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
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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
Government Securities Market Tanzania December 2025 | Treasury Bills & Bonds Analysis | TICGL
Economic Analysis • December 2025
Government Securities Market Tanzania: December 2025 Comprehensive Report
In-depth analysis of Tanzania's government securities market performance, treasury instruments, interbank cash market dynamics, and monetary policy transmission effectiveness.
Published: December 2025
By: TICGL Research Team
Category: Financial Markets & Economic Development
Executive Summary
Tanzania's financial markets demonstrated exceptional strength and liquidity throughout December 2025, underpinned by robust macroeconomic fundamentals and effective monetary policy transmission. The government securities market remained highly active, with Treasury Bills experiencing declining yields to 5.87% and Treasury Bonds achieving remarkable oversubscription rates of 3.44x for the 20-year instrument.
The interbank cash market (IBCM) witnessed extraordinary growth, with turnover surging to TZS 3,481.9 billion—a 95.5% month-on-month increase and 115.3% year-on-year expansion. This market dynamism reflects strong investor confidence, ample banking sector liquidity, and the Bank of Tanzania's successful monetary policy framework anchored at a 5.75% Central Bank Rate (CBR).
GDP Growth (Q3 2025)
6.4%
Mainland Real GDP
Inflation Rate
3.6%
Within 3-5% Target
Private Sector Credit
+23.5%
Robust Expansion
Foreign Reserves
$6.3B
4.9 Months Cover
Tanzania Economic Development Context
Macroeconomic Foundations (2025)
Tanzania's economy maintained strong momentum into late 2025, driven by diversified sectoral growth and prudent macroeconomic management. The economic landscape was characterized by robust fundamentals that created an optimal environment for financial market development and investor confidence.
🌾
Agriculture
Key growth driver with stable food supplies supporting low inflation
⛏️
Mining
Significant contributor to GDP expansion and export revenues
🏗️
Construction
Infrastructure development under FYDP III driving sector growth
💼
Financial Services
M3 money supply growth of 25.8% reflecting financial deepening
The external position improved substantially, with foreign exchange reserves reaching USD 6,329 million (equivalent to 4.9 months of import cover) and a narrower current account deficit. This external strength, combined with declining global fuel prices, contributed to stable inflation within the Bank of Tanzania's 3-5% target range.
These fundamentals fostered a liquid, confident financial system evident in active government securities markets and robust interbank cash market activity. Strong demand for Treasury instruments reflected investor trust in macroeconomic stability, low inflation, and accommodative monetary policy (CBR at 5.75%), enabling cost-effective domestic financing for development priorities like infrastructure under the Fifth Phase Development Plan (FYDP III).
1. Government Securities Market (December 2025)
The Government securities market remained active and liquid throughout December 2025, supported by ample liquidity in the banking system and strong investor confidence in public debt instruments. The market demonstrated exceptional resilience and depth, with both short-term Treasury Bills and long-term Treasury Bonds experiencing robust demand.
Treasury Bills Auction Performance
Treasury Bills auctions in December 2025 reflected favorable domestic borrowing conditions and declining investor risk perception. The weighted average yield decreased to 5.87% from 6.25% in the previous month, signaling improved macroeconomic confidence and reduced government financing costs.
Indicator
Value
Interpretation
Tender Size
TZS 176.1 billion
Government financing needs and liquidity management
Total Bids Received
TZS 341.2 billion
Strong demand (oversubscription)
Amount Accepted
TZS 291.7 billion
BoT accommodated excess liquidity
Bid-to-Cover Ratio
1.94
Indicates high investor appetite
Weighted Average Yield
5.87%
Declined from 6.25% in previous month
Yield Trend
Downward
Reflects excess liquidity and lower risk perception
Key Insight: Treasury Bills Market
The decline in Treasury Bills yields signals favorable domestic borrowing conditions, reduced cost of government financing, and confidence in macroeconomic stability. The oversubscription (bid-to-cover ratio of 1.94) demonstrates that demand exceeded supply by nearly double, indicating strong investor appetite for risk-free government assets. The Bank of Tanzania's decision to accept TZS 291.7 billion—significantly more than the tender size—reflects effective liquidity management and accommodation of excess banking sector liquidity.
Treasury Bills Auction Analysis (TZS Billions)
176.1
Tender Size
341.2
Total Bids
291.7
Amount Accepted
Treasury Bills Yield Trend
Treasury Bond Auction Performance (20-Year Bond)
The long-term Treasury Bond market demonstrated exceptional investor confidence in December 2025. The 20-year Treasury Bond auction attracted remarkable interest, with a bid-to-cover ratio of 3.44, indicating that total bids received were more than three times the tender size. This exceptional oversubscription reflects investors' preference for stable, long-dated government securities, particularly among institutional investors such as pension funds and commercial banks.
Indicator
Value
Interpretation
Instrument
20-Year Treasury Bond
Long-term financing
Tender Size
TZS 236.3 billion
Infrastructure and long-term fiscal needs
Total Bids Received
TZS 813.5 billion
Very strong demand
Amount Accepted
TZS 232.9 billion
Near full allotment
Bid-to-Cover Ratio
3.44
Exceptional investor confidence
Weighted Average Yield
12.02%
Eased compared to previous auctions
Coupon Rate
13.00%
Attractive long-term return
Key Insight: Treasury Bonds Market
The exceptional oversubscription of long-term bonds (3.44x) reflects investors' preference for stable, long-dated government securities, particularly among pension funds and banks. This strong demand enables the government to secure cost-effective long-term financing for infrastructure and development projects under FYDP III at favorable rates. The weighted average yield of 12.02% represents an easing compared to previous auctions, indicating improved investor sentiment and reduced country risk perception. The near full allotment (TZS 232.9 billion accepted from TZS 236.3 billion tendered) demonstrates the government's ability to meet its financing needs efficiently.
Treasury Bonds Auction Performance (TZS Billions)
236.3
Tender Size
813.5
Total Bids
232.9
Amount Accepted
Bid-to-Cover Ratio Comparison
1.94x
Treasury Bills
3.44x
20-Year Bonds
2. Interbank Cash Market (IBCM)
The interbank cash market continued to play a critical role in short-term liquidity redistribution among banks, closely aligned with the Central Bank Rate (CBR). The IBCM serves as a vital mechanism for banks to manage their daily liquidity positions, facilitating the efficient allocation of surplus funds from cash-rich institutions to those experiencing temporary shortfalls.
In December 2025, the IBCM witnessed extraordinary growth and deepening, reflecting enhanced banking sector confidence, improved liquidity circulation, and the effectiveness of the Bank of Tanzania's monetary policy framework. The market's performance demonstrated the financial system's maturity and the strengthening of interbank relationships.
Interbank Cash Market Activity
Market turnover in the IBCM experienced remarkable expansion during December 2025, surging to unprecedented levels that signaled robust liquidity conditions and active trading among financial institutions.
Indicator
December 2025
November 2025
December 2024
Market Turnover (TZS billion)
3,481.9
1,781.0
1,616.8
Month-on-Month Growth
+95.5%
—
—
Year-on-Year Growth
+115.3%
—
—
Key Insight: Interbank Market Turnover
The sharp increase in turnover indicates improved liquidity circulation and stronger interbank confidence. The near-doubling of month-on-month activity (95.5% increase) and more than doubling year-on-year (115.3% increase) reflects several positive developments: enhanced trust among financial institutions, effective reverse repo operations by the Bank of Tanzania (TZS 1,419.3 billion), robust private sector credit growth (23.5%), and overall banking sector health. This exceptional growth demonstrates the IBCM's increasing importance as a liquidity management tool for Tanzania's financial institutions.
The tenor structure of interbank transactions reveals important insights about liquidity management preferences and monetary policy alignment. The distribution of transaction tenors demonstrates how banks strategically manage their short-term funding needs in alignment with the Bank of Tanzania's policy framework.
Tenor
Share of Total Transactions
Overnight
Significant but secondary
2–6 Days
Moderate
7-Day Transactions
39.9% (dominant)
Other Tenors
Minor
Key Insight: Transaction Tenor Structure
The dominance of 7-day transactions (39.9% of total) shows alignment with the Bank of Tanzania's liquidity management framework and policy signalling horizon. This concentration reflects strategic planning by financial institutions, matching the BoT's typical open market operations cycle and the CBR signaling period. The preference for 7-day tenors over overnight funding indicates confidence in near-term liquidity positions and reduces the operational burden of daily refinancing. This maturity profile supports more stable and predictable liquidity management across the banking sector.
Interbank Transaction Tenor Distribution
Interbank Interest Rates
Interest rates in the interbank cash market remained remarkably stable and closely aligned with the Central Bank Rate (CBR), confirming effective monetary policy transmission and adequate liquidity conditions throughout December 2025.
Indicator
Rate (%)
Policy Signal
Overall IBCM Rate
6.29
Stable
Central Bank Rate (CBR)
5.75
Policy anchor
Rate Movement
Almost unchanged
Liquidity adequate
Policy Corridor
±2 percentage points around CBR
Effective transmission
Key Insight: Monetary Policy Transmission
Interbank rates remained close to the CBR, confirming effective monetary policy transmission and adequate liquidity conditions. The IBCM rate of 6.29% staying within the policy corridor of ±2 percentage points around the 5.75% CBR demonstrates that the Bank of Tanzania's monetary policy signals are effectively transmitted to the interbank market. This close alignment indicates: (1) adequate systemic liquidity without excess or scarcity, (2) successful open market operations by the BoT, (3) market confidence in the policy framework, and (4) efficient price discovery in the interbank market. The stability of rates supports predictable borrowing costs for banks and contributes to overall financial system stability.
The comprehensive analysis of Tanzania's government securities market and interbank cash market in December 2025 reveals a financial system operating at peak efficiency, characterized by exceptional liquidity, strong investor confidence, and effective monetary policy transmission. These market dynamics provide robust support for both fiscal operations and monetary policy effectiveness in Tanzania.
In December 2025, Tanzania's financial markets demonstrated extraordinary strength across all key indicators. The oversubscribed auctions for both Treasury Bills (1.94x) and 20-year Treasury Bonds (3.44x), combined with surging interbank cash market turnover (TZS 3,481.9 billion, representing a 95.5% month-on-month increase), highlighted three critical achievements:
💰
Ample Liquidity
Banking sector liquidity remained abundant, enabling robust market activity and supporting credit expansion to the private sector at 23.5% growth.
📈
Investor Confidence
Exceptional demand for government securities across all tenors reflects strong confidence in macroeconomic stability and fiscal sustainability.
🎯
Policy Effectiveness
Interbank rates staying within the CBR corridor confirm effective monetary policy transmission and central bank credibility.
💼
Reduced Borrowing Costs
Declining yields (T-bills to 5.87%, bonds easing to 12.02%) enable efficient financing for infrastructure and development under FYDP III.
Strategic Implication: This financial market strength bolsters Tanzania's macroeconomic stability, supporting sustained GDP growth projections of 6.3% for 2026. The liquid and efficient government securities market enables the government to finance development priorities at competitive rates, while the deepening interbank market enhances financial sector resilience and supports monetary policy effectiveness. Together, these factors position Tanzania's financial system to effectively support economic transformation objectives under the Fifth Phase Development Plan.
December 2025 Financial Markets Performance Summary
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