By Fitch Ratings revised Tanzania’s sovereign credit outlook to Positive from Stable on Friday, citing stronger foreign-exchange reserves, manageable fiscal deficits and sustained economic growth, while affirming the country’s Long-Term Foreign-Currency Issuer Default Rating at ‘B+’.
The revision improves the direction of Tanzania’s credit assessment without changing its current rating. Fitch said the Positive Outlook reflects expectations that stronger reserves and continued fiscal consolidation will support a declining government debt burden.
The agency expects Tanzania’s international reserves to rise to $7.9 billion by 2028 from $6.3 billion at the end of 2025. That would provide coverage equivalent to about 3.3 months of current external payments, although Fitch said this would remain below the 4.2-month median for sovereigns rated in the ‘B’ category.
Fitch also pointed to improvements in Tanzania’s foreign-exchange market. Reduced distortions and greater exchange-rate flexibility have helped ease some short-term external risks, the agency said.
The Bank of Tanzania also holds non-monetary gold estimated by Fitch at about $2.4 billion. Fitch said some of those holdings could provide an additional external buffer if converted into monetary gold or sold for foreign exchange.
Fitch expects Tanzania’s real gross domestic product to grow 5.8% in 2026, significantly above the 3.7% median forecast for sovereigns in the ‘B’ rating category.
It forecasts average real GDP growth of 6.1% in 2027 and 2028, supported by public investment, tourism, Tanzania’s role as a regional logistics hub and the expansion of its mining sector.
The agency said Tanzania’s economy had shown resilience to the economic shock associated with the conflict in Iran. It noted that authorities had prevented material disruptions to fuel supplies through direct procurement arrangements between May and July.
Fitch nevertheless warned that an escalation of the conflict could weaken the growth outlook. Agriculture also remains exposed to higher fertiliser costs, changing rainfall patterns and natural disasters, according to the agency.
The stronger growth outlook is an important component of the Tanzania credit rating because sustained economic expansion can increase government revenues and help reduce debt relative to the size of the economy.
Fitch estimated Tanzania’s fiscal deficit at 2.8% of GDP in the financial year that ended in June 2026. It attributed the relatively contained deficit to strong revenue performance and the limited impact of fuel subsidies on fiscal execution.
The agency expects the fiscal deficit to remain close to 3% of GDP through fiscal 2028, partly reflecting continued gains in domestic revenue mobilisation under the government’s Medium-Term Revenue Programme.
Tax revenue increased by one percentage point to 15.6% of GDP between fiscal 2023 and fiscal 2025, Fitch said.
Fitch forecasts government debt to fall to 46.2% of GDP in 2028 from 48.9% in 2025. That would be below the projected 55% median for sovereigns rated ‘B’.
The agency said the decline would be supported by strong nominal GDP growth and relatively low primary deficits. However, the debt outlook remains vulnerable to currency movements because external debt accounts for about 68% of Tanzania’s total government debt.
Fitch also highlighted improvements in public financial management. By March 2026, the verified stock of supplier and value-added tax refund arrears had fallen to 0.2% of GDP from 1.2% in December 2022, according to the agency.
Fitch said Tanzania had made progress in strengthening its macroeconomic policy framework since 2023, including institutional and operational reforms affecting central bank independence, the exchange-rate regime and foreign-exchange management.
The agency also said the completion of Tanzania’s GDP rebasing exercise in June 2026 had improved the quality of official economic data.
However, Fitch cautioned that some of the reforms are relatively recent and have yet to be tested by significant economic shocks.
The Positive Outlook therefore does not amount to an upgrade. Tanzania remains rated ‘B+’, but the change in outlook indicates that Fitch sees the balance of risks around the rating as more favourable.
Fitch identified several factors that could support an eventual upgrade of Tanzania’s sovereign rating.
These include greater confidence that improvements to the country’s macroeconomic policy framework will strengthen its ability to withstand external shocks, continued growth in foreign-exchange reserves, and further progress in revenue mobilisation and expenditure controls.
A sustained decline in government debt relative to GDP would also support the credit profile.
Conversely, Fitch said the outlook could come under pressure if Tanzania’s policy framework fails to improve its resilience to economic shocks, foreign-exchange reserves come under sustained pressure, or government debt rises significantly because of fiscal slippage, higher interest costs or weaker economic growth.
For investors and lenders, the latest Tanzania credit rating assessment provides an updated view of the country’s ability to manage its external and fiscal obligations.
The affirmation at ‘B+’ means Fitch has not changed its assessment of Tanzania’s current level of credit risk. The Positive Outlook, however, indicates that an upgrade could become possible if the improvement in reserves, fiscal management, economic growth and policy credibility continues.
Tanzania’s latest rating action follows earlier assessments by international credit agencies that have also focused on the country’s economic growth, foreign-exchange reserves and debt sustainability. The World Bank has previously cited adequate foreign-exchange reserves and a strong record of economic growth as factors supporting Tanzania’s sovereign credit profile.
