Tanzania’s economy continues to show resilience and positive growth, even as the world faces economic pressures driven by the ongoing Middle East crisis. Key indicators suggest the country is managing external shocks effectively.
The Monetary Policy Committee (MPC) of the Bank of Tanzania (BoT) has decided to keep the Central Bank Rate (CBR) at 5.75 percent for the second quarter of 2026.
The decision was announced on April 2, 2026, at BoT’s Dar es Salaam branch by Deputy Governor Dr. Yamungu Kayandabila, who handles Economic and Financial Policies, on behalf of BoT Governor and MPC Chairperson, Mr. Emmanuel Tutuba.
Dr. Kayandabila explained that the decision followed a detailed assessment of economic trends during an MPC meeting on April 1.
“Although the Middle East crisis poses risks globally, its impact on Tanzania’s economy has so far been limited. However, a prolonged crisis could affect growth prospects,” he said.
Data shows that in the first quarter of 2026, the mainland economy grew by 6.2 percent, while Zanzibar recorded 6.7 percent growth.
Strong performance came from construction, agriculture, financial services, insurance, and tourism. Private sector lending also expanded, rising 22.8 percent, reflecting higher demand from businesses and households.
The MPC projects that, assuming no major external shocks, growth will continue in the second quarter at 6.1 percent for the mainland and 6.6 percent for Zanzibar.
Inflation remains within the BoT’s target range. For the first quarter, it averaged 3.3 percent in mainland Tanzania and 4.5 percent in Zanzibar.
This stability is attributed to sound monetary policy, steady food and energy prices, and effective management of early cost pressures from rising energy and transport prices.
Inflation is expected to remain between 3 and 5 percent in the next quarter, supported by a strong shilling and stable food costs.
The banking sector remains strong, with ample liquidity and solid capital buffers. Non-performing loans have dropped to 2.9 percent, below the 5 percent upper limit. Payment systems continue to function efficiently.
In external trade, Tanzania’s current account deficit narrowed to 2.2 percent of GDP for the year ending March 2026, compared to 2.4 percent in 2025.
Exports of gold, agricultural produce, and tourism services contributed to this improvement. Zanzibar continues to record a trade surplus, thanks to strong tourism earnings.
The shilling has strengthened against major currencies, supported by foreign exchange reserves exceeding USD 6.2 billion, enough to cover nearly five months of imports, surpassing both national and regional minimum benchmarks.
Fiscal performance also remains strong. Revenue collections exceeded targets due to economic growth, improved tax administration, and voluntary compliance. Government spending has continued in line with available resources.
Given these positive developments, the MPC has urged BoT to closely monitor the Middle East crisis and its potential effects on Tanzania’s economy to ensure timely policy responses. The next MPC meeting is scheduled for July 2026.
