Key takeaways:
- Fitch revised Tanzania’s outlook to Positive from Stable and affirmed its rating at ‘B+’
- The revision reflects strengthening reserves, moderate deficits and a declining debt trajectory
- Government debt is projected to fall to 46.2% of GDP by 2028, from 48.9% in 2025
Global rating agency, Fitch Ratings, has revised the outlook on Tanzania’s Long-Term Issuer Default Ratings to Positive from Stable, while affirming the ratings at ‘B+’.
The agency said on Monday the revision reflects Tanzania’s projected strengthening in international reserves and moderate fiscal deficits.
Fitch said these factors will support a downward trajectory for government debt.
The agency noted that recent institutional and operational improvements in Tanzania’s macroeconomic policy framework could also increase the country’s resilience to shocks, though it said these improvements remain to be tested given their relatively recent implementation.
How Fitch is assessing Tanzania
Fitch said Tanzania’s ratings reflect strong real GDP growth, low inflation and low government debt relative to peers, though the rating remains constrained by weak governance and low government revenue relative to other ‘B’ category countries.
The agency expects Tanzania’s international reserves to strengthen to $7.9 billion by 2028, up from $6.3 billion at the end of 2025, translating into 3.3 months of coverage for current external payments.
The agency also pointed to Tanzania’s central bank holdings of non-monetary gold, estimated at $2.4 billion, as a potential further boost to external buffers if sold for foreign exchange or converted into monetary gold, a process it said is already underway.
Debt trajectory improving despite external pressures
Fitch expects Tanzania’s current account deficit to widen to 3.2% of GDP in 2026 due to the impact of the war in Iran, before narrowing to 2.5% of GDP over 2027-2028.
The agency estimated a fiscal deficit of 2.8% of GDP for the fiscal year that ended in June 2026, reflecting strong revenue performance and limited fiscal impact from fuel subsidies, with the deficit expected to remain close to 3% of GDP through fiscal year 2028.
Government debt is projected to decline to 46.2% of GDP by 2028, from 48.9% in 2025, driven by strong nominal GDP growth and low primary deficits, a figure Fitch noted sits below the ‘B’ median of 55% of GDP.
However, the agency cautioned that Tanzania’s debt trajectory remains exposed to exchange-rate depreciation, given that external debt makes up 68% of the country’s total debt stock.
Fitch expects Tanzania’s economy to grow 5.8% in 2026, well above the 3.7% projected for the ‘B’ median, aided by direct fuel procurement that prevented supply disruptions from the war in Iran.
The agency forecasts growth will average 6.1% in 2027-2028, supported by public investment, tourism and the country’s mining sector, though it flagged risks from a potential escalation in the Iran conflict and the agricultural sector’s exposure to higher fertilizer prices and weather-related disruptions.
