Domestic debt by creditor: banks and pension funds now carry the load
Tanzania's government domestic debt (excluding liquidity papers) stood at TZS 39,257.3 billion at end-May 2026, marginally down from TZS 39,335.8 billion in April as the government drew down its Bank of Tanzania overdraft. The creditor base has shifted steadily over the past year: commercial banks (28.4%) and pension funds (26.6%) together now hold 55.0 percent of all domestic debt, while the Bank of Tanzania's own share has fallen from 20.3 percent to 19.0 percent — consistent with planned reforms to cut the central bank's overdraft ceiling from 18 to 14 percent of prior-year government revenue. Government bonds remain the dominant instrument, at 81.3 percent of the stock, with the overdraft facility making up 14.4 percent.
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Government domestic debt by creditor category
Six creditor groups fund Tanzania's domestic debt. Over the twelve months to May 2026, pension funds grew their exposure fastest in absolute terms, commercial banks retained the largest single share, and the Bank of Tanzania's participation continued to decline as a matter of policy.
Domestic debt by creditor category
TZS billion — May-25, Apr-26 and May-26 compared
Creditor share, May 2026
Percentage of total domestic debt stock (excl. liquidity papers)
| Creditor | May-25 | Share | Apr-26 | Share | May-26p | Share | YoY change |
|---|---|---|---|---|---|---|---|
| Commercial banks | 10,138.2 | 28.8% | 11,052.2 | 28.1% | 11,149.8 | 28.4% | +10.0% |
| Pension funds | 9,203.9 | 26.1% | 10,426.4 | 26.5% | 10,441.4 | 26.6% | +13.5% |
| Bank of Tanzania | 7,158.2 | 20.3% | 7,706.3 | 19.6% | 7,455.1 | 19.0% | +4.1% |
| Others (public institutions, private companies, individuals & non-residents) | 6,244.5 | 17.7% | 7,339.8 | 18.7% | 7,381.7 | 18.8% | +18.2% |
| Insurance companies | 1,840.0 | 5.2% | 2,012.5 | 5.1% | 2,030.7 | 5.2% | +10.4% |
| BOT's special funds | 616.3 | 1.8% | 798.4 | 2.0% | 798.4 | 2.0% | +29.6% |
| Domestic debt stock (excl. liquidity papers) | 35,201.1 | 100% | 39,335.8 | 100% | 39,257.3 | 100% | +11.5% |
Source: Ministry of Finance and Bank of Tanzania (Table 2.6.6). p = provisional data. YoY = year-on-year change, May-25 to May-26.
Eight years of domestic debt growth
Government domestic debt has grown roughly 2.7-fold since May 2018 — from TZS 14,844.1 billion to TZS 39,257.3 billion — as the government leaned more heavily on the domestic securities market to fund development spending. Growth accelerated sharply between 2020 and 2022, moderated through 2023–2024, and has since stabilised near the TZS 39 trillion mark.
Government domestic debt stock, May 2018 – May 2026
TZS billion, annual snapshots (May) plus the two latest months
Source: Ministry of Finance (Chart 2.6.1, Government Domestic Debt Stock).
By instrument: bonds dominate, overdraft use is easing
Looking at the same debt stock by instrument rather than creditor confirms the story: government bonds make up 81.3 percent of domestic debt, Treasury bills just 4.0 percent, and the Bank of Tanzania overdraft facility 14.4 percent — down from 15.0 percent the month before, the main reason the total stock dipped between April and May 2026.
Domestic debt by borrowing instrument
TZS billion, stacked by instrument type
| Instrument | May-25 | Apr-26 | May-26p | Share May-26 |
|---|---|---|---|---|
| Government bonds | 27,774.8 | 31,783.7 | 31,912.3 | 81.3% |
| Overdraft (BOT) | 5,198.2 | 5,897.6 | 5,646.4 | 14.4% |
| Treasury bills | 2,022.6 | 1,518.7 | 1,562.8 | 4.0% |
| Government stocks | 187.1 | 135.7 | 135.7 | 0.3% |
| Total | 35,201.1 | 39,335.8 | 39,257.3 | 100% |
Source: Ministry of Finance and Bank of Tanzania (Table 2.6.5). p = provisional data.
May 2026: new issuance vs. debt servicing
The government raised TZS 278.8 billion in new domestic securities in May 2026 — TZS 128.6 billion from Treasury bonds and TZS 150.2 billion from Treasury bills — while servicing TZS 367.7 billion of existing domestic debt (TZS 106.1 billion in principal and TZS 261.6 billion in interest). Debt servicing exceeded new issuance in the month, consistent with the modest net decline in the total domestic debt stock.
Issuance vs. servicing, May 2026
TZS billion
Reading it
Interest payments (TZS 261.6bn) made up 71 percent of total domestic debt servicing in May 2026 — a reminder that as the stock of government bonds grows, so does the recurring interest bill competing with development spending in the budget.
New issuance was tilted toward Treasury bills (54%) over bonds (46%) in May, a short-term skew that can reflect either investor demand at the time of the auction or deliberate cash-flow management by the government.
Source: Bank of Tanzania (Chart 2.6.2, Issued Government Securities for Financing Purposes).
Why creditors keep buying: the domestic yield curve
Treasury yields eased across the curve in May 2026 amid ample banking-system liquidity, but long-dated paper still offers pension funds and insurers attractive real returns relative to the 12-month deposit rate (10.17%) — helping explain why long-term institutional investors keep adding to their government-securities holdings.
Treasury bond yield curve — May 2026
Weighted average yield to maturity, percent
Source: Bank of Tanzania (Table A4, Interest Rates Structure).
What this means for investors and policymakers
1. Watch bank balance-sheet capacity
Commercial banks hold TZS 11.15 trillion in government securities — capital that could otherwise support private-sector lending. With private credit growth already running above 23% y/y, any further increase in bank holdings of government paper is worth monitoring for early signs of crowding-out pressure.
2. Pension funds are the swing buyer
Pension funds' 13.5% year-on-year growth in holdings makes them the fastest-growing creditor group. Their appetite for long-dated bonds (15–25 year tenors) gives the government a relatively stable, long-duration funding base — but concentrates asset risk for the pension system.
3. BOT overdraft reform is already visible
The Bank of Tanzania's declining share (20.3% → 19.0%) and the month-on-month drop in overdraft usage both pre-empt the FY2026/27 legal cap reduction from 18% to 14% of revenue — a positive signal for monetary-fiscal separation and inflation credibility.
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Apply now →Deni la Ndani la Serikali kwa Kundi la Wakopeshaji — Mei 2026
Deni la ndani la Serikali (bila karatasi za ukwasi) lilifikia shilingi trilioni 39.26 mwishoni mwa Mei 2026, likishuka kidogo kutoka trilioni 39.34 mwezi Aprili, hasa kutokana na kupungua kwa matumizi ya akaunti ya "overdraft" kutoka Benki Kuu.
Benki za kibiashara zinaendelea kuwa mkopeshaji mkubwa zaidi kwa asilimia 28.4 (shilingi trilioni 11.15), zikifuatiwa na mifuko ya hifadhi ya jamii (mifuko ya pensheni) kwa asilimia 26.6 (shilingi trilioni 10.44) — ikiwa ndiyo kundi lililokua kwa kasi zaidi kwa mwaka mzima (asilimia 13.5). Benki Kuu ya Tanzania (BOT) imepunguza mchango wake kutoka asilimia 20.3 hadi asilimia 19.0 kwa mwaka, sambamba na mpango wa kupunguza kikomo cha "overdraft" ya Serikali kutoka asilimia 18 hadi asilimia 14 ya mapato ya mwaka uliopita, kuanzia mwaka wa fedha 2026/27.
Kwa upande wa aina ya dhamana, hati fungani za Serikali (Treasury bonds) zinaendelea kutawala kwa asilimia 81.3 ya deni lote la ndani, huku "overdraft" ikiwa asilimia 14.4 na dhamana fupi (Treasury bills) asilimia 4.0 pekee. Mwezi Mei 2026, Serikali ilikopa shilingi bilioni 278.8 mpya kupitia dhamana za ndani, huku ikilipa shilingi bilioni 367.7 za deni la zamani (bilioni 106.1 mtaji na bilioni 261.6 riba).
Maana yake kwa wawekezaji: Ushiriki mkubwa wa benki za kibiashara na mifuko ya pensheni katika ukopeshaji wa Serikali unaweza kuathiri uwezo wao wa kukopesha sekta binafsi (crowding-out effect) — jambo ambalo TICGL/TERI inaendelea kulifuatilia kwa karibu.