Tanzania’s National Debt Reaches Sh91.7 Trillion

Minister of Planning and Investment, Prof. Kitila Mkumbo, announced that the nation’s government debt had reached Sh91.7 trillion by March 2024.

This marks a 19.1% increase from Sh77 trillion in March 2023. The rapid rise has pushed the debt past the Sh90 trillion mark for the first time, highlighting the government’s ongoing borrowing for development projects.

Breaking down the figures, Mkumbo detailed that the domestic debt stood at Sh30.7 trillion, while the external debt amounted to Sh60.9 trillion. Despite the considerable increase, the government maintains that the debt remains sustainable in both the short and long terms. This assessment is supported by various financial analyses, including the Debt Sustainability Analysis conducted in collaboration with the International Monetary Fund (IMF) and the World Bank.

A notable factor contributing to the rising debt is the government’s investment in key infrastructure projects, such as the Standard Gauge Railway (SGR), which has necessitated substantial borrowing. Additionally, the depreciation of the Tanzanian shilling against major currencies has also impacted the debt figures, particularly the external debt denominated in foreign currencies

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In the fiscal year 2024/2025, Tanzania has allocated Sh13.13 trillion for debt servicing, a significant increase from Sh10.48 trillion in the previous fiscal year. This allocation represents approximately 27% of the total government budget for the year. The government has emphasized the importance of directing borrowed funds towards development projects to ensure economic growth and improve the country’s ability to service its debts in the future

The Minister of Finance and Planning, Dr. Mwigulu Nchemba, reiterated the government’s commitment to fiscal responsibility and sustainability. He highlighted that Tanzania’s debt-to-GDP ratio remains well within manageable limits, currently at 31.8%, significantly below the 55% threshold considered risky. This prudent management of debt has enabled Tanzania to continue accessing loans from multilateral institutions and development partners due to its creditworthiness

While the government remains confident in its debt strategy, there are calls for increased transparency and accountability in how borrowed funds are utilized. Experts and stakeholders have urged the government to prioritize loans with favorable terms and focus on projects that yield high economic returns, thereby enhancing the country’s long-term financial stability