In March 2021, Tanzania's external debt stood at TZS 61,805,876 million (61 trillion), representing a decrease of 5% from February 2021, but a notable increase of 9% from March 2020. This suggests a fluctuating pattern in external borrowing, possibly influenced by economic conditions and government policies during this period. On the other hand, domestic debt in March 2021 amounted to TZS 16,116,500 million (16 trillion), marking a 2% increase from February 2021 and a 9% rise from March 2020. The total debt, combining external and domestic debts, reached TZS 77,922,376 million (77 trillion), showing a 4% decrease from February 2021 but a 9% increase from March 2020.

Moving to January 2024, Tanzania's external debt had decreased to TZS 85,355,369 million (85 trillion), representing a 4% decline from November 2023 but a significant 15% increase compared to January 2021. This indicates a continued reliance on external borrowing to support various developmental projects or budgetary needs. Similarly, domestic debt decreased slightly to TZS 30,505,400 million (30 trillion), reflecting a 1% decrease from November 2023, but a 15% increase from January 2021. The total debts in January 2024 amounted to TZS 115,860,769 million (115 trillion), showing a 3% decrease from November 2023, but a substantial 15% rise from January 2021.

Hence, the trend in Tanzania's debt development from 2021 to 2024 demonstrates a consistent increase in both external and domestic debts over the three-year period, with occasional fluctuations in monthly changes. The significant year-on-year increase of 15% in both external and domestic debts suggests a growing reliance on borrowing to fund developmental initiatives, infrastructure projects, or address fiscal deficits. This trend underscores the importance of monitoring debt levels closely to ensure sustainability and mitigate potential risks associated with high debt burdens, such as debt servicing challenges and macroeconomic instability.

Tanzania's debt trends alongside economic growth requires a comprehensive understanding of various factors influencing both aspects:

Debt Growth Trends:

• From March 2021 to January 2024, Tanzania's total debts increased from TZS 77,922,376 million (77 trillion) to TZS 115,860,769 million (115 trillion), marking a substantial 49% rise over the three-year period.
• External debt grew from TZS 61,805,876 million (61 trillion) to TZS 85,355,369 million (85 trillion), representing a 38% increase.
• Domestic debt also showed significant growth, increasing from TZS 16,116,500 million (16 trillion) to TZS 30,505,400 million (30 trillion), marking an 89% rise.

 Economic Growth Context:

• The substantial increase in debt typically indicates a government's investment in infrastructure, social programs, and other projects aimed at stimulating economic growth.
• However, sustained high levels of debt could also pose risks to economic stability if not managed effectively. This includes concerns about debt servicing, fiscal deficits, and potential crowding out of private investment.

 Implications for Economic Growth:

• The consistent growth in both external and domestic debts suggests that Tanzania has been actively borrowing to finance various developmental projects and address budgetary needs.
• This borrowing may have contributed to economic growth through increased investment in infrastructure, which can enhance productivity, attract foreign investment, and create employment opportunities.
• However, the sustainability of this growth model depends on the efficiency of investments, the capacity to service debts, and the ability to generate sufficient returns on investment to repay debts in the long run.
• The 15% year-on-year increase in debts indicates a rapid accumulation of debt, which could raise concerns about debt sustainability and the potential burden it places on future generations.

Risks and Challenges:

• High levels of debt pose risks to macroeconomic stability, as they can lead to increased debt servicing costs, currency depreciation, inflationary pressures, and reduced investor confidence.
• Moreover, if borrowed funds are not invested efficiently or if projects fail to generate expected returns, the debt burden could become unsustainable, leading to debt crises or the need for austerity measures.

While the growth in Tanzania's debts may have supported economic expansion by financing crucial development projects, it also poses significant risks to long-term economic stability. It's essential for Tanzania policymakers to carefully manage debt levels, prioritize investments that generate sustainable economic returns, and implement effective debt management strategies to ensure that debt remains manageable and supportive of long-term economic growth.