Global credit rating agency Fitch Ratings has revised Tanzania’s economic outlook to positive from stable, while affirming its long-term issuer default rating at ‘B+’, signaling improved economic prospects and policy reforms.
The revision, announced on Friday, August 21, 2026, reflects expectations of stronger international reserves, moderate fiscal deficits, and continued economic growth, which Fitch said would support a downward trajectory in government debt.
The agency acknowledged improvements in Tanzania’s macroeconomic policy framework, including institutional and operational reforms that have strengthened central bank independence, exchange-rate management, and foreign exchange (FX) operations.
“Recent institutional and operational improvements in the country’s macroeconomic policy framework could also increase its resilience to shocks, but these remain to be tested,” Fitch said.
The positive outlook signals the potential for an upgrade if the improvements in economic management continue to strengthen the country’s resilience to external shocks. Fitch expects Tanzania’s international reserves to rise to $7.9 billion by 2028, from $6.3 billion at the end of 2025. The projected reserves would provide coverage equivalent to 3.3 months of current external payments.
Fitch expects Tanzania’s government debt-to-GDP ratio to decline to 46.2 percent in 2028, from 48.9 percent in 2025, driven by strong nominal economic growth and low primary deficits. The agency estimates the fiscal deficit at 2.8 percent of GDP for the financial year ended June 2026 and forecasts it will remain close to 3 percent of GDP through 2028.
Fitch noted that tax revenues increased by one percentage point to 15.6 percent of GDP between FY2023 and FY2025, reflecting gains in revenue mobilisation under the government’s Medium-Term Revenue Programme.
Fitch expects Tanzania’s real GDP growth to reach 5.8 percent in 2026, significantly above the 3.7 percent projected median for countries in the ‘B’ category. The agency expects growth to average 6.1 percent in 2027 and 2028, supported by public investment, tourism, Tanzania’s position as a regional logistics hub, and the emerging mining sector.
However, the agency warned that Tanzania’s debt position remains exposed to exchange-rate depreciation because external debt accounts for 68 percent of total government debt. Fitch identified continued strengthening of foreign exchange reserves, further improvements in revenue mobilisation and expenditure controls, and greater confidence in Tanzania’s macroeconomic policy framework as factors that could lead to a positive rating action.
The agency cautioned that some of the recent policy reforms remain relatively new and therefore need to be tested over time. The positive outlook is a vote of confidence in the country’s economic direction, but sustained policy implementation will be key to achieving an actual upgrade.
