Moody’s Ratings has reaffirmed Tanzania’s B1 long-term issuer ratings in both local and foreign currency and kept the outlook stable. The rating action reflects a balance between structural weaknesses - notably a weak institutional framework and low per-capita incomes - and stronger macroeconomic momentum and shock resilience driven by recent policy measures and a pivot toward private-sector-led investment.
The agency highlighted a rise in political risks surrounding the 2025 election and the associated violence, although it noted that order has been restored since those events. Moody’s also pointed to persistent social pressures from low incomes and rapid population growth as factors that elevate the prospect of renewed instability. Such instability, the agency warned, could have adverse effects on investment flows, export performance and public finances.
Public debt, at roughly 50% of gross domestic product, is characterized as moderate but on an upward trajectory. The increase in borrowing has largely financed infrastructure and social-development projects, contributing to the growth of the debt stock.
On the growth front, Moody’s expects Tanzania’s economy to expand by at least 6% going forward. This outlook is supported by growing investment across manufacturing, mining and processing, as well as ongoing gains in tourism and transport-related services. Policy measures enacted over successive reform rounds have strengthened economic-policy effectiveness, the agency said.
Since 2023 authorities have moved to address foreign-currency shortages by encouraging greater use of the local currency and by improving domestic foreign-exchange market functioning. The central bank has also managed to keep inflation below 5% since 2018, a record Moody’s cited in assessing monetary stability.
Fiscal dynamics have shown improvement in revenue mobilization. Non-grant revenue rose from 13.7% of GDP in fiscal year 2020/21 to 15.9% of GDP in 2025/26, and it is projected to exceed 17% of GDP in the current fiscal year. Gains have been driven by enhanced tax administration, digitization and compliance, together with rising non-tax receipts. Higher dividend income following governance reforms at state-owned enterprises has contributed to the revenue uptick.
Nevertheless, financing conditions have tightened. Interest payments now account for 16% of revenue as access to concessional lending has become more constrained, increasing budgetary pressure.
Moody’s left Tanzania’s local-currency country ceiling at Ba1 and the foreign-currency country ceiling at Ba3. The three-notch gap between the local-currency ceiling and the sovereign rating reflects a combination of the large government role in the economy, moderate external imbalances and political and geopolitical risk, offset in part by diversified revenue sources and a record of more predictable policy execution.