By Alfred Zacharia
Tanzania’s public debt surged by 18.36 percent in the 2023/24 fiscal year, raising questions about the country’s financial obligations and what this means for economic stability.
According to the Controller and Auditor General (CAG) Charles Kichere, the national debt reached Sh97.35 trillion by June 30, 2024, up from Sh82.25 trillion in the previous fiscal year.
The rise in public debt comes at a time when Tanzania’s annual budget relies significantly on borrowing to finance development projects, given that revenue collections remain lower than total expenditures.
The government’s reliance on loans—both domestic and external—has been a strategic approach to bridge budget deficits and support infrastructure development.
As of June 2024, domestic debt stood at Sh31.95 trillion, while external debt accounted for Sh65.40 trillion.
Despite the surge, Mr. Kichere assured that Tanzania’s debt remains sustainable.
“Key indicators show that the value of external debt accounts for 23.6 percent of the nation’s Gross Domestic Product (GDP), well below the international threshold of 40 percent,” he said.
He further noted, “The total debt constitutes 41.1 percent of the GDP, which is also below the recommended limit of 55 percent.”
Debt servicing is also within manageable limits, with payments in relation to export revenue standing at 127.5 percent—under the global limit of 180 percent.
Additionally, debt payments as a percentage of government revenue are at 14.5 percent, which is below the acceptable threshold of 18 percent.
“These figures indicate that while the debt has increased, it remains within limits that ensure the country’s financial stability,” Mr. Kichere emphasized.
While the debt remains within safe limits, analysts argue that Tanzania’s ability to meet its financial obligations depends on its revenue collection efforts.
The government has been working to expand the tax base and improve compliance to reduce dependence on borrowing.
The balance between borrowing for development and ensuring long-term financial sustainability will continue to be a crucial aspect of Tanzania’s economic planning.