Tanzania’s debt servicing costs relative to GDP have evolved significantly from 2013 to 2024, reflecting the country’s growing debt burden and economic dynamics. Over this period, debt servicing costs rose from an estimated USD 1.36 billion (TZS 3.71 trillion, 3.09% of GDP) in 2013 to USD 2.52 billion (TZS 6.87 trillion, 2.99% of GDP) in 2024, with a peak of USD 3.33 billion (TZS 9.09 trillion, 4.39% of GDP) in 2022. This evolution, driven by a 184% increase in national debt (USD 14.93 billion to USD 42.36 billion), TZS depreciation (8% in 2023/24), and shifts toward higher-cost commercial loans, underscores the fiscal challenges Tanzania faces in balancing debt repayment with economic growth.
Explanation of Figures:
2013: Debt servicing cost of USD 1.36 billion (TZS 3.71 trillion) was 3.09% of GDP (USD 44 billion), estimated using 2.5–3.5% of GNI (mid-point).
2022: Actual cost of USD 3.33 billion (TZS 9.09 trillion, The Citizen) was 4.39% of GDP (USD 75.94 billion), reflecting a spike due to principal repayments and TZS depreciation.
2024: Estimated cost of USD 2.52 billion (TZS 6.87 trillion) was 2.99% of GDP (USD 84.40 billion), showing stabilization with GDP growth.
Debt Growth: National debt increased from USD 14.93 billion (2013) to USD 42.36 billion (2024), per Statista.
Exchange Rate: 1 TZS = 0.000366972502112619 USD (Statista, October 2024).
Debt Servicing Costs
From the previous analysis, A compiled debt servicing costs for 2013–2021 and 2023–2024, with 2022 as a confirmed data point (TZS 9.09 trillion, USD 3.33 billion). Other years rely on estimates using a debt service-to-GNI ratio of 2.5–3.5% (based on TICGL’s 2.89% for 2023 and IMF’s 5–7% of GDP range). Below are the figures:
Year
Debt Servicing Cost (USD Billion)
Debt Servicing Cost (TZS Trillion)
2013
1.13–1.58
3.08–4.31
2014
1.18–1.65
3.22–4.50
2015
1.24–1.74
3.38–4.74
2016
1.30–1.82
3.54–4.96
2017
1.37–1.91
3.73–5.21
2018
1.44–2.01
3.92–5.48
2019
1.51–2.11
4.11–5.75
2020
1.58–2.22
4.30–6.05
2021
1.73–2.42
4.71–6.59
2022
3.33
9.09
2023
2.31
6.29
2024
2.10–2.94
5.72–8.01
Notes:
2022 is actual (The Citizen). Others are estimated using 2.5–3.5% of GNI, adjusted to align with 2023’s 2.89% GNI ratio.
TZS converted using 1 USD = 2,725.3 TZS.
Debt Servicing Cost as % of GDP
Year
Debt Servicing Cost (USD Billion)
Debt Servicing Cost (TZS Trillion)
GDP (USD Billion)
Debt Service-to-GDP Ratio (%)
2013
1.36
3.71
44.00
3.09
2014
1.42
3.86
46.20
3.07
2015
1.49
4.06
48.51
3.07
2016
1.56
4.25
50.94
3.06
2017
1.64
4.47
53.49
3.07
2018
1.73
4.70
56.16
3.08
2019
1.81
4.93
59.85
3.02
2020
1.90
5.18
62.84
3.02
2021
2.08
5.65
69.24
3.00
2022
3.33
9.09
75.94
4.39
2023
2.31
6.29
80.00
2.89
2024
2.52
6.87
84.40
2.99
Evolution of Debt Service-to-GDP Ratio
2013–2021: The ratio remained stable at ~3.0–3.1%, fluctuating slightly due to steady GDP growth (4–6%) and moderate debt service growth (from USD 1.36 billion to USD 2.08 billion). The consistency reflects Tanzania’s reliance on concessional loans with low interest rates (1–2%).
2022 Spike: The ratio jumped to 4.39% (USD 3.33 billion ÷ USD 75.94 billion), driven by a significant increase in debt servicing costs (TZS 9.09 trillion). This spike likely reflects principal repayments on maturing loans or higher commercial loan costs (6–7% rates).
2023–2024 Decline: The ratio fell to 2.89% (2023) and ~2.99% (2024), aligning with TICGL’s 2.89% GNI ratio and suggesting a return to lower servicing costs, possibly due to debt restructuring or slower principal repayments.
Trend Summary
Overall Trend: The debt service-to-GDP ratio increased slightly from 3.09% (2013) to 2.99% (2024), with a notable peak at 4.39% in 2022.
Annual Average: ~3.15% over the period, within IMF’s 5–7% of GDP range for sustainable debt service.
Drivers of Changes in the Ratio
Debt Stock Growth:
Total national debt grew 184% from USD 14.93 billion (2013) to USD 42.36 billion (2024), per Statista. This increased servicing obligations, especially for external debt (71.3% of total in 2023/24).
Impact: Higher debt stock raised absolute servicing costs (e.g., USD 1.36 billion in 2013 to USD 2.52 billion in 2024), but the ratio remained stable due to proportional GDP growth.
GDP Growth:
GDP grew from USD 44 billion (2013) to USD 84.40 billion (2024), a 92% increase (4–6% annually). Strong GDP growth offset rising debt service costs, keeping the ratio stable except in 2022.
Impact: GDP growth of 5–6% annually (IMF) outpaced debt service growth (~4–5% annually, except 2022), stabilizing the ratio around 3%.
TZS Depreciation:
The TZS depreciated by 8% in 2023/24 and 0.5% in 2023 (per BoT and Statista). This increased the cost of servicing USD-denominated external debt (71.3% of total).
Impact: Depreciation likely contributed to the 2022 spike (USD 3.33 billion), as TZS costs for external debt payments rose, pushing the ratio to 4.39%.
Debt Composition:
External debt (71.3%) includes concessional loans (1–2% rates) and commercial loans (6–7%). Domestic debt (28.7%) carries higher rates (15–19%, per BoT).
Impact: The 2022 spike may reflect increased commercial borrowing or principal repayments on post-2015 infrastructure loans (e.g., SGR). The decline in 2023–2024 suggests a shift back to concessional financing.
Principal Repayments:
The 2022 spike (TZS 9.09 trillion) likely includes significant principal repayments on maturing loans from the mid-2010s infrastructure boom.
Impact: Principal repayments temporarily inflated the ratio in 2022, unlike the stable interest-driven costs in other years.
Interest Rate Changes:
Domestic T-bill rates rose from 5.8% to 11.7% by March 2024 (per X posts). Commercial external loans (6–7%) also increased costs compared to concessional loans.
Impact: Higher rates on domestic and commercial debt likely contributed to the 2022 peak and sustained higher costs in 2024.
Explanation with Figures
Stable Period (2013–2021): The ratio hovered around 3.0–3.1% (e.g., USD 1.36 billion ÷ USD 44 billion = 3.09% in 2013; USD 2.08 billion ÷ USD 69.24 billion = 3.00% in 2021). This stability reflects balanced growth in debt service (USD 1.36 billion to USD 2.08 billion, ~52% increase) and GDP (USD 44 billion to USD 69.24 billion, ~57% increase).
2022 Peak: The ratio spiked to 4.39% (USD 3.33 billion ÷ USD 75.94 billion), driven by a 60% jump in servicing costs from 2021’s estimated USD 2.08 billion. TZS 9.09 trillion consumed ~30% of recurrent expenditure (TZS 30.31 trillion, BoT), likely due to principal repayments and TZS depreciation (0.5–8%).
2023–2024 Decline: The ratio dropped to 2.89% (USD 2.31 billion ÷ USD 80 billion) in 2023 and ~2.99% (USD 2.52 billion ÷ USD 84.40 billion) in 2024, reflecting lower servicing costs (possibly due to fewer principal repayments) and continued GDP growth (5.5%).
Key Driver Example: In 2022, external debt (~USD 23.7 billion, 71.3% of USD 33.27 billion) at ~3% average rate cost ~USD 0.71 billion, while domestic debt (~USD 9.5 billion) at ~17% cost ~USD 1.62 billion. TZS depreciation and principal repayments likely added ~USD 1 billion, explaining the spike.
Summary
The proportion of debt servicing costs to GDP in Tanzania evolved from 3.09% in 2013 to 2.99% in 2024, with a peak of 4.39% in 2022. The ratio remained stable at ~3.0–3.1% from 2013–2021 due to balanced GDP and debt service growth, spiked in 2022 due to principal repayments and TZS depreciation, and declined to ~2.9–3.0% in 2023–2024 with GDP growth and fewer repayments. Key drivers include:
TZS Depreciation: 8% in 2023/24, inflating external debt costs.
Debt Composition: Shift to commercial loans and high domestic rates (15–19%) in 2022.
GDP Growth: 92% increase (USD 44 billion to USD 84.4 billion), stabilizing the ratio.
In March 2025, Tanzania’s central government collected a total of TZS 2,465.8 billion in revenue, which was 98.9% of the monthly target. Of this, TZS 2,387.5 billion came from the central government, including TZS 2,055.2 billion in tax revenue—driven by income taxes (TZS 676.1 billion), taxes on imports (TZS 755.3 billion), and local goods and services (TZS 490.6 billion). Non-tax revenue reached TZS 332.3 billion, meeting 99.4% of its target. On the expenditure side, the government spent TZS 3,658.3 billion, with TZS 2,372.0 billion allocated to recurrent expenses—including TZS 937.6 billion for wages and salaries—and TZS 1,286.3 billion for development projects. This spending reflects the government's commitment to public service delivery and infrastructure investment, despite operating a short-term fiscal gap of over TZS 1.19 trillion.
1. Central Government Revenue (March 2025)
Total revenue collected: TZS 2,465.8 billion, which was just 1.1% below the target.
Central government share: TZS 2,387.5 billion, which is 96.8% of total revenue.
Development expenditure: TZS 1,286.3 billion (Target exceeded slightly)
The government maintained a fiscal discipline approach, focusing on key social services and infrastructure despite a slight revenue shortfall.
Summary Table: Government Budget Operations (March 2025)
Category
Amount (TZS Billion)
Performance
Total Revenue
2,465.8
98.9% of target
└ Central Government Revenue
2,387.5
96.8% of total revenue
└ Tax Revenue
2,055.2
Met target
└ Non-Tax Revenue
332.3
99.4% of target
Total Expenditure
3,658.3
└ Recurrent Expenditure
2,372.0
64.8% of total expenditure
└ Wages and Salaries
937.6
└ Interest Payments (Total)
366.4
└ Development Expenditure
1,286.3
35.2% of total expenditure
In March 2025, Tanzania’s central government demonstrated strong revenue performance, collecting over TZS 2.4 trillion, primarily through taxes. Despite revenue being slightly below target, government expenditure reached TZS 3.7 trillion, focusing on development and essential services, supported by prudent fiscal management.
Key Takeaways
1. trong Revenue Performance
The government collected TZS 2,465.8 billion, just 1.1% below target, showing strong tax collection efficiency.
Tax revenue (TZS 2,055.2 billion) hit its target, indicating:
Good tax administration,
Broadening tax base,
Resilient economic activity.
Non-tax revenue (TZS 332.3 billion) also performed well at 99.4% of target, reflecting enhanced collection from fees, licenses, and dividends.
What it tells: The revenue system is functioning effectively, even under economic pressure.
2. High Government Spending
Total expenditure reached TZS 3,658.3 billion, led by:
Development spending: TZS 1,286.3 billion (35%) — invested in infrastructure, education, and health.
What it tells: The government is committed to balancing service delivery and long-term development, even if it means running a short-term fiscal deficit.
3. Fiscal Gap Suggests Borrowing
With revenue at TZS 2.5 trillion and spending at TZS 3.7 trillion, there's a fiscal gap of about TZS 1.2 trillion.
This likely requires borrowing (domestic and/or external) to bridge the deficit.
What it tells: The fiscal policy is slightly expansionary, prioritizing development, but managed under a disciplined framework.
Conclusion
The March 2025 budget performance shows a resilient fiscal system, with strong revenue collection and strategic spending priorities. Although the government is spending more than it earns in the short term, this is controlled and focused on growth-oriented sectors, supported by good tax performance and financial management.
