Fitch Affirms Tanzania at ‘B+’ with Stable Outlook
Fitch Ratings has affirmed Tanzania’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B+’ with a stable outlook.
Tanzania’s rating reflects its relatively strong real GDP growth and low inflation, underpinned by reforms and access to external financing under the current IMF programme, Fitch said.
It added that Tanzania’s rating is constrained by weak governance and low, albeit improving, government revenue relative to ‘B’ category peers, and a weak macroeconomic policy framework that leads to distortions in the FX market.
In the rating note, Fitch said Tanzania’s incumbent president, Samia Suluhu Hassan, was elected with 98% of the vote following the October 2025 presidential election.
Ratings analysts highlighted that opposition parties rejected the election result, stressing that the main challengers had been prevented from participating in the vote.
Fitch expects Hassan’s election to ensure policy continuity, underpinning Tanzania’s Extended Credit Facility (ECF) and Resilience Sustainability Facility (RSF) with the IMF. Fitch sees significant or widespread social unrest during Hassan’s new term as unlikely.
Ratings analysts expect Tanzania’s real GDP growth to remain strong at 6% in 2026 and 2027, supported by increased agriculture and mining activity as well as strong infrastructure investment in flagship projects such as the Standard Gauge Railway and the East African Crude Oil Pipeline between Uganda and Tanzania.
“Tanzania’s growth will be above our projected 4.5% for the ‘B’ median over the same period. Tanzania’s low growth volatility may understate macroeconomic stability risks, given the vulnerability of the agricultural sector to rain patterns and natural disasters”.
According to Fitch, Tanzania’s growth outlook is significantly exposed to the duration of the ongoing war in Iran. A sizeable portion of the country’s imports of fuel (close to 62%) and fertilisers (close to 40%) originate from Gulf Cooperation Council (GCC) countries.
Tanzania’s key tourism industry is also exposed as a significant portion of tourist arrivals transit through the GCC region. A prolongation of the war beyond Fitch’s current assumptions of one month could translate into a significant shock to inflation, external reserves and economic growth.
Fitch expects Tanzania’s current account deficit (CAD) to widen to 3.5% of GDP in 2026, driven by the negative impact of the war in Iran on fuel import costs and tourist arrivals.
Travel exports (credit) amounted to USD4.4 billion in 2025 or 25% of exports of goods and services. Ratings analysts said this will be partly offset by the rising value of Tanzania’s gold exports, which amounted to USD4.7 billion in 2025, or 27% of total exports of goods and services.
Fitch’s base case is that Tanzania’s international reserves’ coverage of current external payments will stand at 2.5 months over 2026-2027, below the ‘B’ median of 4.8 months for the same period.
A prolongation of the war in Iran beyond our base case would likely lead to a wider CAD, reflecting higher global Brent prices, above analysts’ current baseline of USD70/bbl for 2026, and weaker tourism receipts, leading to an erosion of international reserves.
Fitch forecasts Tanzania’s fiscal deficit to remain close to 3% of GDP in the fiscal year ending June 2026 (FY26) and in FY27.
“ We expect an election-related increase in expenditure in FY26 to be offset by an overperformance in tax revenue collection, based on data for the first half of the fiscal year”.
Ratings analysts expect modest increases in tax revenue collection in FY27, underpinned by the authorities’ Medium-Term Revenue Strategy, which will finance an increase in expenditure. Tanzania’s revenue collection improved from 14.2% of GDP in FY21 to 15.9% in FY25.
Fitch expects Tanzania’s government debt to decrease to 47% of GDP in FY27, from 50% in FY25, driven by the narrow fiscal deficits and strong nominal GDP growth.
This will remain below the ‘B’ median of 54% we project for the same period. The high share of concessional debt supports Tanzania’s debt sustainability.
The government debt trajectory remains exposed to exchange-rate depreciation given the high share of external debt, accounting for 68% of the total stock.
The authorities have taken steps to address the long-standing public financial management issues that led to an accumulation of supplier and VAT refund arrears in recent years.
By December 2025, the verified stock of these arrears had decreased to 0.2% of GDP from 1.2% at the end of December 2022. Fitch said it does not expect new arrears to accumulate, as it expects the authorities to remain committed to clearing arrears through fiscal adjustments.
