In the face of escalating global trade tensions and geopolitical uncertainty, the Bank of Tanzania (BoT) has opted for stability.
Following its April 3, 2025, Monetary Policy Committee (MPC) meeting, the central bank announced it would maintain the Central Bank Rate (CBR) at 6 percent, a move aimed at cushioning the economy from external shocks while supporting domestic growth.
“We are navigating uncertain times globally,” said Deputy Governor Dr. Yamungu Kayandabila, speaking on behalf of BoT Governor Emmanuel Tutuba.
“Maintaining the policy rate at 6 percent gives us room to stabilize inflation and support productive sectors without stifling growth,” he added.
The BoT’s decision comes as major economies around the world begin easing their monetary stances, driven by falling inflation and reduced economic shocks.
Still, global risks remain. Trade tariffs are rising, supply chains remain unpredictable, and commodity markets are volatile.
“This is not the time for abrupt shifts. While global inflation has softened and interest rates are trending downward, we must remain cautious. The threat of new trade tariffs could reignite price pressures,” Dr. Kayandabila noted.
Despite global headwinds, Tanzania’s domestic economy has shown remarkable resilience.
GDP growth in Mainland Tanzania reached 5.5 percent in 2024, up from 5.1 percent the year before, bolstered by strong performance in agriculture, mining, construction, and financial services.
Tourism, a key foreign exchange earner, also saw a marked recovery.
In Zanzibar, economic momentum was even stronger.
“Our latest data show Zanzibar’s economy grew by 7.2 percent at the end of 2024, compared to just 2.2 percent the previous year,” said Dr. Kayandabila.
The growth, according to BoT is largely driven by tourism and trade, expecting it to sustain at around 6.5 percent this quarter.
Inflation remained within comfortable limits. Mainland Tanzania averaged 3.1 percent in 2024 and edged slightly to 3.2 percent in early 2025, well below the central bank’s 5 percent ceiling.
In Zanzibar, inflation stood at 4.8 percent in February 2025, down from 5.1 percent the previous year.
Dr. Kayandabila attributed the low inflation to “adequate food supplies, responsible government spending, and a cooling in global energy prices.”
On exchange rate stability, BoT addressed the recent depreciation pressures on the shilling, stating they were seasonal.
“We expect the situation to improve as foreign currency inflows rise,” said Dr. Kayandabila, reinforcing that “the 7-day interbank lending rate will continue to be managed within the 4 to 8 percent range.”
The BoT also reported healthy growth in private sector credit, particularly to SMEs, agriculture, and manufacturing, key drivers of job creation.
The money supply grew strongly in 2024, reflecting confidence in the banking sector.
“Our banks are solid,” Dr. Kayandabila affirmed.
“They are profitable, well-capitalized, and stable. The rate of non-performing loans stands at just 3.6 percent, comfortably below the 5 percent threshold,” he added.
Both the Union and Zanzibar governments are maintaining fiscal discipline. “Tax revenues met their targets in Q3 of the 2024/25 fiscal year,” Dr. Kayandabila said.
“This is a sign of improved compliance and effective revenue administration. Public debt levels remain sustainable,” he said.
Tanzania’s trade balance also improved significantly. The current account deficit narrowed to 2.6 percent of GDP from 3.7 percent the year before, driven by robust exports in tourism, gold, cashew nuts, and tobacco. Zanzibar’s trade surplus surged to $563.5 million, up from $407.4 million.
Foreign exchange reserves stood strong at over $5.6 billion—enough to cover 4.5 months of imports. BoT expects this buffer to remain intact through the second quarter.
Addressing questions about dependency on gold exports, BoT’s Director of Policy and Research, Dr. Suleiman Misango, offered reassurance: “Gold is important, but not our only engine. Cashew nuts, agriculture, and tourism have been equally resilient contributors.”
The private sector also echoed this confidence. Tanzania Bankers Association Chairman, Theobald Sabi, said the BoT’s policy stance reflects sound economic management.
“We’ve seen solid GDP growth, improved trade metrics, and disciplined public finance. These are hallmarks of a stable and forward-looking economy,” he affirmed.
As the global landscape continues to shift, Tanzania is signaling that it will remain measured and focused—betting on policy consistency and domestic strength to chart its path through uncertain times.