Govt: National debt sustainable

DODOMA: THE national debt remains in sustainable levels over medium and long term, despite its rising trend, the government has said. Minister for Finance Dr Mwigulu Nchemba said last week that the debt reached 107.7tri/- as of April 2025, driven by ambitious infrastructure projects.

Presenting the proposed government budget for 2025/26 last week, Dr Nchemba said the rising figure was due to increased borrowing to finance critical development initiatives including energy and transport infrastructure in wider efforts to unlock Tanzania’s economic potential.

He said 72.94tri/- of the debt was external, while domestic debt accounted for 34.76tri/-.

He said a Debt Sustainability Analysis (DSA) conducted in October 2024 supported the government’s stance, concluding the nation’s debt remained manageable. The report’s assessment for the 2024/25 fiscal year showed key debt indicators well within their respective thresholds, he said.

The report’s assessment for the 2024/25 fiscal year showed key debt indicators well within their respective thresholds. For instance, the present value of public debt to GDP was 40.3 per cent against a 55 per cent threshold, while the present value of external debt to GDP stood at 23.6 per cent compared to a 40 per cent threshold.

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The present value of external debt to exports was 123.8 per cent, well below the 180 per cent limit. The government is heavily investing in energy and transport infrastructure, aiming to expand electricity access and improve transportation networks to leverage Tanzania’s strategic geographical positioning as a gateway to Eastern and Central Africa.

Major projects include the 6.5tri/- Julius Nyerere Hydropower Project, which was completed in March and stands as East Africa’s largest and Africa’s second-largest hydropower facility.

Construction continues on the Standard Gauge Railway (SGR), a largescale initiative designed to modernise Tanzania’s transportation network, boost regional trade and connect the country with neighbouring Burundi, Rwanda and the Democratic Republic of Congo.

Tanzania also completed East Africa’s longest bridge, the 3.2-kilometre Kigongo–Busisi Bridge, spanning Lake Victoria in the northwestern Mwanza region. The 300 million US dollars project was financed through domestic resources.

Additionally, the government is building a stateof-the-art international airport in Dodoma City at a cost of 360bn/- with the passenger terminal and control tower 51 per cent complete and the runway and road components 85 per cent complete by March this year.

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The national carrier, Air Tanzania Company Limited (ATCL), is undergoing significant revival through new aircraft acquisitions to expand its operations both locally and internationally.

Minister of State in the President’s Office (Planning and Investment), Professor Kitila Mkumbo, provided further details, stating that as of March 2025, government debt reached 104.931tri/-, a 14.4 per cent increase from 91.7tri/- in March 2024.

He attributed this acceleration primarily to new and existing loans secured from diverse sources to finance key projects in roads, railways, airports, electricity and water infrastructure, which are essential for economic growth.

He said the debt’s acceleration was primarily attributed to new and existing loans secured from diverse sources to finance key projects in roads, railways, airports, electricity and water infrastructure, essential for economic growth.

The minister said further that independent assessments of Tanzania’s ability to borrow and repay debts in international markets have also been favourable.

He said in March 2025, Moody’s Investors Service conducted its second review of Tanzania’s economy, affirming its creditworthiness at a B1 rating with a Stable Outlook, consistent with its March 2024 assessment.

Moody’s noted that the B1 rating indicates the continued strengthening of the country’s economy and its capacity to withstand external economic shocks. Separately, Fitch Ratings, following its review in December 2024, assigned Tanzania a B+ rating with a Stable Outlook, maintaining its position from June 2024.

These robust credit ratings are crucial for attracting foreign direct investment (FDI) and improving access to finance in international financial markets, vital for implementing both government and private sector projects, he said.