMF; World Bank Tanzania Economic Update 2025
Tanzania Debt Sustainability — Key Ratios vs. Risk Thresholds
Current levels (blue) plotted against IMF/World Bank risk thresholds (red dashed). Values in % of GDP.
Debt Sustainability
Four Pillars of Economic Impact
🏗️
Infrastructure & Fiscal Financing
Domestic securities fund ~34% of the national budget, prioritizing hydropower
(+1.2–1.5% GDP), roads, and industrial zones. Average borrowing cost of ~10.8% keeps debt
servicing at a sustainable 6.5% of budget.
TZS 49.2 Tn — FY 2025/26 Budget Size
📉
Inflation Anchoring & Stability
BoT's use of securities for Open Market Operations keeps inflation at 3.2%
within the 3–5% target. This protects household purchasing power and anchors business
planning confidence across all sectors.
3.2% — Tanzania Inflation, February 2026
💰
FDI & Investment Climate
Consistent oversubscription signals macro credibility, contributing to USD 11B in FDI
in 2025. Stable credit outlook and policy reforms target USD 15B by end-2026,
with 927 new approved investment projects.
USD 11 Bn — Tanzania FDI Inflows, 2025
⚠️
Crowding-Out & SME Risk
Banks holding ~70% of liquid assets in government securities may limit SME credit
access. Private credit growth at 16.1% remains below the 20% target.
Youth unemployment at 13.4% requires urgent private-sector catalysis.
13.4% — Youth Unemployment Rate, 2025
11
Section 11 — Conclusion
Conclusion — Tanzania's Financial Markets in 2026
Tanzania's government securities market and interbank cash market together constitute
a robust, maturing financial infrastructure capable of supporting the country's
ambitious development agenda. The evidence from October 2025 through January 2026 is unambiguous:
every auction was oversubscribed, yields remained within manageable bounds, the interbank market
cleared efficiently, and inflation stayed firmly within target.
These outcomes do not happen by chance. They reflect disciplined monetary management by the
Bank of Tanzania, a deepening institutional investor base, and growing market
confidence in Tanzania's macroeconomic fundamentals. With GDP growth forecast at 6.3% for 2026
and a medium-term target of 6.9%, the securities market is well-positioned to remain a cornerstone
of Tanzania's self-reliant growth strategy.
The primary challenge ahead is ensuring that this financial strength translates into
broad-based, inclusive prosperity — particularly for SMEs, youth, and rural
communities who remain underserved by formal financial markets. Innovative instruments such as
green bonds, infrastructure bonds with retail participation, and SME credit guarantee facilities
could bridge this gap — turning oversubscribed government auctions from a fiscal tool into
an engine of inclusive growth.
✅ TICGL Research Summary
Tanzania's Financial Markets Remain Stable, Deep, and Growth-Enabling
The convergence of consistently oversubscribed auctions, a functioning interbank market,
controlled inflation, and growing FDI inflows positions Tanzania as one of East Africa's
most credible domestic capital markets. With disciplined management, the securities market
can accelerate medium-term GDP to 6.9% and deliver more inclusive development outcomes.
✓
Treasury Bill auctions oversubscribed every month Oct 2025–Jan 2026, with demand rising to 50% above tender
✓
10-Year Treasury Bond yield at 11.30% — favourable long-term borrowing cost for development financing
✓
Interbank market turnover of TZS 2,868.9 Bn in Jan 2026 — efficient bank liquidity management
✓
Inflation at 3.2% within BoT target; GDP growth forecast 6.3% for 2026; debt-to-GDP sustainable at ~40.6%
✓
FDI inflows reached USD 11 Bn in 2025 — investor confidence in Tanzania's macro stability is rising
✓
Key risk: crowding-out of private credit — requires innovative instruments to broaden financial inclusion
Tanzania Financial Market Composite — Key Metrics at a Glance (Jan 2026)
Normalised performance score (0–100) across six market dimensions — for comparative context
Composite Scorecard
Sources:Bank of Tanzania (BoT) Monthly Economic Reviews & Auction Results·National Bureau of Statistics (NBS) Tanzania·Ministry of Finance & Planning Tanzania·Tanzania Investment Centre (TIC)·IMF Article IV Consultation 2025·World Bank Tanzania Economic Update 2025·TICGL Economic Research Division, March 2026
Tanzania Shilling (TZS) vs Inflation Rates - December 2025 Analysis | TICGL Economic Research
Tanzania's economy in late 2025 and early 2026 continued to exhibit resilience, with mainland real GDP growth at 6.4% in Q3 2025, driven by investments in agriculture, mining, construction, and financial services. Headline inflation rose modestly to 3.6% in December 2025, remaining within the 3-5% national target, EAC's ≤8%, and SADC's 3-7%, primarily due to seasonal food pressures.
Core inflation eased to 2.5%, reflecting subdued non-food prices amid declining global commodities. The Tanzanian shilling (TZS) depreciated mildly by 1.3% annually against the USD, trading at an average of TZS 2,452.76 per USD in December, supported by foreign reserves of USD 6,329 million (4.9 months import cover) and export growth (10.2% to USD 17,599.2 million, led by gold and tourism).
Monetary policy, with the Central Bank Rate at 5.75%, anchored stability, fostering 23.5% private credit expansion. These dynamics limited exchange rate pass-through to inflation, enabling sustained development with IMF-projected 6.3% GDP growth in 2026.
GDP Growth Q3 2025
6.4%
Headline Inflation (Dec 2025)
3.6%
TZS Depreciation (Annual)
1.3%
Foreign Reserves
$6.3B
1. Exchange Rate Stability of the Tanzania Shilling
The Tanzania Shilling (TZS) demonstrated remarkable stability throughout 2025, with minimal volatility against major international currencies. The slight monthly depreciation observed in December 2025 underscores the effectiveness of policy buffers implemented by the Bank of Tanzania against global economic pressures. This stability is particularly noteworthy given the turbulent global financial environment characterized by varying monetary policies across major economies.
The marginal depreciation of 1.3% annually indicates well-contained exchange rate pressures that were non-disruptive to trade flows, foreign direct investment (FDI), and overall macroeconomic stability. This performance contrasts favorably with broader currency declines experienced across the African continent in 2025, where several countries faced significant depreciation pressures due to capital outflows and commodity price volatility.
Exchange Rate Performance Data
Indicator
Value
Change
Average Exchange Rate (Dec 2025)
TZS 2,452.76 / USD
-
Average Exchange Rate (Nov 2025)
TZS 2,444.81 / USD
-
Monthly Depreciation
TZS 7.95
0.33%
Annual Depreciation (Dec 2024 vs Dec 2025)
-
1.3%
Foreign Reserves (Dec 2025)
USD 6,329 million
4.9 months import cover
Interpretation:
The marginal depreciation of 1.3% annually indicates contained exchange rate pressures with no significant disruption to trade or investment activities. The TZS/USD rate movement from 2,444.81 in November to 2,452.76 in December represents a monthly change of just 0.33%, demonstrating exceptional stability. This performance is supported by:
Robust foreign exchange reserves providing 4.9 months of import cover, well above the international benchmark of 3 months
Strong export performance with 10.2% growth, particularly from gold and tourism sectors
Effective monetary policy interventions by the Bank of Tanzania
Improved investor confidence in Tanzania's economic fundamentals
2. Inflation Developments in Tanzania
Tanzania's inflation trajectory in 2025 reflected a well-managed monetary environment, with headline inflation edging up slightly but remaining firmly within the national target range of 3-5%. The modest increase from 3.4% in November to 3.6% in December 2025 was primarily driven by domestic factors, particularly seasonal food price pressures, rather than imported cost inflation or exchange rate pass-through effects.
Significantly, core inflation—which excludes volatile food and energy prices—eased to 2.5% in December 2025 from 3.3% a year earlier, reflecting subdued non-food price pressures. This decline in core inflation demonstrates the effectiveness of monetary policy in containing underlying inflationary pressures and anchoring inflation expectations among economic agents.
Headline and Core Inflation Analysis
Inflation Measure
December 2024
December 2025
Change (pp)
Target Range
Headline Inflation
3.1%
3.6%
+0.5
3-5% (National)
Core Inflation
3.3%
2.5%
-0.8
-
Food Inflation
-
6.7%
-
-
EAC Target
≤ 8.0%
SADC Target
3.0 - 7.0%
Key Drivers of Inflation
Food Prices (6.7%): Seasonal variations in agricultural production, particularly for vegetables and cereals, drove the upward pressure on headline inflation
Processed Goods: Declining prices due to lower global commodity costs and stable exchange rates
Fuel Prices: Reduced from 5.3% to 4.6% annually, benefiting from stable global oil prices around USD 61 per barrel
Core Services: Remained stable with minimal inflationary pressure
Interpretation:
Inflation remained well within the national target range of 3-5%, EAC's target of ≤8%, and SADC's target of 3-7%, despite slight upward pressure from food prices. The uptick from 3.4% in November to 3.6% in December stemmed primarily from unprocessed food items (6.7% inflation), with core inflation easing to 2.5% due to lower prices for processed goods and fuel. This inflation profile demonstrates:
Effective monetary policy in anchoring inflation expectations
Limited exchange rate pass-through to consumer prices
Seasonal food supply dynamics as the primary inflation driver
One of the most significant findings in Tanzania's 2025 inflation dynamics is the minimal exchange rate pass-through to consumer prices. Despite the marginal 1.3% annual depreciation of the Tanzania Shilling, imported inflation remained remarkably contained. This decoupling of exchange rate movements from imported price pressures reflects both the stability of the TZS and subdued global commodity price pressures throughout the year.
The analysis of imported goods categories reveals that the stable TZS effectively prevented imported inflation, particularly for critical categories such as fuel, manufactured inputs, and transport services. This stability in imported goods prices contributed significantly to the overall low inflation environment and supported Tanzania's economic competitiveness.
Inflation by Imported Goods Categories
Category
Annual Inflation (%)
Previous Year
Exchange Rate Impact
Global Price Trend
Energy, Fuel & Utilities
4.6%
5.3%
Low
Declining (Oil at $61/barrel)
Transport
4.1%
4.8%
Moderate
Stable
Manufactured Goods
2.8%
3.5%
Low
Declining
Imported Food Items
3.2%
4.1%
Low
Moderating
Clothing & Footwear
2.1%
2.9%
Minimal
Stable
Key Insight: Exchange Rate Pass-Through Analysis
The stable TZS prevented imported inflation across all major categories, with particularly notable effects on:
Fuel and Energy: Despite being fully imported, fuel inflation declined from 5.3% to 4.6%, benefiting from both stable TZS and lower global oil prices
Manufactured Inputs: Critical for industrial production, these items saw inflation decrease from 3.5% to 2.8%, supporting manufacturing sector competitiveness
Exchange Rate Pass-Through Coefficient: Estimated at approximately 0.15, meaning a 1% depreciation in TZS translates to only 0.15% increase in imported goods prices—well below the African average of 0.35-0.45.
Interpretation:
Exchange rate pass-through to inflation remained limited throughout 2025, reflecting both TZS stability and subdued global price pressures. The stable Tanzanian Shilling effectively curbed imported inflation, particularly evident in the fuel sector where inflation decreased to 4.6% from 5.3% despite Tanzania's complete dependence on imported petroleum products. Global oil prices averaging USD 61 per barrel combined with the stable TZS created a favorable environment for imported goods pricing. This limited pass-through effect can be attributed to:
The relationship between exchange rate stability and inflation control in Tanzania during 2025 exemplifies effective macroeconomic policy coordination. The Bank of Tanzania's monetary policy framework successfully ensured exchange rate stability, which in turn played a crucial role in containing inflationary pressures across the economy. This virtuous cycle was achieved through a combination of prudent policy rate management, adequate liquidity provision, and strategic foreign exchange market interventions.
The effectiveness of monetary policy in 2025 can be attributed to multiple policy anchors working in concert. The Central Bank Rate (CBR), maintained at 5.75%, provided a stable nominal anchor for inflation expectations while supporting credit growth to productive sectors. The interbank cash market (IBCM) rate, hovering around 6.3%, ensured stable liquidity conditions in the banking system, facilitating smooth monetary transmission mechanisms.
Policy Anchors Supporting TZS and Inflation Stability
Policy Variable
Status (Dec 2025)
Previous Period
Inflation Impact
Exchange Rate Impact
Central Bank Rate (CBR)
5.75%
5.50% (Dec 2024)
Anchors inflation expectations
Supports FX stability
7-Day IBCM Rate
~6.3%
~6.0%
Ensures stable liquidity
Maintains market confidence
Foreign Exchange Reserves
USD 6,329 million
USD 5,893 million
Limits imported inflation
Provides FX intervention capacity
Import Cover
4.9 months
4.5 months
Stabilizes import prices
Enhances TZS credibility
Private Sector Credit Growth
23.5%
18.2%
Supports productive capacity
Indicates economic confidence
Money Supply Growth (M3)
15.8%
14.1%
Moderate - within targets
Balanced liquidity
Monetary Policy Transmission Mechanisms
The Bank of Tanzania's policy framework operated through multiple transmission channels in 2025:
Interest Rate Channel: The 25 basis point increase in CBR from 5.50% to 5.75% helped moderate credit demand while maintaining adequate liquidity for productive sectors
Exchange Rate Channel: FX market interventions and reserve accumulation (up 7.4% to USD 6.3 billion) maintained TZS stability, limiting imported inflation
Credit Channel: Despite higher policy rates, private sector credit expanded by 23.5%, indicating strong loan demand and bank intermediation
Expectations Channel: Consistent communication and policy credibility anchored inflation expectations within the 3-5% target range
Interpretation:
Effective monetary policy coordination ensured exchange rate stability, which in turn contained inflationary pressures throughout 2025. The accommodative yet vigilant policy stance—with CBR at 5.75% and IBCM rate around 6.3%—successfully balanced multiple objectives:
Price Stability: Headline inflation remained within the 3-5% target despite seasonal food pressures
Exchange Rate Stability: TZS depreciation limited to 1.3% annually, well below regional peers
Growth Support: 23.5% private credit growth facilitated 6.4% GDP growth
The policy mix demonstrated that inflation control and exchange rate stability are mutually reinforcing under sound macroeconomic management. The limited inflation transmission from the marginal TZS depreciation validates the effectiveness of Tanzania's monetary policy framework.
5. Inflation Structure vs Exchange Rate Sensitivity
A detailed decomposition of Tanzania's inflation structure in December 2025 reveals critical insights into the drivers of price changes and their relationship to exchange rate movements. The analysis demonstrates that inflation pressures were predominantly domestically driven, particularly through food prices, rather than being induced by exchange rate depreciation or imported cost pressures.
This inflation structure has important policy implications. It suggests that exchange rate management, while crucial for overall macroeconomic stability, was not the primary tool for combating inflation in 2025. Instead, supply-side interventions in agriculture and food distribution, along with maintaining stable global commodity prices, were more relevant for inflation control.
Detailed Contribution to Headline Inflation (December 2025)
Component
Weight in CPI Basket (%)
Annual Inflation Rate (%)
Contribution to Headline Inflation (pp)
Exchange Rate Sensitivity
Unprocessed Food
28.5
6.7
1.5
Very Low (Domestic production)
Energy & Fuel
8.2
4.6
0.6
High (100% imported)
Processed Food & Beverages
15.3
3.8
0.5
Moderate (Mix of local/imported)
Transport Services
9.1
4.1
0.4
Moderate (Fuel-dependent)
Housing & Utilities
12.4
2.9
0.3
Low (Mostly domestic)
Clothing & Footwear
6.8
2.1
0.1
Moderate (Imported textiles)
Health
4.2
2.5
0.1
High (Imported pharmaceuticals)
Communication
3.8
0.8
0.0
Low (Competitive market)
Recreation & Culture
3.5
1.9
0.1
Moderate
Other Goods & Services
8.2
2.7
0.0
Low to Moderate
TOTAL HEADLINE INFLATION
100.0
3.6
3.6
-
Key Insight: Domestic vs External Inflation Drivers
The inflation decomposition reveals a clear dominance of domestic factors:
Domestic-Driven Components (Low FX Sensitivity): 2.4 percentage points
Unprocessed food: 1.5 pp (largest contributor)
Housing & utilities: 0.3 pp
Processed food: 0.3 pp (partial)
Other domestic services: 0.3 pp
Import-Sensitive Components (High/Moderate FX Sensitivity): 1.2 percentage points
Energy & fuel: 0.6 pp
Transport: 0.4 pp
Other imported goods: 0.2 pp
Critical Finding: Approximately 67% of inflation (2.4 out of 3.6 percentage points) stemmed from domestically-driven components with low exchange rate sensitivity. This reinforces the view that TZS weakness was not the primary inflation driver in 2025.
Interpretation:
Inflation pressures in Tanzania during 2025 were domestically driven (primarily food) rather than exchange rate-induced, reinforcing the view that TZS weakness was not the inflation driver. The detailed breakdown shows:
Food Dominance: Unprocessed food alone contributed 1.5 percentage points (42% of total inflation), driven by seasonal supply variations in vegetables, cereals, and livestock products
Limited FX Impact: Even fully imported items like fuel (4.6% inflation) showed declining price pressures due to both stable TZS and lower global oil prices
Core Stability: Non-food, non-energy components remained subdued, with core inflation at 2.5%
Policy Effectiveness: The structure validates monetary policy focus on exchange rate stability as sufficient for imported inflation control
This inflation structure suggests that future policy interventions should prioritize agricultural productivity and food supply chain efficiency to address the primary inflation driver, while maintaining current exchange rate management to contain imported pressures.
6. Analytical Summary: TZS vs Inflation - The Complete Picture
The comprehensive analysis of Tanzania's macroeconomic performance in 2025 reveals a nuanced relationship between the Tanzania Shilling and inflation dynamics. The evidence overwhelmingly demonstrates that inflation was not driven by exchange rate depreciation, but rather by domestic factors, particularly food prices. This finding has significant implications for policy formulation and economic outlook for 2026 and beyond.
The relationship between the TZS and inflation can be characterized by three key attributes: stability, limited transmission, and effective policy management. The marginal 1.3% annual depreciation of the shilling was successfully insulated from the inflation process through a combination of adequate foreign reserves, prudent monetary policy, and favorable global commodity price trends.
Comprehensive Relationship Matrix: TZS vs Inflation
Factor
Effect on Inflation
Current Assessment (Dec 2025)
Supporting Evidence
Policy Implication
Shilling Depreciation
Low
Only 1.3% annually
Minimal exchange rate volatility; TZS moved from 2,420 to 2,453 per USD
Continue reserve accumulation and FX market monitoring
Imported Inflation
Minimal
Stable FX rate limited pass-through
Fuel inflation declined to 4.6%; manufactured goods at 2.8%
Maintain exchange rate stability as inflation anchor
Food Prices
High
Dominant driver (6.7% inflation)
Contributed 1.5 pp to headline; seasonal supply constraints
Invest in agricultural productivity and storage infrastructure
Core Inflation
Declining
Eased to 2.5% from 3.3%
Non-food, non-energy prices stable; global commodity disinflation
Inflation within 3-5% target; credit growth at 23.5%
Data-dependent approach; ready to adjust if inflation risks emerge
Export Performance
Supporting
Strong growth (10.2%)
Exports reached USD 17.6B; gold and tourism leading
Diversify export base; support tourism recovery
Key Takeaway: Policy Perspective for 2026
Inflation in Tanzania during 2025 was NOT driven by the Tanzania Shilling. The comprehensive evidence shows:
✓ What Worked Well
TZS remained stable (1.3% depreciation)
Imported inflation was contained
Core inflation declined to 2.5%
Foreign reserves increased to 4.9 months
Export growth accelerated (10.2%)
Monetary policy credibility strengthened
⚠ Areas Requiring Attention
Food prices remain volatile (6.7% inflation)
Seasonal supply constraints persist
Agricultural productivity needs improvement
Food storage and distribution infrastructure gaps
Climate vulnerability in agriculture
Policy Recommendations for Sustaining Low-Inflation Growth in 2026:
Maintain Exchange Rate Stability: Continue building foreign reserves toward 5+ months import cover; active FX market monitoring to prevent speculative pressures
Address Food Supply Constraints: Invest in agricultural infrastructure (irrigation, storage); improve market linkages; support climate-resilient farming practices
Sustain Export Competitiveness: Diversify beyond gold and tourism; support manufacturing exports; improve trade logistics and customs efficiency
Fiscal Prudence: Maintain fiscal discipline to avoid domestic financing pressures that could threaten monetary stability
Data-Dependent Monetary Policy: Be prepared to adjust CBR if inflation expectations drift above target; maintain credibility through transparent communication
Monitor Global Risks: Watch for oil price spikes, global financial tightening, or commodity shocks that could affect TZS or imported inflation
2026 Outlook: With IMF projecting 6.3% GDP growth, Tanzania is well-positioned for sustained development. The key challenge is ensuring this growth remains inclusive while maintaining macroeconomic stability. The proven effectiveness of monetary policy in 2025 provides confidence, but addressing structural food inflation requires complementary supply-side interventions.
Comparative Regional Perspective
Tanzania's macroeconomic performance in 2025 compares favorably with regional peers:
Country
Inflation Rate (2025)
Currency Depreciation (vs USD)
GDP Growth (2025)
Reserves (Months)
Tanzania
3.6%
1.3%
6.4%
4.9
Kenya
5.8%
4.2%
5.3%
3.8
Uganda
4.5%
2.1%
6.0%
4.2
Rwanda
6.2%
3.8%
7.1%
3.5
EAC Average
5.3%
2.9%
6.2%
4.1
Tanzania's advantages: Lowest inflation in EAC, strongest currency stability, highest reserves coverage, and GDP growth above regional average. This demonstrates the effectiveness of Tanzania's macroeconomic policy framework.
Conclusion: A Story of Macroeconomic Resilience
Tanzania's economic performance in 2025 represents a case study in effective macroeconomic management. The central finding—that inflation was not driven by exchange rate depreciation—validates the country's monetary policy framework and provides important lessons for sustaining stability in 2026.
The Tanzania Shilling's stability, supported by strong fundamentals including rising foreign reserves, robust export performance, and prudent monetary policy, successfully insulated the economy from imported inflation pressures. Meanwhile, the primary inflation driver—food prices—reflects domestic supply-side challenges that require structural interventions beyond monetary policy.
Looking ahead to 2026, Tanzania's economic prospects remain favorable with projected 6.3% GDP growth. However, sustaining this momentum while maintaining price stability requires continued vigilance on multiple fronts: preserving exchange rate stability through reserve accumulation, addressing agricultural productivity constraints, maintaining fiscal discipline, and remaining responsive to both domestic and global economic developments.
Final Thoughts for Investors and Policymakers
For Investors: Tanzania's macroeconomic stability provides a favorable environment for long-term investment. Low inflation, stable currency, and robust growth create predictable returns and minimal currency risk.
For Policymakers: The 2025 experience demonstrates that exchange rate stability and inflation control are mutually reinforcing under sound policy. Continue this approach while addressing structural constraints in agriculture.
For Businesses: Predictable macroeconomic conditions support business planning and investment. However, monitor food price volatility if in related sectors, and leverage strong credit growth (23.5%) for expansion.
For Development Partners: Support agricultural infrastructure and climate resilience programs to address the primary inflation driver, complementing Tanzania's effective monetary policy framework.
Tanzania Shilling Stability vs National Debt Analysis (December 2025) | TICGL Economic Research
Tanzania Shilling Stability vs National Debt
A Comprehensive Economic Analysis of Currency Resilience Amid Rising Public Debt
📅 December 2025
🏢 TICGL Research
📊 Economic Analysis
🇹🇿 Tanzania
01
Tanzanian Shilling (TZS) Stability
The Tanzanian shilling has demonstrated remarkable stability throughout 2025 despite rising public debt levels. This resilience is primarily attributable to three key factors: adequate foreign exchange reserves, controlled domestic borrowing practices, and effective monetary policy operations by the Bank of Tanzania.
December 2025 Rate
2,452.76
TZS per USD - showing minimal monthly volatility
Annual Depreciation
1.3%
Significantly lower than regional peers
2024 Performance
+3.8%
Appreciation against the USD
Table 1: Exchange Rate Performance of the Tanzanian Shilling
Indicator
Value
Average Exchange Rate (Dec 2025)
TZS 2,452.76 / USD
Average Exchange Rate (Nov 2025)
TZS 2,444.81 / USD
Monthly Movement
Slight depreciation
Annual Depreciation
1.3%
2024 Comparison
+3.8% appreciation
TZS/USD Exchange Rate Trend (Nov-Dec 2025)
The chart demonstrates the stable trajectory of the Tanzanian Shilling against the US Dollar
💡 Key Interpretation
The shilling exhibited remarkably low volatility throughout the period, indicating that rising debt levels have not triggered exchange-rate pressure. This stability reflects strong institutional frameworks, prudent fiscal management, and adequate external buffers that have insulated the currency from debt-related vulnerabilities.
02
National Debt Position
Tanzania's national debt structure is characterized by external debt dominance, accounting for nearly 70% of total obligations. While this composition presents exchange-rate exposure risks, current levels remain manageable due to substantial foreign reserves and robust export earnings, particularly from gold and tourism sectors.
Total National Debt
134.9T
TZS trillion (December 2025)
External Debt Share
69.5%
TZS 93.7 trillion in foreign obligations
Domestic Debt Share
30.5%
TZS 37.9 trillion locally held
Table 2: Total National Debt Stock
Debt Category
Amount
Total National Debt
TZS 134.9 trillion
External Debt
TZS 93.7 trillion
Domestic Debt
TZS 37.9 trillion
Share of External Debt
69.5%
Share of Domestic Debt
30.5%
USD figures converted using Dec 2025 average rate: TZS 2,452.76/USD
National Debt Composition (TZS Trillion)
Visual breakdown of Tanzania's debt structure showing external debt dominance
💡 Key Interpretation
Tanzania's debt structure is external-debt dominant, which creates exchange-rate exposure as these obligations must be serviced in foreign currency. However, this risk is currently cushioned by adequate foreign reserves (TZS 15.5 trillion) and strong export earnings from gold, tourism, and agricultural products. The government's ability to maintain this balance will be critical for continued currency stability.
03
Domestic Debt and Shilling Stability
Tanzania's domestic debt profile reveals a well-structured portfolio dominated by long-term treasury bonds, which significantly reduces short-term liquidity pressures on the shilling. The local creditor base, comprising primarily commercial banks, pension funds, and the central bank, further insulates the currency from external exchange-rate shocks.
Domestic Debt Stock
37.9T
TZS billion total domestic obligations
Treasury Bonds
81.6%
Long-term bonds (TZS 30.9T)
Treasury Bills
5.2%
Short-term bills (TZS 2.0T)
Table 3: Government Domestic Debt Stock
Indicator
Amount (TZS billion)
Domestic Debt Stock
37,899.0
Treasury Bonds
30,924.8
Treasury Bills
1,951.9
Non-Securitized Debt (overdrafts, etc.)
4,886.5
Domestic Debt Structure Breakdown
Distribution of domestic debt instruments showing bond dominance
💡 Key Insight
Most domestic debt is structured as long-term bonds (81.6% of total), which reduces short-term liquidity stress on the shilling. This maturity profile allows the government to spread repayment obligations over extended periods, minimizing the risk of sudden currency depreciation due to large, concentrated redemptions.
Table 4: Holders of Domestic Debt
Creditor
Amount (TZS billion)
Share (%)
Commercial Banks
10,979.6
29.0%
Pension Funds
10,352.2
27.3%
Bank of Tanzania
6,695.2
17.7%
Insurance Companies
2,006.1
5.3%
Others
7,128.0
18.8%
Distribution of Domestic Debt Holders
Breakdown showing local institutional ownership of government debt
💡 Key Interpretation
Domestic debt is predominantly held by local institutions (commercial banks 29%, pension funds 27.3%, and Bank of Tanzania 17.7%), meaning there is no direct foreign-exchange pressure from repayments. This domestic creditor base provides stability, as debt service occurs in local currency without requiring foreign exchange outflows, thereby protecting the shilling from external volatility.
04
External Debt, FX Reserves, and Shilling Protection
While Tanzania's external debt position is substantial at TZS 93.7 trillion, representing 69.5% of total national debt, this exposure is effectively managed through adequate foreign exchange reserves and robust export earnings. The country's foreign reserves provide a critical buffer against exchange rate volatility and ensure the government's ability to meet external obligations.
External Debt Stock
93.7T
TZS trillion (USD 38.2 billion)
Foreign Reserves
15.5T
TZS trillion (USD 6.3 billion)
Import Cover
4.9
Months - Above EAC benchmark
Table 5: External Debt vs Foreign Reserves
Indicator
Value
External Debt Stock
TZS 93.7 trillion
Foreign Exchange Reserves
TZS 15.5 trillion
Import Cover
4.9 months
Reserve Adequacy
Above EAC benchmark
External Debt vs Foreign Exchange Reserves (TZS Trillion)
Comparison showing the relationship between external debt obligations and reserve buffers
Foreign Reserves Import Coverage
Tanzania's import cover exceeds the East African Community benchmark of 4.5 months
💡 Key Interpretation
Although external debt is large, foreign exchange reserves are sufficient to stabilize the shilling and manage external obligations in the short-to-medium term. The import cover of 4.9 months exceeds the East African Community benchmark of 4.5 months, demonstrating Tanzania's capacity to absorb external shocks. Additionally, strong export performance from gold, tourism, and agricultural commodities provides ongoing foreign currency inflows that support reserve adequacy and debt servicing capacity.
05
Debt Servicing and Exchange Rate Pressure
Domestic debt servicing operations are conducted entirely in Tanzanian Shillings, which eliminates direct foreign exchange pressure on the currency. This contrasts sharply with external debt obligations, which require foreign currency and can potentially create depreciation pressures if not properly managed through adequate reserves and export earnings.
Breakdown of principal and interest payments for domestic debt obligations
💡 Key Insight
Domestic debt servicing is denominated and paid in TZS, meaning it does not directly weaken the shilling through foreign exchange outflows. The total domestic servicing burden of TZS 488.0 billion in December 2025, while substantial, is manageable within the government's revenue framework and does not create external currency pressures. This contrasts with external debt servicing, which requires USD and can pressure reserves if export earnings decline or capital flows reverse.
06
Analytical Summary: Shilling Stability vs Debt
A comprehensive assessment of the factors influencing Tanzania's exchange rate stability reveals a nuanced picture where debt levels, while elevated, are not currently threatening currency stability. This resilience stems from a combination of prudent debt management, strong institutional frameworks, and favorable external conditions.
Tanzania's shilling stability is currently not threatened by national debt, mainly because:
✓Domestic debt is shilling-denominated and locally held – This eliminates direct foreign exchange pressure and ensures that debt service operations support rather than undermine currency stability.
✓External debt is cushioned by strong FX reserves and exports – With 4.9 months of import cover and robust export performance in gold, tourism, and agriculture, Tanzania maintains adequate buffers against external shocks.
✓Monetary policy is effectively anchoring liquidity and interest rates – The Bank of Tanzania's Interest-Based Currency Management (IBCM) framework, aligned with the Central Bank Rate, provides a strong institutional anchor for currency stability.
⚠️ Looking Ahead: Sustainability Considerations
While current conditions support shilling stability, continued vigilance is required in several areas:
Export Performance: Sustained strength in gold prices and tourism receipts is critical for maintaining reserve adequacy.
External Debt Management: As external debt matures, careful refinancing strategies will be needed to avoid bunching of obligations.
Fiscal Discipline: Maintaining the current trajectory of controlled domestic borrowing will be essential for preventing inflation and currency pressure.
Global Economic Conditions: Changes in global interest rates, commodity prices, or capital flows could alter the risk landscape.
Contribute to cutting-edge economic research and analysis on Tanzania's economy. Join our team of expert researchers and help shape policy discussions.
About this Analysis: This report is based on December 2025 data from the Bank of Tanzania, Ministry of Finance, and other official sources. For the most current economic indicators and updates, please visit our
Tanzania Business Intelligence Dashboard.
