Executive Summary
The Tanzanian shilling depreciated by just 0.08 percent on an annual basis in the year to June 2026 — nearly half the 0.21 percent depreciation recorded a year earlier — making it one of the more stable currencies among peer economies over the period. The shilling traded at a monthly average of TZS 2,633.73 per US dollar in June 2026, up modestly from TZS 2,616.88 in May, after actually appreciating from TZS 2,604.6 (June 2025) to TZS 2,436.8 (November 2025) before drifting back up. This stability rests on strong gold export earnings (+36.7% y/y), resilient tourism receipts, and active Bank of Tanzania smoothing in the interbank foreign exchange market.
Set against that stability, Tanzania's national debt stock reached USD 50,595.8 million at end-June 2026 (+4.5% y/y), of which 70.4 percent is external. Crucially, 66.2 percent of external debt is denominated in US dollars — meaning the currency stability described above is not a peripheral detail but a direct determinant of how expensive Tanzania's debt is in local-currency terms. The debt mix is also shifting: domestic debt grew 10.8 percent year-on-year versus just 2.4 percent for external debt, a deliberate move that reduces exchange-rate risk on new borrowing but raises domestic financing costs and competes with private credit. Reserves cover of 4.4 months of imports — just above the four-month national benchmark — is the buffer holding this system together, and it is thinner than it looks once current-account and commodity-price risks are taken into account.
Related TICGL Deep-Dive: What's Next for Tanzania's Economy?
Currency stability and debt sustainability are two of the structural pillars TICGL examines in our flagship policy research on the gaps standing between Tanzania's current trajectory and a US$1 trillion economy by 2050 — including how FX-denominated debt and reserve buffers interact with long-run growth policy.
Read: What's Next for Tanzania's Economy? →On This Page
1. Shilling Stability: How Stable, Really?
The interbank foreign exchange market (IFEM) was broadly stable in June 2026, with turnover rising to USD 193.3 million from USD 119.3 million in May, as the Bank of Tanzania made a net sale of USD 28.5 million to smooth volatility, consistent with its intervention policy. Rather than a straight-line depreciation, the monthly end-period data show the shilling actually strengthening through much of late 2025 before giving some of that back into mid-2026 — a shallow U-shaped path rather than sustained weakening.
Chart 1 · TZS/USD End-of-Period Exchange Rate, June 2025–June 2026
Source: Ministry of Finance & Bank of Tanzania (Table A10). Lower value = stronger shilling.
| Period | TZS/USD (end of period) | Month-on-month change |
|---|---|---|
| Jun-25 | 2,604.6 | — |
| Jul-25 | 2,545.8 | −2.26% (appreciation) |
| Aug-25 | 2,463.3 | −3.24% (appreciation) |
| Sep-25 | 2,442.8 | −0.83% (appreciation) |
| Oct-25 | 2,451.6 | +0.36% |
| Nov-25 | 2,436.8 | −0.60% (appreciation) |
| Dec-25 | 2,447.5 | +0.44% |
| Jan-26 | 2,518.1 | +2.88% |
| Feb-26 | 2,542.5 | +0.97% |
| Mar-26 | 2,577.4 | +1.37% |
| Apr-26 | 2,602.0 | +0.95% |
| May-26 | 2,609.2 | +0.28% |
| Jun-26 | 2,623.5 | +0.55% |
Source: Ministry of Finance & Bank of Tanzania (Table A10), TICGL computations.
TICGL Reading: A Managed, Not Purely Market-Driven, Stability
- The appreciation phase (Jul–Nov 2025) coincides with peak gold-export strength and the ramp-up of the domestic gold purchase programme, suggesting FX supply from minerals was the dominant driver rather than portfolio flows.
- The re-depreciation from January 2026 onward tracks the period when global oil prices spiked on the Middle East conflict (Brent rose from USD 66.8 in Jan-26 to USD 120.4 in Apr-26 before correcting), consistent with higher import demand for fuel pressuring the currency.
- BOT's net USD 28.5 million sale in June 2026 confirms the central bank is actively leaning against volatility rather than allowing a fully free float — a policy stance that supports predictability for debt servicing but requires reserves to be maintained.
2. National Debt Stock: Size & Composition
Tanzania's national debt stock — external plus domestic — reached USD 50,595.8 million at the end of June 2026, up 4.5 percent from USD 48,396.3 million a year earlier. External debt (USD 35,606.1 million) remains dominant at 70.4 percent of the total, but its growth rate (+2.4% y/y) is now running well below that of domestic debt (+10.8% y/y in USD-equivalent terms), signalling a gradual but clear shift in how the deficit is being financed.
Chart 2 · National Debt Stock Composition, June 2025–June 2026 (USD Million)
Source: Ministry of Finance & Bank of Tanzania (Table A10).
| Period | External Debt | Domestic Debt | Total National Debt | External Share |
|---|---|---|---|---|
| Jun-25 | 34,765.3 | 13,631.1 | 48,396.3 | 71.8% |
| Sep-25 | 35,642.2 | 15,407.9 | 51,050.1 | 69.8% |
| Dec-25 | 35,528.8 | 15,485.0 | 51,013.8 | 69.6% |
| Mar-26 | 35,886.2 | 14,917.3 | 50,803.5 | 70.6% |
| May-26 | 35,553.3 | 15,045.7 | 50,599.0 | 70.3% |
| Jun-26 | 35,606.1 | 14,989.7 | 50,595.8 | 70.4% |
Source: Ministry of Finance & Bank of Tanzania (Table A10). Domestic debt shown in USD-equivalent terms; the TZS-denominated stock (TZS 39,325.8bn at Jun-26) is not itself subject to direct exchange-rate revaluation risk.
3. Currency Exposure of External Debt
The single most important number linking currency stability to debt sustainability is the currency composition of external debt. As of June 2026, 66.2 percent of Tanzania's disbursed outstanding external debt was denominated in US dollars, followed by the Euro (17.4%), Chinese Yuan (6.7%), and other currencies (9.8%). This composition has been essentially unchanged for the past year (USD share was 66.0% in June 2025), meaning currency-mix diversification has not materially progressed even as absolute borrowing has grown.
Chart 3 · Currency Composition of External Debt, June 2026
Source: Ministry of Finance & Bank of Tanzania (Table 2.7.4 / A10).
Chart 4 · Interest Payments by Source, Jul’25–May’26 (TZS Billion)
Foreign interest is the FX-exposed share of total debt-service cost.
| Currency | Jun-25 | May-26 | Jun-26 |
|---|---|---|---|
| United States Dollar | 66.0% | 65.9% | 66.2% |
| Euro | 17.7% | 17.5% | 17.4% |
| Chinese Yuan | 6.4% | 6.6% | 6.7% |
| Other currencies | 9.9% | 9.9% | 9.8% |
TICGL Reading: Concentration Risk Is Structural, Not Transitory
- A one percentage-point move in the shilling against the dollar revalues roughly two-thirds of the entire external debt stock — around USD 23.6 billion of exposure at June 2026 levels — directly in TZS terms, even with zero new borrowing.
- The Euro and Yuan shares are small but rising slightly (Yuan up from 6.4% to 6.7% y/y), reflecting the growing role of Chinese concessional and commercial financing in infrastructure projects — a diversification trend worth watching but not yet material to overall risk.
- Multilateral creditors hold 59.3 percent of external debt by creditor type — typically offering longer maturities and lower rates than commercial debt (34.4% share), which is a mitigating factor against currency-driven repayment shocks even though it does not reduce the currency exposure itself.
4. The Stability–Debt Feedback Loop
Reserves are the buffer that lets Tanzania absorb currency shocks without triggering a debt crisis. Gross official reserves stood at USD 5,673.5 million at end-June 2026 — comfortably above the previous year's levels but providing only 4.4 months of import cover, just above the four-month national benchmark (and below the higher EAC/SADC regional benchmarks shown in the source review). External debt service paid in June 2026 alone was USD 249.2 million (USD 184.9m principal, USD 64.3m interest) — a reminder that reserves must simultaneously cover trade financing needs and debt-service obligations.
| Item | Value |
|---|---|
| External loan disbursements (June 2026) | USD 379.8 million |
| External debt service paid (June 2026) | USD 249.2 million |
| of which principal | USD 184.9 million |
| of which interest | USD 64.3 million |
| Gross official reserves (end-Jun 2026) | USD 5,673.5 million |
| Import cover | 4.4 months (benchmark: 4.0 months) |
| Domestic interest paid (cumulative Jul’25–May’26) | TZS 3,225.3 billion |
| Foreign interest paid (cumulative Jul’25–May’26) — FX-exposed | TZS 1,782.6 billion |
Source: BOT Monthly Economic Review, July 2026 (Tables A10, A2, 2.8.1).
TICGL Reading: A Thin but Currently Adequate Buffer
- Foreign interest represents about 36% of total interest paid (TZS 1,782.6bn of TZS 5,007.9bn cumulative) — this is the portion of debt-service cost that rises automatically in TZS terms if the shilling weakens, independent of any change in fiscal policy.
- The current account deficit widened 7.0% year-on-year (to USD 2,303.9m) on faster import growth (+18.1%) than export growth (+17.2%) — a trend that, if it continues, will draw down the same reserves that back both import cover and debt-service capacity.
- The shift toward domestic borrowing (Section 2) is a rational hedge against this exposure: TZS-denominated debt does not carry direct currency-revaluation risk. But cumulative net domestic financing for FY2025/26 had already reached 122.5% of its full-year budget by May 2026 (see TICGL's companion budget analysis), meaning this hedge is being pursued more aggressively than originally planned — with knock-on effects on domestic bond yields (10-year yield rose to 10.39% in June 2026) and private-credit crowding-out risk.
5. Historical Context: 2018–2025
Viewed over the medium term, Tanzania's external debt stock has grown 69.5 percent since 2018 (USD 20,503.0m → USD 34,765.3m), while the shilling's annual-average exchange rate has depreciated a cumulative 12.1 percent over the same period (TZS 2,263.8 → TZS 2,537.6 per USD) — debt growth has significantly outpaced currency depreciation, which is a broadly reassuring signal for long-run debt sustainability, though the pace of both increased noticeably from 2023 onward.
Chart 5 · External Debt Stock vs Exchange Rate, 2018–2025 (Annual)
Source: BOT Monthly Economic Review, July 2026 (Table A1). Left axis: debt (USD m); right axis: exchange rate (TZS/USD).
Chart 6 · Gross Reserves & Import Cover, 2018–2025
Bars: reserves (USD m, left axis). Line: import cover in months (right axis).
| Year | Exch. Rate, Annual Avg (TZS/USD) | External Debt (USD m) | Gross Reserves (USD m) | Import Cover (Months) |
|---|---|---|---|---|
| 2018 | 2,263.8 | 20,503.0 | 5,044.6 | 4.9 |
| 2019 | 2,288.2 | 21,920.9 | 5,567.6 | 6.4 |
| 2020 | 2,294.1 | 22,952.7 | 4,767.7 | 5.6 |
| 2021 | 2,297.8 | 25,519.3 | 6,386.0 | 6.6 |
| 2022 | 2,303.1 | 27,832.5 | 5,177.2 | 4.7 |
| 2023 | 2,382.1 | 30,252.7 | 5,450.1 | 4.5 |
| 2024 | 2,597.4 | 31,950.9 | 5,546.9 | 4.5 |
| 2025 | 2,537.6 | 34,765.3 | 6,329.0 | 4.9 |
Source: BOT Monthly Economic Review, July 2026 (Table A1), Ministry of Finance.
TICGL Reading: 2024 Was the Inflection Point
The annual-average exchange rate jumped from TZS 2,382.1 in 2023 to TZS 2,597.4 in 2024 (+9.0% in a single year) — by far the sharpest move in the eight-year series — before partially reversing to TZS 2,537.6 in 2025. External debt growth also accelerated over the same window. Import cover simultaneously dipped to its lowest points of the series (4.5 months in both 2023 and 2024) before recovering to 4.9 months in 2025. Read together, 2023–2024 was a period of genuine currency and reserve stress that the 2025–2026 data shows Tanzania has since stabilised out of — but the reserve buffer has not yet been rebuilt much beyond where it stood before that stress episode.
6. TICGL Assessment & Outlook
Key Takeaways
- Currency stability is real, but partly engineered. Active BOT intervention (net USD sales) and strong gold-export inflows — not simply market equilibrium — are what has kept depreciation to 0.08% y/y. This is a policy achievement, but one that depends on gold prices and IFEM management capacity continuing to hold.
- Two-thirds of external debt is a standing currency bet. With 66.2% of external debt in USD, any renewed depreciation episode (of the kind seen in 2023–2024) would mechanically raise TZS-denominated debt-service costs and the debt-to-GDP ratio, without any new borrowing decision being taken.
- The domestic-financing shift is a rational but not costless hedge. Growing domestic debt 10.8% y/y (vs 2.4% for external debt) reduces FX exposure but is already running ahead of its FY2025/26 budget envelope, pushing up Treasury yields and raising crowding-out risk for private credit — a trade-off between currency risk and domestic financial-market risk, not a free reduction in overall risk.
- Reserve buffers are adequate but thin. At 4.4 months of import cover — only marginally above the 4.0-month floor — Tanzania has limited room to absorb a simultaneous shock to gold prices, tourism receipts, and oil import costs without the shilling coming under renewed pressure.
- Watch the CBR-yield-currency triangle through Q3 2026. The MPC's hike to 6.25% supports the shilling via higher real interest rates, but it simultaneously raises the cost of the domestic-borrowing-heavy financing strategy the government is now running — reinforcing why currency policy and debt policy cannot be assessed in isolation from one another.
This currency-and-debt analysis complements TICGL's parallel review of central government revenue and expenditure performance for the same period — read it alongside our broader research on structural policy gaps in Tanzania's growth model.
Related TICGL Research & Resources
Continue exploring Tanzania's economic and investment landscape with TICGL's research platform, dashboards and advisory programmes.
Muhtasari kwa Kiswahili
Shilingi ya Tanzania imeendelea kubaki tulivu sana, ikishuka thamani kwa asilimia 0.08 tu kwa mwaka hadi Juni 2026, ikilinganishwa na asilimia 0.21 mwaka uliopita. Uthabiti huu unasaidiwa na mapato imara ya dhahabu (yaliyokua kwa asilimia 36.7), utalii, na uingiliaji kati wa Benki Kuu ya Tanzania (BOT) katika soko la fedha za kigeni — ikiwemo mauzo halisi ya dola milioni 28.5 mwezi Juni 2026 kudhibiti mabadiliko ya thamani.
Hata hivyo, deni la taifa (la ndani na nje) limefikia dola za Marekani milioni 50,595.8 ifikapo Juni 2026, huku asilimia 66.2 ya deni la nje likiwa katika dola za Marekani. Hii ina maana kwamba uthabiti wa shilingi ni muhimu sana katika kudhibiti gharama za ulipaji deni kwa fedha za Kitanzania — mabadiliko madogo ya thamani ya shilingi yanaweza kuongeza gharama za deni bila hata mkopo mpya kuchukuliwa. Akiba ya fedha za kigeni (miezi 4.4 ya uagizaji bidhaa) ipo juu kidogo ya kiwango cha chini kinachokubalika (miezi 4), hivyo bado kuna nafasi finyu ya kuhimili mshtuko wa ghafla kwenye bei za dhahabu au mapato ya utalii.
Wakati huo huo, Serikali imeendelea kuongeza matumizi ya mikopo ya ndani (iliyokua kwa asilimia 10.8 kwa mwaka) kuliko mikopo ya nje (asilimia 2.4), hatua inayopunguza hatari ya fedha za kigeni lakini inayoongeza shinikizo kwenye viwango vya riba vya ndani na inaweza kuathiri upatikanaji wa mikopo kwa sekta binafsi. TICGL inashauri wadau kufuatilia kwa karibu uwiano huu kati ya uthabiti wa shilingi na mwelekeo wa deni la taifa, hasa katika muktadha wa malengo ya muda mrefu ya kiuchumi ya Tanzania. Soma zaidi: What's Next for Tanzania's Economy? The Policy Gaps Keeping $1 Trillion Out of Reach by 2050.
This page is a TICGL research summary and visualization of publicly available data published by the Bank of Tanzania in its Monthly Economic Review, July 2026, and by the Ministry of Finance, as cited throughout. Figures marked provisional (p) or revised (r) in the source document may be updated in subsequent BOT releases. This content is for general information and research purposes and does not constitute investment, legal or tax advice. © 2026 Tanzania Investment and Consultant Group Ltd (TICGL).