International credit rating agency Fitch Ratings has affirmed Tanzania’s B+ sovereign credit rating while maintaining a Positive Outlook, citing improvements in foreign exchange reserves, fiscal management and the country’s broader macroeconomic policy framework.
The assessment signals growing confidence in Tanzania’s ability to meet its financial obligations and access international capital markets, while also highlighting areas that will require sustained policy discipline to support a further upgrade.
According to Fitch, the Positive Outlook reflects strengthening foreign exchange buffers, a manageable fiscal deficit and continued economic growth.
These factors are expected to support government revenues, improve fiscal flexibility and gradually reduce the public debt burden.
Fitch projects Tanzania’s foreign exchange reserves to rise from $6.3 billion at the end of 2025 to $7.9 billion by 2028, equivalent to about 3.3 months of external payments.
The agency said reduced pressures in the foreign exchange market and greater exchange-rate flexibility have helped lower some short-term external risks.
It also noted that Tanzania’s gold reserves held by the Bank of Tanzania, estimated at about $2.4 billion, could provide an additional buffer against external shocks.
On fiscal management, Fitch estimates that Tanzania’s budget deficit stood at 2.8 percent of GDP in the financial year ending June 2026.
The improvement was supported by stronger domestic revenue collection and lower-than-expected effects from fuel subsidies.
The agency expects the fiscal deficit to remain around 3 percent of GDP through 2028, supported by continued improvements in revenue mobilisation under the Medium-Term Revenue Strategy.
Fitch noted that tax revenue increased from 14.6 percent of GDP in 2023 to 15.6 percent in 2025, pointing to progress in strengthening domestic revenue generation.
The rating agency also expects Tanzania’s public debt-to-GDP ratio to decline from 48.9 percent in 2025 to 46.2 percent in 2028.
The projected ratio would remain below the estimated 55 percent average for countries in the B rating category.
According to Fitch, the decline will be supported by strong nominal GDP growth and a relatively contained primary fiscal deficit.
The agency also highlighted improvements in public financial management. By March 2026, verified government arrears to suppliers and tax refunds had fallen to 0.2 percent of GDP, from 1.2 percent in December 2022.
Fitch expects Tanzania’s economy to continue outperforming the average growth rate among countries in the B rating category.
It projects GDP growth of 5.8 percent in 2026, compared with an average of 3.7 percent for the B-rated group.
Growth is then expected to average 6.1 percent in 2027–2028, driven by public investment, tourism, Tanzania’s growing role as a regional transport and trade hub, and expansion in the mining sector.
Inflation is projected to average 4.2 percent in 2026, up from 3.3 percent in 2025, but still below the 5.6 percent average expected for B-rated economies.
Fitch said Tanzania has also made progress in strengthening its macroeconomic policy framework since 2023 through institutional and operational reforms.
These include measures aimed at strengthening central bank independence, improving the operation of the foreign exchange regime and enhancing foreign exchange market management.
The agency said the reforms could improve Tanzania’s capacity to absorb economic shocks, although some of the changes will need to demonstrate sustained effectiveness over time.
Fitch also said earlier concerns about the ability of national statistics to fully capture changes in economic activity had eased following the completion of Tanzania’s GDP rebasing exercise in June 2026.
Fitch identified several factors that could support a further improvement in Tanzania’s credit rating.
These include continued growth in foreign exchange reserves, stronger revenue collection, tighter control of government expenditure and a sustained decline in the public debt-to-GDP ratio.
Greater confidence that macroeconomic policy reforms will continue strengthening Tanzania’s resilience to external shocks and preserve economic stability would also be important in supporting a potential upgrade.
Overall, Fitch’s assessment presents Tanzania’s economic outlook as broadly positive, while emphasising that continued fiscal discipline, stronger domestic revenue mobilisation and consistent implementation of policy reforms will be critical to converting the Positive Outlook into an actual improvement in the sovereign rating.
The assessment therefore provides a favourable signal to investors and lenders, but also places greater emphasis on maintaining the reforms and fiscal policies that have contributed to the improved outlook.
