Tanzania’s decision to make no repayments to the International Monetary Fund (IMF) during July 2025, while receiving TZS 0.58 trillion (USD 213.1 million) in disbursements, contributed to a 18.98% increase in its IMF credit outstanding, from TZS 3.07 trillion to TZS 3.65 trillion (based on an exchange rate of approximately TZS 2,735 per USD, sourced from recent web data). This strategy, part of Tanzania’s engagement with the Extended Credit Facility (ECF) and Resilience and Sustainability Facility (RSF), reflects a focus on maximizing liquidity to address immediate fiscal and developmental needs. However, the absence of repayments raises questions about the long-term sustainability of Tanzania’s debt, particularly given its public debt level of approximately 50% of GDP in 2024 and a moderate risk of debt distress, as assessed by the IMF and World Bank. This analysis explores the implications of Tanzania’s zero repayments for its long-term debt sustainability, drawing on IMF data and broader economic insights.
Key Figures
The table below summarizes Tanzania’s key IMF financing and debt metrics as of July 25, 2025, highlighting the context of its zero repayments:
Metric
Value
Notes
IMF Credit Outstanding (07/25/2025)
TZS 3.65 trillion
Increased 18.98% from TZS 3.07 trillion on 06/30/2025
Disbursements (June-July 2025)
TZS 0.58 trillion
16.86% of Africa’s TZS 3.46 trillion; 100% of East Africa’s disbursements
Repayments (June-July 2025)
TZS 0
No repayments made, unlike Rwanda’s minor repayments
Public Debt (2024)
~50% of GDP
Moderate risk of debt distress, per IMF and World Bank assessments
External Debt (January 2025)
USD 33.91 billion (TZS 92.74 trillion)
76.4% government-held, with 68.1% in USD, per TICGL
Tax Revenue (2024)
13% of GDP
Below Sub-Saharan Africa average of 16%, per World Bank
Debt-to-GDP Ratio (2022/23)
45.7% (46.7% with arrears)
Up from 43.6% in 2021/22, per IMF
Foreign Exchange Reserves
USD 5.7 billion (TZS 15.58 trillion)
Covers 3.8 months of imports as of March 2025, per IMF
Real GDP Growth (2025 Projection)
6%
Supported by IMF financing and reforms, per AfDB
Implications for Long-Term Debt Sustainability
Increased Debt Burden and Future Repayment Pressure
Tanzania’s zero repayments in July 2025, coupled with TZS 0.58 trillion in new IMF disbursements, increase its external debt stock, which stood at USD 33.91 billion (TZS 92.74 trillion) in January 2025. The IMF’s concessional financing, with low or zero interest rates and extended repayment periods (e.g., 5½-year grace period for ECF loans), mitigates immediate servicing costs. However, the absence of repayments during this period defers obligations, potentially creating a future repayment bulge. The IMF’s 2025 Article IV consultation projects that fiscal consolidation will resume in FY25/26 to maintain debt sustainability, but accumulating debt without repayments could strain Tanzania’s capacity if economic conditions deteriorate. With 68.1% of external debt denominated in USD, a weaker Tanzania Shilling (depreciated 8% in 2023) could further inflate repayment costs, threatening long-term sustainability.
Fiscal Space for Development vs. Sustainability Trade-Off
The zero-repayment strategy maximizes fiscal space, allowing Tanzania to allocate the TZS 0.58 trillion disbursement to priority sectors like transport (21% of external debt allocation), social welfare, and education (19.9% each). The ECF supports these investments, aligning with Vision 2025 goals for infrastructure and human capital development. For example, the World Bank’s Sustainable Rural Water Supply and Sanitation Program, concluding in 2025, has improved water access for 7.92 million people, demonstrating the developmental impact of such financing. However, this approach risks prioritizing short-term gains over long-term sustainability. The IMF warns that pausing fiscal consolidation in FY24/25, with a 0.4% GDP increase in public spending, could undermine debt sustainability if not paired with revenue reforms. Tanzania’s low tax-to-GDP ratio (13% in 2024) limits its ability to service future debts without continued external support, posing a sustainability challenge.
Dependence on Concessional Financing
Tanzania’s zero repayments reflect its reliance on concessional IMF financing, which constitutes a significant portion of its external debt (71.7% from multilateral and bilateral creditors in FY2021/22). The IMF’s Debt Sustainability Analysis (DSA) indicates that Tanzania’s public debt-to-GDP ratio (45.7% in FY2022/23) remains below the 55% benchmark for its debt-carrying capacity, suggesting moderate risk. However, the DSA emphasizes the importance of maintaining concessional terms to avoid unsustainable borrowing. Without repayments, Tanzania’s debt stock grows, and any shift to non-concessional borrowing (e.g., commercial loans at higher rates) could elevate debt distress risks, especially given rising domestic interest rates (T-Bill rates rose from 5.8% to 11.7% by March 2024). Sustained access to concessional financing is critical, but over-reliance without repayment progress could signal fiscal vulnerabilities to creditors.
Risks from External and Domestic Vulnerabilities
The absence of repayments amplifies Tanzania’s exposure to external and domestic risks. Externally, the IMF highlights risks from global economic slowdown, geoeconomic fragmentation, and reduced donor support, which could limit future financing. Domestically, the 2025 national elections may delay reforms, increasing fiscal pressures. A 2019 study notes that external debt significantly impacts private investment in Tanzania, and failure to monitor debt closely could crowd out private sector growth, undermining economic resilience. The high USD exposure (68.1% of external debt) exacerbates risks from exchange rate fluctuations, potentially increasing future repayment costs. Without repayments, Tanzania’s ability to build fiscal buffers is limited, reducing its capacity to absorb shocks and threatening long-term debt sustainability.
Opportunities for Strategic Debt Management
Tanzania’s zero repayments provide an opportunity to strategically manage its debt portfolio. The IMF and World Bank recommend prioritizing projects with high socioeconomic returns, such as infrastructure and human capital investments, to maximize the benefits of borrowed funds. The ECF’s focus on revenue mobilization, including a medium-term revenue strategy, aims to increase the tax-to-GDP ratio, reducing reliance on external debt. Additionally, diversifying debt currencies (e.g., 16.1% Euro, 6.3% Chinese Yuan) helps mitigate USD exposure risks. By implementing governance reforms, such as transparent debt management and anti-corruption measures, Tanzania can enhance creditor confidence and ensure sustainable debt levels, as emphasized in the IMF’s 2025 consultation.
Key Considerations for Tanzania
Revenue Mobilization: Increasing the tax-to-GDP ratio from 13% to closer to the Sub-Saharan African average (16%) through digital tax systems and broader tax bases is essential to reduce debt dependency.
Project Selection: Prioritizing high-return investments in transport, energy, and education, as seen in current debt allocations, can drive sustainable growth.
Debt Monitoring: Close monitoring of external debt, particularly USD-denominated loans, is critical to manage exchange rate risks.
Fiscal Consolidation: Resuming fiscal consolidation in FY25/26, as planned, will help rebuild fiscal buffers and ensure debt sustainability.
Climate Resilience: RSF-supported climate adaptation measures can protect key sectors like agriculture, reducing debt distress risks from climate shocks.
Conclusion
Tanzania’s zero repayments to the IMF in July 2025, alongside TZS 0.58 trillion in disbursements, enhance short-term fiscal space for critical investments in infrastructure and social services, aligning with Vision 2025. However, this strategy increases the debt burden, with external debt at USD 33.91 billion (TZS 92.74 trillion) and public debt at 50% of GDP, raising concerns about long-term sustainability. While concessional IMF financing mitigates immediate risks, deferred repayments could create future repayment pressures, particularly with high USD exposure and low domestic revenue (13% of GDP). External risks, such as global economic slowdown, and domestic challenges, like election-related reform delays, further complicate sustainability. By prioritizing revenue mobilization, high-return projects, and governance reforms, Tanzania can leverage IMF financing to support development while safeguarding long-term debt sustainability.
Member
Total IMF Credit Outstanding as of 06/30/2025
Total Disbursements
Total Repayments
Total IMF Credit Outstanding as of 07/25/2025
Afghanistan, Islamic Republic of
366,158,000
0
0
366,158,000
Albania
40,657,506
0
0
40,657,506
Angola
2,750,091,673
0
28,208,333
2,721,883,340
Argentina
40,260,000,000
0
0
40,260,000,000
Armenia, Republic of
89,873,183
0
0
89,873,183
Bangladesh
2,922,634,500
0
0
2,922,634,500
Barbados
491,550,010
0
0
491,550,010
Benin
765,823,950
0
3,183,400
762,640,550
Bosnia and Herzegovina
47,559,375
0
0
47,559,375
Burkina Faso
342,002,000
0
2,253,000
339,749,000
Burundi
100,100,000
0
0
100,100,000
Cabo Verde
72,116,000
4,510,000
0
76,626,000
Cameroon
1,168,860,000
0
23,460,000
1,145,400,000
Central African Republic
236,885,500
0
6,931,600
229,953,900
Chad
454,915,000
0
6,309,000
448,606,000
Colombia
937,500,000
0
0
937,500,000
Comoros
23,447,940
0
0
23,447,940
Congo, Democratic Republic of
1,762,450,000
190,400,000
0
1,952,850,000
Congo, Republic of
353,160,000
0
3,240,000
349,920,000
Costa Rica
1,837,765,000
0
0
1,837,765,000
Cote d'Ivoire
3,104,687,108
0
0
3,104,687,108
Djibouti
31,800,000
0
0
31,800,000
Dominica
10,895,000
0
0
10,895,000
Ecuador
6,211,675,007
438,400,000
0
6,650,075,007
Egypt
7,497,485,852
0
74,623,333
7,422,862,519
El Salvador
172,320,000
0
0
172,320,000
Equatorial Guinea
51,496,501
0
0
51,496,501
Eswatini, The Kingdom of
9,812,500
0
0
9,812,500
Ethiopia
1,415,347,500
191,700,000
13,364,000
1,593,683,500
Gabon
414,512,500
0
0
414,512,500
Gambia, The
129,241,250
0
1,166,250
128,075,000
Georgia
370,416,667
0
0
370,416,667
Ghana
2,448,001,000
267,500,000
8,302,500
2,707,198,500
Grenada
18,600,000
0
200,000
18,400,000
Guinea
323,213,900
0
1,721,300
321,492,600
Guinea-Bissau
51,174,400
4,730,000
587,000
55,317,400
Haiti
173,013,750
0
0
173,013,750
Honduras
511,299,319
0
0
511,299,319
Jamaica
595,590,000
0
0
595,590,000
Jordan
1,530,513,418
0
0
1,530,513,418
Kenya
3,022,009,900
0
0
3,022,009,900
Kosovo
142,072,000
0
0
142,072,000
Kyrgyz Republic
74,422,400
0
0
74,422,400
Lesotho
11,660,000
0
0
11,660,000
Liberia
174,503,200
0
0
174,503,200
Madagascar
695,577,600
77,392,000
9,340,600
763,629,000
Malawi
296,056,000
0
0
296,056,000
Maldives
21,200,000
0
0
21,200,000
Mali
403,827,600
0
5,165,000
398,662,600
Mauritania
296,660,000
36,160,000
0
332,820,000
Moldova, Republic of
733,876,260
0
800,000
733,076,260
Mongolia
71,488,115
0
0
71,488,115
Morocco
937,500,000
0
0
937,500,000
Mozambique
545,280,000
0
0
545,280,000
Myanmar
258,395,000
0
21,533,750
236,861,250
Namibia
95,550,000
0
23,887,500
71,662,500
Nepal
380,165,000
0
0
380,165,000
Nicaragua
64,997,500
0
0
64,997,500
Niger
411,896,500
30,268,000
6,028,000
436,136,500
North Macedonia, Republic of
203,440,000
0
0
203,440,000
Pakistan
6,745,250,006
0
59,666,666
6,685,583,340
Papua New Guinea
725,130,000
0
0
725,130,000
Paraguay
0
146,000,000
0
146,000,000
Rwanda
606,757,500
0
4,005,000
602,752,500
St. Lucia
21,400,000
0
0
21,400,000
St. Vincent and the Grenadines
19,872,450
0
0
19,872,450
Samoa
16,200,000
0
0
16,200,000
Sao Tome & Principe
27,158,013
0
63,433
27,094,580
Senegal
1,003,723,612
0
10,787,500
992,936,112
Serbia, Republic of
949,460,000
0
0
949,460,000
Seychelles
106,579,000
0
272,500
106,306,500
Sierra Leone
325,840,900
0
3,999,500
321,841,400
Solomon Islands
6,989,433
0
0
6,989,433
Somalia
87,000,000
7,500,000
0
94,500,000
South Africa
381,400,000
0
0
381,400,000
South Sudan
246,000,000
0
0
246,000,000
Sri Lanka
1,446,746,184
254,000,000
9,991,166
1,690,755,018
Sudan
991,551,000
0
0
991,551,000
Suriname
430,700,000
0
0
430,700,000
Tajikistan, Republic of
139,200,000
0
0
139,200,000
Tanzania
1,122,630,000
213,100,000
0
1,335,730,000
Togo
292,730,000
44,040,000
2,517,000
334,253,000
Tonga
13,800,000
0
0
13,800,000
Tunisia
526,138,180
0
14,731,866
511,406,314
Uganda
992,750,000
0
0
992,750,000
Ukraine
10,800,391,676
0
0
10,800,391,676
Uzbekistan, Republic of
92,050,000
0
0
92,050,000
Zambia
992,860,000
0
0
992,860,000
Total
118,045,530,338
1,905,700,000
346,339,197
119,604,891,141
1. Total Domestic Debt Stock
Overview: Tanzania’s domestic debt stock represents obligations issued in Tanzania Shillings (TZS), primarily through Treasury bills (T-Bills) and Treasury bonds, to finance budget deficits and support monetary policy objectives. The Bank of Tanzania (BoT) issues these securities, with Treasury bonds dominating due to their longer maturities (2–25 years). Domestic debt is a critical component of Tanzania’s public debt, complementing external debt (USD 35.60 billion in May 2025) and supporting fiscal needs under the Third Five-Year National Development Plan (2021/22–2025/26).
May 2025 Performance:
Total Domestic Debt Stock: TZS 35,201.1 billion (approximately USD 13.04 billion at an exchange rate of ~TZS 2,698/USD, consistent with, noting a 2.6%-shilling depreciation).
Context: The domestic debt stock increased from TZS 34,759.9 billion in April 2025 (implied by provided creditor data) to TZS 35,201.1 billion in May 2025, a 1.3% rise (TZS 441.2 billion). This aligns with earlier trends, as September 2024 reported TZS 32.62 trillion, and April 2025 reached TZS 34.75 trillion, reflecting an 8.8% increase from June 2024. The growth is driven by increased Treasury bond issuances (78.9% of domestic debt in September 2024), supporting infrastructure and budget deficits (TZS 743.2 billion in April 2025).
Economic Drivers:
Fiscal Needs: The 2024/25 budget of TZS 49.35 trillion, with a 3% GDP deficit target, relies on domestic borrowing (TZS 6.27 trillion planned for 2025/26) to finance recurrent (61%) and development (39%) spending. High demand for Treasury bonds (e.g., TZS 794 billion in subscriptions for a 25-year bond in May 2025) reflects investor confidence.
Monetary Policy: The BoT’s Central Bank Rate (CBR) at 6% and interbank rates near 8% (Document, Page 7) drive high T-Bill yields (8.89%) and bond yields (15.29% for 25-year bonds), attracting institutional investors but crowding out private sector credit (15.1% growth in April 2025, slower than 18.4% a year earlier).
Market Dynamics: The shift to market-aligned Treasury bond coupon rates in January 2025 enhances liquidity and price discovery, boosting bond market activity (bond turnover up 592.52% by May 16, 2025).
Implications: The domestic debt stock (TZS 35,201.1 billion, ~22% of GDP based on 2024 GDP of TZS 156.6 trillion) remains sustainable, with a low risk of distress. However, high yields (15.5% average lending rates) and crowding-out effects may limit private sector growth, particularly for SMEs (15% loan access in 2023). The BoT’s liquidity injections (e.g., reverse repos, gold purchases) aim to ease pressures, but fiscal discipline is needed to manage debt servicing costs (TZS 172.0 billion interest in April 2025).
2. Government Domestic Debt by Creditor Category
Overview: Domestic debt is held by institutional and individual investors, with commercial banks, pension funds, and the BoT as primary creditors. Treasury bonds (78.9% of domestic debt) are favored for their long-term stability, while T-Bills (8.8% in March 2024) support short-term financing. Creditor composition reflects the banking sector’s role in government financing and the growing participation of non-bank investors.
May 2025 Performance:
Creditor Breakdown:
Commercial Banks: TZS 10,138.2 billion (28.8%).
Pension Funds: TZS 9,203.9 billion (26.1%).
Bank of Tanzania (BoT): TZS 7,158.2 billion (20.3%).
Key Insight: Commercial banks and pension funds hold 54.9% of domestic debt, reflecting their dominant role in financing government activities, consistent with September 2024 (28.9% and 26.4%, respectively).
Context and Analysis:
Commercial Banks (28.8%): Banks hold TZS 10,138.2 billion, down slightly from 29.7% (TZS 9,678.8 billion) in September 2024, but up from 28.9% (TZS 10,049.9 billion) in April 2025. With 33 commercial banks among 45 licensed banks in January 2025, their role reflects strong banking sector assets (TZS 54,263 billion in 2023). High bond yields (15.29% for 25-year bonds) attract banks, but this crowds out private sector lending (15.1% growth in April 2025).
Pension Funds (26.1%): Pension funds hold TZS 9,203.9 billion, slightly up from 26.4% (TZS 9,171.1 billion) in April 2025 and 27.6% (TZS 8,991.4 billion) in September 2024. Their long-term investment horizon aligns with Treasury bonds, supporting fiscal stability. Combined pension assets (USD 13 billion in East Africa) are underutilized in private equity, indicating potential for further debt market participation.
Bank of Tanzania (20.3%): The BoT’s TZS 7,158.2 billion share (up from 20.5% or TZS 7,119.2 billion in April 2025) reflects its role in monetary policy alignment, holding bonds to regulate money supply. The BoT has no outstanding external debt, focusing on domestic instruments.
Others (17.7%): The TZS 6,244.5 billion held by others (public institutions, private companies, individuals) marks a significant rise from 15.2% (TZS 4,956.0 billion) in September 2024, driven by retail investor interest in high-yield bonds (e.g., TZS 794 billion subscriptions in May 2025).
Insurance Companies (5.2%): The TZS 1,840.0 billion share, down from 5.8% (TZS 1,904.2 billion) in September 2024, reflects limited insurance sector growth (5% of financial assets). Regulatory constraints limit their bond market participation.
BOT Special Funds (1.8%): The TZS 616.3 billion share, up from 1.2% (TZS 389.0 billion) in September 2024, indicates increased use of special funds for targeted financing, though their role remains minor.
Economic Drivers:
Bond Market Boom: Treasury bonds (80% of domestic debt in April 2025) drive creditor participation, with a 25-year bond auction in May 2025 attracting TZS 794 billion in bids. The shift to market-aligned coupon rates in January 2025 enhances investor appeal.
Banking Sector Strength: Commercial banks’ 28.8% share reflects their TZS 54,263 billion asset base and 17.4% growth in 2023, though high bond holdings reduce private sector credit availability (15.5% lending rates).
Pension and Insurance: Pension funds’ 26.1% share aligns with their USD 13 billion regional asset pool, but low insurance participation (5.2%) reflects shallow non-bank financial markets.
Implications: The concentration of debt in banks and pension funds (54.9%) ensures stability but risks crowding out private credit, as noted in April 2025 (15.1% credit growth vs. 18.4% prior year). The rise in “Others” (17.7%) diversifies the investor base, reducing rollover risk. However, high yields (8.89% T-Bills, 15.29% bonds) increase debt servicing costs (TZS 5.31 trillion annually at 15.5% rates), straining fiscal space.
3. Comparison with April 2025
Overview: The month-on-month change in domestic debt by creditor reflects shifting investor dynamics, driven by high-yield bond auctions and monetary policy conditions. The total debt stock rose by TZS 441.2 billion (1.3%), with varying changes across creditor categories.
Comparison:
Commercial Banks: Increased from TZS 10,049.9 billion to TZS 10,138.2 billion (+TZS 88.3 billion, +0.9%).
Pension Funds: Increased from TZS 9,171.1 billion to TZS 9,203.9 billion (+TZS 32.8 billion, +0.4%).
Bank of Tanzania (BoT): Increased from TZS 7,119.2 billion to TZS 7,158.2 billion (+TZS 39.0 billion, +0.5%).
Others: Increased from TZS 5,996.8 billion to TZS 6,244.5 billion (+TZS 247.7 billion, +4.1%).
Insurance Companies: Decreased from TZS 1,858.4 billion to TZS 1,840.0 billion (-TZS 18.4 billion, -1.0%).
BOT Special Funds: Increased from TZS 564.5 billion to TZS 616.3 billion (+TZS 51.8 billion, +9.2%).
Context and Analysis:
Significant Growth in “Others”: The TZS 247.7 billion increase in “Others” (17.7% share) is the largest, reflecting growing retail and non-bank institutional interest, driven by high bond yields (e.g., TZS 794 billion subscriptions for a 25-year bond). This aligns with bond market turnover rising 592.52% by May 16, 2025, indicating broader market participation.
Modest Bank and Pension Growth: Commercial banks (+TZS 88.3 billion) and pension funds (+TZS 32.8 billion) saw modest increases, consistent with their dominant roles (54.9% combined). Banks’ growth reflects strong asset bases (TZS 54,263 billion in 2023), while pension funds’ steady rise aligns with long-term investment strategies.
BoT and Special Funds: The BoT’s TZS 39.0 billion increase maintains its 20.3% share, supporting monetary policy (7-day interbank rate at 7.98%, Document, Page 7). The TZS 51.8 billion rise in BOT Special Funds (9.2%) suggests targeted financing, possibly for liquidity management.
Insurance Decline: The TZS 18.4 billion decrease in insurance holdings (5.2% share) reflects regulatory limits and a focus on shorter-term assets, as insurance assets remain small compared to pensions.
Economic Drivers: The 1.3% debt stock increase (TZS 441.2 billion) is driven by a record TZS 794 billion bond auction in May 2025, with institutional investors (banks, pensions) absorbing most issuances. Tight monetary policy (CBR at 6%) and high interbank rates (7.98%) encourage bond investments over private lending, as noted in April 2025 (15.1% credit growth slowdown).
Implications: The rise in “Others” (+4.1%) diversifies the creditor base, reducing reliance on banks and pensions, which lowers rollover risk. However, the modest growth in bank holdings (+0.9%) and decline in insurance (-1.0%) suggest liquidity constraints, as banks prioritize bonds over private credit. The BoT’s increased share (20.3%) supports fiscal financing but may strain monetary policy if liquidity tightens further (interbank rates near 8% ceiling).
4. Key Takeaways
Concentration and Stability: Commercial banks (28.8%) and pension funds (26.1%) dominate, ensuring stable financing but crowding out private credit (15.5% lending rates). The 54.9% combined share aligns with September 2024 (56.1%), reflecting institutional reliance.
Broadening Investor Base: The significant rise in “Others” (17.7%, +TZS 247.7 billion) indicates growing retail and non-bank participation, driven by high-yield bonds (15.29% for 25-year bonds). This diversification enhances market resilience and aligns with the BoT’s market-aligned coupon rate reform.
Debt Sustainability: Domestic debt (TZS 35,201.1 billion, ~22% of GDP) remains sustainable, with a low risk of distress. However, high servicing costs (TZS 5.31 trillion annually at 15.5% rates) and crowding-out effects challenge private sector growth. The 2025/26 budget’s TZS 6.27 trillion borrowing plan requires careful management to maintain fiscal space.
Risks and Opportunities: The increase in “Others” reduces rollover risk, but high bond yields and tight liquidity (interbank rates near 8%) may elevate borrowing costs. The BoT’s liquidity tools (reverse repos, gold purchases) and IMF support (USD 441 million in April 2025) mitigate risks, while bond market reforms enhance efficiency.
Summary Table – May 2025
Creditor Category
May 2025 (TZS Billion)
Share (%)
April 2025 (TZS Billion)
Change (TZS Billion)
Commercial Banks
10,138.2
28.8%
10,049.9
+88.3
Pension Funds
9,203.9
26.1%
9,171.1
+32.8
Bank of Tanzania (BoT)
7,158.2
20.3%
7,119.2
+39.0
Others
6,244.5
17.7%
5,996.8
+247.7
Insurance Companies
1,840.0
5.2%
1,858.4
-18.4
BOT Special Funds
616.3
1.8%
564.5
+51.8
Total Domestic Debt Stock
35,201.1
100.0%
34,759.9
+441.2
Additional Insights and Outlook
Fiscal Context: The domestic debt stock (TZS 35,201.1 billion) supports the 2024/25 budget’s 3% GDP deficit target, financed through bonds (80%) and T-Bills (8.8%). The 1.3% increase from April 2025 reflects strong bond demand, but high yields (15.29%) increase servicing costs, straining fiscal space (TZS 172.0 billion interest in April 2025).
Market Dynamics: The rise in “Others” (17.7%) aligns with bond market growth (592.52% turnover increase by May 16, 2025), driven by market-aligned coupon rates. This diversification reduces dependence on banks (28.8%) and pensions (26.1%), enhancing resilience.
Risks: High bond holdings by banks crowd out private credit (15.1% growth), impacting SMEs. Shilling depreciation (2.6%) and tight liquidity (7.98% interbank rate) may elevate costs, requiring BoT interventions (reverse repos).
Outlook: The 2025/26 budget’s TZS 40.47 trillion revenue target and 6% GDP growth projection rely on sustained domestic borrowing. Continued bond market reforms and IMF support (USD 441 million) will bolster sustainability, but balancing public and private sector financing is critical.
Tanzania Domestic Debt by Creditor - May 2025: Key Figures
Creditor Category
May 2025 (TZS Billion)
Share (%)
April 2025 (TZS Billion)
Change (TZS Billion)
Commercial Banks
10,138.2
28.8%
10,049.9
+88.3
Pension Funds
9,203.9
26.1%
9,171.1
+32.8
Bank of Tanzania (BoT)
7,158.2
20.3%
7,119.2
+39.0
Others (incl. public institutions, private companies, individuals)
6,244.5
17.7%
5,996.8
+247.7
Insurance Companies
1,840.0
5.2%
1,858.4
-18.4
BOT Special Funds
616.3
1.8%
564.5
+51.8
Total Domestic Debt Stock
35,201.1
100.0%
34,759.9
+441.2
Total Domestic Debt (USD Billion)
13.04
—
12.88
+0.16
Note: USD conversion based on exchange rate of ~TZS 2,698/USD.
Tanzania’s debt development, as outlined in the April 2025 Monthly Economic Review and recent data, influences economic growth through fiscal constraints and resource allocation. Below, we analyze the debt structure, including domestic and external debt figures, percentage changes, and their implications for growth, using specific figures to illustrate impacts.
Debt Structure and Figures
Figures:
Domestic Debt: TZS 34.26 trillion in March 2025, with 29% held by commercial banks and 26.5% by pension funds.
External Debt: USD 34.1 billion (approximately TZS 91.29 trillion at TZS 2,677/USD, based on a 2.6% year-on-year exchange rate depreciation, Page 30), with 78.3% held by the central government and 67.7% denominated in US dollars.
Total National Debt: TZS 91.7 trillion in 2024/25 budget context.
Public Debt (Historical): 45.5% of GDP in 2022/23, up from 43.6% in 2021/22.
Percentage Change: Exact year-on-year percentage changes for March 2025 debt are not provided in the document or search results. However, domestic debt uptake increased through treasury bills and bonds, and external debt grew to USD 34.1 billion (), suggesting continued borrowing. For context, public debt rose by 4.4% (45.5% - 43.6% of GDP) from 2021/22 to 2022/23.
Explanation:
Domestic Debt: The TZS 34.26 trillion domestic debt finances fiscal deficits, with significant holdings by commercial banks (TZS 9.93 trillion, 29%) and pension funds (TZS 9.08 trillion, 26.5%). Increased borrowing indicates rising deficits, potentially driven by a 13.4% planned spending increase to TZS 57.04 trillion in FY 2025/26.
External Debt: The USD 34.1 billion (TZS 91.29 trillion) external debt supports development projects, with 78.3% (USD 26.7 billion) held by the central government. The 67.7% USD denomination (USD 23.1 billion) exposes Tanzania to exchange rate risks, amplified by a 2.6%-shilling depreciation.
Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with public debt at 35% of GDP in 2024, below the 55% benchmark (). Total debt service was 2.89% of GNI in 2023.
Impact on Economic Growth
Figures and Explanation:
Fiscal Space Constraints: Limited fiscal space, noted globally, restricts Tanzania’s ability to fund growth. The FY 2024/25 budget of TZS 49.35 trillion includes TZS 29.41 trillion (59.6%) from tax revenue, leaving a deficit financed by domestic (TZS 34.26 trillion) and external (USD 34.1 billion) borrowing. A planned 13.4% spending increase to TZS 57.04 trillion in FY 2025/26 will further rely on debt, with TZS 16.07 trillion (28.2%) from borrowing.
Debt Servicing Costs: Debt servicing absorbs significant resources. Historically, external debt servicing consumed 40% of government expenditures. In 2023, total debt service was 2.89% of GNI. For March 2025, servicing TZS 34.26 trillion domestic debt (at, e.g., 15.5% lending rates,) and USD 34.1 billion external debt (at concessional rates,) could cost TZS 5.31 trillion and USD 1-2 billion annually, diverting funds from investments. The 2.6%-shilling depreciation increases external debt costs by TZS 2.37 trillion.
Crowding-Out Effect: Domestic borrowing of TZS 34.26 trillion (29% by banks) raises lending rates to 15.5%, crowding out private investment. Credit to the private sector weakened in Q4 2024, limiting business growth. The 6% Central Bank Rate mitigates this, but high government borrowing (TZS 4,362 billion average,) strains liquidity.
Growth Projections: GDP growth is projected at 5.4% in 2024 and 6% in 2025, driven by agriculture (26.5% of GDP), construction (13.2%), and mining (9%). However, debt servicing and fiscal constraints could cap growth below the 6.4% potential by 2026.
Global and Domestic Economic Context
Figures and Explanation:
Global Risks: The IMF’s global growth forecast of 2.8% for 2025 and rising interest rates increase external borrowing costs. Tanzania’s USD 34.1 billion external debt, with 67.7% in USD, faces higher servicing costs amid global tightening.
Commodity Impacts: Declining coffee (-2%) and sugar (-1.5%) prices reduce export revenues, straining foreign exchange for debt repayment (Page 3). Gold prices at USD 2,983.25/ounce (+3%) and exports at USD 16.1 billion bolster reserves (USD 5.7 billion, 3.8 months of imports,), easing debt pressures.
Inflation and Policy: Headline inflation at 3.3% and food inflation at 5.4% (Page 4) increase household costs, potentially slowing consumption. The 6% Central Bank Rate and 587,062-tonne food reserves (32,598 tonnes released) stabilize prices, supporting growth.
Opportunities and Mitigation
Figures and Explanation:
Development Projects: External debt of USD 34.1 billion funds infrastructure (48% of World Bank’s USD 10 billion portfolio,), like the Standard Gauge Railway, boosting long-term growth. Projects worth TZS 14.81 trillion (30% of FY 2024/25 budget,) enhance connectivity and trade.
Debt Management: The moderate debt distress risk and concessional financing keep debt sustainable. Revenue mobilization (TZS 2.47 trillion collected in March 2025,) and IMF’s USD 441 million ECF/RSF support () reduce reliance on costly borrowing.
Fiscal Reforms: Plans to raise tax revenue to TZS 29.41 trillion (10% increase,) and reduce the fiscal deficit to 2.5% of GDP by 2024/25 () enhance fiscal space, freeing resources for growth.
Conclusion
Tanzania’s debt, at TZS 34.26 trillion domestic and USD 34.1 billion (TZS 91.29 trillion) external in March 2025, impacts growth by constraining fiscal space and diverting resources to servicing costs (e.g., TZS 5.31 trillion domestic, USD 1-2 billion external annually). A 2.6%-shilling depreciation and high lending rates (15.5%) exacerbate pressures, crowding out private investment. While debt fuels infrastructure (TZS 14.81 trillion in projects), declining exports (coffee -2%) and global risks (2.8% growth) challenge repayment. Prudent policy (6% CBR, USD 5.7 billion reserves) and revenue growth (TZS 29.41 trillion) mitigate risks, supporting 5.4%-6% GDP growth, but fiscal discipline is crucial.
Key Figures: Tanzania’s Debt Development and Economic Growth (March 2025)
Indicator
Key Figure
Domestic Debt
TZS 34.26 trillion (Mar 2025, 29% by banks, 26.5% by pension funds)
External Debt
USD 34.1 billion (TZS 91.29 trillion, Mar 2025, 78.3% central gov., 67.7% USD)
