A Strategic Approach to Fiscal Stability
Tanzania’s domestic debt, totaling TZS 33.6 trillion in November 2024, reflects a strategic focus on long-term financing through Treasury Bonds, which account for 78.2% of the debt portfolio. With a diverse creditor base led by commercial banks (28.8%), pension funds (26.9%), and the Bank of Tanzania (21%), the government balances long-term commitments with short-term liquidity needs. This approach minimizes exchange rate risks and supports fiscal stability, underscoring the importance of sustainable debt management for economic growth.
1. Overview of Domestic Debt
As of November 2024, Tanzania’s domestic debt stock amounted to TZS 33,569.2 billion, reflecting an increase of TZS 546 billion from the previous month. This growth was primarily driven by the issuance of new Treasury bonds and bills.
2. Government Domestic Debt by Borrowing Instruments
The distribution of government domestic debt by instruments in November 2024 is as follows:
Instrument | Amount (TZS Billion) | Share (%) |
Government Securities | 28,459.2 | 84.8% |
- Treasury Bonds | 26,244.7 | 78.2% |
- Treasury Bills | 2,027.4 | 6.0% |
- Government Stocks | 187.1 | 0.6% |
Non-Securitized Debt | 5,110.0 | 15.2% |
- Overdraft | 5,091.6 | 15.2% |
- Other Liabilities* | 18.4 | 0.1% |
Key Observations:
3. Government Domestic Debt by Creditor Category
The breakdown of creditors for domestic debt as of November 2024 is as follows:
Creditor Category | Amount (TZS Billion) | Share (%) |
Commercial Banks | 9,679.6 | 28.8% |
Pension Funds | 9,015.3 | 26.9% |
Bank of Tanzania (BOT) | 7,051.7 | 21.0% |
Insurance Companies | 1,921.8 | 5.7% |
BOT’s Special Funds | 460.4 | 1.4% |
Others (e.g., public institutions, private companies, individuals) | 5,440.4 | 16.2% |
Key Observations:
4. Summary of Figures
Category | Amount (TZS Billion) | Share (%) |
Domestic Debt Stock | 33,569.2 | 100% |
- Government Securities | 28,459.2 | 84.8% |
- Non-Securitized Debt | 5,110.0 | 15.2% |
Major Creditors | ||
- Commercial Banks | 9,679.6 | 28.8% |
- Pension Funds | 9,015.3 | 26.9% |
- Bank of Tanzania (BOT) | 7,051.7 | 21.0% |
Insights:
Tanzania’s domestic debt portfolio appears strategically managed, emphasizing long-term stability while maintaining access to short-term funds
1. Reliance on Long-Term Borrowing Instruments
Implication: This strategy reflects a focus on financial stability and sustainable debt management, avoiding excessive short-term debt accumulation.
2. Diverse Creditor Base
Implication: A diversified creditor base enhances resilience to shocks, ensuring continued access to domestic financing even during economic uncertainties.
3. Use of Non-Securitized Debt
Implication: The government balances long-term commitments with immediate fiscal needs, reflecting a pragmatic approach to debt management.
4. Domestic Financing Reduces Exchange Rate Risks
Implication: The emphasis on domestic debt aligns with sound fiscal management, leveraging local resources while avoiding external currency risks.
5. Debt Sustainability and Fiscal Discipline
Conclusion:
Tanzania’s domestic debt strategy emphasizes long-term stability, diversified financing, and fiscal flexibility. However, as debt levels grow, effective utilization of funds for development and maintaining debt sustainability will be critical to avoiding financial strain in the future.