Tanzania affirms its cautious borrowing position amid concern over the rising trajectory of national debt

DODOMA: WHILE some Members of Parliament have expressed concern over the rising trajectory of national debt, the government has reaffirmed its position that it will continue borrowing cautiously, while closely monitoring debt sustainability through ongoing fiscal and economic assessments.

Responding to the concerns during the debate on the 2026/2027 National Budget on June 23, 2026, in Parliament in Dodoma, the Minister for Finance, Ambassador Khamis Mussa Omar, stated that all new borrowing will be directed toward national development priorities that have direct impact on economic growth.

He explained that the government continues to use borrowing as part of budget financing, but within a structured Debt Sustainability Assessment (DSA) framework that manages fiscal risks and ensures debt remains within safe economic thresholds.

According to him, more than 40 percent of the currently serviced national debt originates from loans invested in the water, energy, and railway sectors—areas considered critical for reducing production costs and improving overall economic efficiency.

Analysis of fiscal trends indicates that investments in railway and energy infrastructure typically enhance national productive capacity in the medium to long term, despite creating short-term pressure on debt servicing obligations.

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For instance, projects such as the Standard Gauge Railway (SGR) and electricity grid expansion in developing economies have been associated with improved transport efficiency and reduced business costs, which in turn strengthen future tax revenue performance and improve government debt servicing capacity.

Ambassador Omar further noted that approximately 25 percent of central government revenue is allocated to debt servicing, particularly for obligations linked to earlier development loans, reflecting a financial cycle embedded within the national budget structure.

Overall, the government’s position reflects a dual-track strategy combining fiscal discipline with targeted infrastructure investment, aiming to manage debt risks without constraining long-term economic development momentum.