Moody’s, Fitch upgrade to attract more FDIs to Tanzania

DAR ES SALAAM: TWO global credit rating agencies have upgraded Tanzania’s economic status to stable from a positive outlook, thanks to its steady macroeconomic fundamentals.

The country’s upgraded economic status is poised to attract more foreign direct investments (FDIs) and increase access to funds in international financial markets.

Fitch Ratings affirmed Tanzania’s long- term foreign-currency Issuer Default Rating (IDR) at ‘B+’ with a stable outlook, while Moody’s Analytics upgraded the country to B1 from B2 and expects continued robust GDP growth.

PwC’s National Budget Bulletin June 2024 analysis said the next budget was read amidst a background of particularly positive sentiment on the country’s economy with projections showing continued strong and accelerating growth.

The PwC budget analysis, dubbed Catalysing Growth and Inclusion also shows a positive trend in increased foreign direct investment, single-digit infla- tion, and an improving balance of trade position.

The analysis further shows that recent developments include an improved credit rating up- graded by Moody’s Analytics in March as well as an agreement in principle for further significant financial support under the IMF’s Extended Credit Facility (ECF).

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Deloitte Tanzania, Tax and Legal Partner Festo Barthalome said the 2024/25 budget reflects the government’s unwavering commitment to creating a thriving, inclusive and sustainable economy.

“Through continuous reforms, strategic fiscal policies, and targeted initiatives,

Tanzania will continue to attract and retain investors who will contribute to our nation’s sustainable development.

“We look forward to a future where Tanzania stands out as a premier investment destination in Africa, offering unparalleled opportunities and a supportive business environment,” Mr Barthalome said in Tanzania Budget Highlights 2024/25: “Fostering inclusion for sustainable growth”.

University of Dar es Salaam School of Business lecturer God- saviour Christopher said eight indicators propelled the country into a stable outlook as per the 2024/25 budget document.

“These indicators reflect a stable economic environment conducive to domestic and for- eign investments, setting a posi- tive tone for the fiscal year,” Mr Christopher told ‘Daily News’ yesterday.

Some of the indicators are tax relief and simplification, excise duty reductions, agricultural sector—VAT-exempted agrarian supplies such as fertilisers and seeds, and Industrial Development Levy.

Others include the digital economy, tourism and mining, private sector empowerment and the telecommunications sector, which has seen a strong pickup following the removal of the mobile money transaction levy on electronic money transfers.

However, Mr Christopher said hopes that the coming budget would extend this removal to cash withdrawals were dashed, indicating a cautious approach by the government in balancing revenue needs and sectoral growth.

Minister for Finance Dr Mwigulu Nchemba when tabling the 2024/25 budget proposal said the two international credit rating agencies assessed the country’s borrowing and debt repayment capacity since late last year.

“The benefits of upgrading Tanzania’s credit rating include attracting foreign direct investment and increasing access to funds in international financial markets for the implementation of both public and private sector projects,” Dr Nchemba said.

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