DAR ES SALAAM: Fitch Ratings has affirmed Tanzania’s long-term foreign-currency issuer default rating at ‘B+’ with a stable outlook, citing strong economic growth and improving fiscal performance following the 2025 general election.
The decision follows a similar assessment by Moody’s Ratings, which maintained Tanzania’s rating at ‘B1’ with a stable outlook earlier this year, signalling broadly aligned views among major agencies on the country’s economic trajectory.
Fitch said Tanzania’s economy is expected to grow by around 6% in 2026, outperforming the median for ‘B’-rated economies of about 4.5%. The expansion is being driven by infrastructure investment, including the Standard Gauge Railway and the East African Crude Oil Pipeline, alongside a recovery in tourism and continued strength in gold exports.
The agency said the rating reflects “sustained economic momentum” and access to concessional financing under programmes such as the IMF’s Extended Credit Facility.
However, Fitch noted that Tanzania’s credit profile remains constrained by structural challenges, including weaknesses in the foreign exchange market and relatively low revenue mobilisation compared with regional peers.
It also flagged risks linked to external shocks, particularly geopolitical tensions that could disrupt fuel and fertiliser imports.
Tanzania’s public debt is projected to decline to around 47% of gross domestic product by 2027, from about 50% in 2025, placing it below the ‘B’ median of roughly 54%. The debt profile is supported by a high share of concessional borrowing, although Fitch warned that exposure to exchange-rate movements remains significant, with external debt accounting for about two-thirds of the total.
The agency said Tanzania’s growth outlook is sensitive to developments in the Middle East, particularly tensions affecting Gulf energy suppliers. The country relies heavily on fuel imports from the region, while tourism flows are also linked to transit routes through Gulf hubs.
Moody’s affirms Tanzania at B1, citing steady growth and reform progress
Fitch expects Tanzania’s current account deficit to widen to about 3.5% of GDP in 2026, driven by higher import costs and potential pressure on tourism revenues.
Travel exports generated around $4.4 billion in 2025, accounting for roughly a quarter of total exports, while gold exports—worth about $4.7 billion—are expected to provide some offset against external pressures.
International reserves are projected to cover about 2.5 months of external payments over 2026–2027, below the ‘B’ median of 4.8 months, highlighting a relatively tighter external position.
On the fiscal side, Fitch expects the deficit to remain contained at around 3% of GDP over the next two years. Increased spending linked to the election cycle is likely to be balanced by stronger tax collection, supported by ongoing revenue reforms.
Government revenue has risen steadily in recent years, from 14.2% of GDP in the 2021 financial year to an estimated 15.9% in 2025, with further gains expected under the government’s medium-term revenue strategy.
While the stable outlook suggests no immediate change to the rating, Fitch said Tanzania’s credit profile will depend on its ability to manage external risks, strengthen revenue collection and maintain macroeconomic stability.
