Tanzania’s national debt stock fell by 1.4 percent in July, bringing it down to $41.8 billion. This decrease was largely due to a reduction in external debt, as reported in the latest monthly economic review by the Bank of Tanzania.
External debt now makes up 70.9 percent of the total national debt, valued at $29.6 billion, which is a 1.9 percent drop from the previous month. The report highlights that this decline is mainly linked to a decrease in external debt held by the private sector. In July, external loans amounting to $87 million were primarily disbursed to the central government.
During the same month, the total cost of servicing external debt reached $45.3 million, with $34.2 million going toward repaying the principal and the rest for interest payments. Notably, the central government continues to hold the largest share of external debt, accounting for 83.2 percent of the total.
The reduction in national debt creates more fiscal space for the government, allowing it to redirect resources toward important areas like social programs, infrastructure projects, and economic development initiatives. Lower debt obligations also mean reduced interest payments, which can free up funds for more productive uses within the economy.
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This reduction in debt could foster economic growth, boost investor confidence, and strengthen long-term stability, particularly if it’s part of a larger effort to enhance public finances.
According to the Bank of Tanzania’s report, the mix of external debt by creditor category has remained consistent compared to both the previous month and the same time last year, with multilateral institutions still holding the majority of the portfolio.
The report also highlighted that the transportation and telecommunications sectors account for the largest share of the outstanding external debt, followed by social welfare and education.
The currency composition of the external debt has stayed the same, with the US dollar making up 66.8 percent of the total.
On the domestic front, the debt stock reached 32.4 trillion Tanzanian shillings at the end of July, reflecting an increase of 526.9 billion shillings from the previous month, mainly due to greater use of the overdraft facility.
Treasury bonds remain the dominant form of debt, comprising 76.7 percent of the total, while commercial banks and social security schemes continue to be the main creditors to the government.
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In July, the government raised 372.1 billion shillings from the domestic market to support its budget, with 230.1 billion shillings coming from Treasury bonds and 142 billion shillings from Treasury bills.
Domestic debt service payments for the month totaled 250.4 billion shillings, which included 32.5 billion shillings in principal repayments and 217.9 billion shillings in interest payments.
The outstanding domestic debt of selected State-Owned Enterprises (SOEs) stood at 76 billion shillings at the end of July, marking an increase of 2.7 billion shillings from the previous month. The Dar es Salaam Water and Sewerage Authority (DAWASA) was the main contributor to this rise, with its debt growing by 2.8 billion shillings.