As of February 2025, Tanzania’s external debt stock reached USD 31.31 billion, reflecting a monthly increase of USD 393.4 million (1.3%). The central government accounts for 79.7% of the total, highlighting its leading role in borrowing to fund infrastructure and social projects. Funds are mainly allocated to transport and telecommunications (21.6%), education and social welfare (16.3%), and energy and mining (13.7%). However, with 65.8% of the debt denominated in US dollars, the country remains exposed to exchange rate volatility, necessitating prudent fiscal and monetary management.

Tanzania’s debt development, Tanzania’s Monthly Economic Review – March 2025, focusing on external debt.

Tanzania Debt Development (as of February 2025)

1. Total External Debt Stock

• Total External Debt Stock (Public and Private):
  ➤ USD 31,312.8 million (USD 31.31 billion)
• Month-to-Month Change:
  ➤ An increase of USD 393.4 million (1.3%) compared to January 2025.
• Reason for Increase:
  ➤ Mainly due to new disbursements and exchange rate valuation effects.

2. External Debt Stock by Borrower

Key Insight:
The Central Government holds the majority share of external debt, nearly 80%, showing that debt is primarily used to finance public infrastructure and development projects.

3. Disbursed Outstanding Debt by User of Funds

Key Insight:
The largest portion of external debt is invested in transport, telecom, education, and energy, which are strategic sectors for long-term development.

4. Debt by Currency Composition

Key Insight:
The dominance of the US Dollar (nearly 66%) exposes Tanzania to foreign exchange risk if the dollar strengthens further. However, diversification into other currencies like the Euro, Yuan, and Yen offers some buffer.

Summary:

• Tanzania’s external debt stock reached USD 31.31 billion in February 2025.
• 79.7% of it is held by the central government.
• Major debt usage goes to transport, education, energy, and finance.
• USD remains the dominant currency (65.8%), increasing exposure to exchange rate movements.

Tanzania’s external debt development tells us:

What the Figures Tell Us

1. Heavy Reliance on External Financing
   With USD 31.31 billion in total external debt, Tanzania continues to rely significantly on foreign borrowing, especially from multilateral and bilateral sources, to fund its development agenda.
2. Government is the Main Borrower
   The central government holds nearly 80% of the external debt. This indicates that most of the borrowing is channeled into large-scale public projects like infrastructure, energy, and social services—reflecting the government's role in driving economic development.
3. Strategic Allocation of Debt
   A large share of disbursed debt is used in productive sectors:
   • Transport and telecom (21.6%)
   • Social welfare and education (16.3%)
   • Energy and mining (13.7%)
     This shows a development-oriented borrowing strategy, aiming to boost long-term economic productivity.
4. Vulnerability to Exchange Rate Risk
   Since 65.8% of the debt is denominated in US dollars, any strengthening of the dollar could raise the cost of debt servicing. This makes exchange rate management critical for debt sustainability.
5. Gradual but Steady Growth in Debt Stock
   The month-on-month increase of USD 393.4 million (1.3%) suggests a controlled growth in borrowing, possibly linked to disbursements for ongoing projects and valuation changes.

🧠 Bottom Line: Tanzania’s external debt is focused on development, government-driven, and largely USD-denominated, which helps fund national priorities but also requires careful debt and currency risk management to remain sustainable.