Fitch positive outlook tests Tanzania’s upgrade hopes

Dar es Salaam. Tanzania’s improved sovereign credit outlook has opened the possibility of a higher rating, but analysts say the country must now strengthen revenue collection, governance and macroeconomic stability to turn the positive signal into a tangible upgrade.

Global credit rating agency Fitch Ratings on Friday August 21, 2026 revised Tanzania’s outlook to Positive from Stable, while affirming its long-term issuer default rating at B+.

While the move is a vote of confidence in the country’s economic direction, financial analysts said the change should not be interpreted as an upgrade itself.

Financial analyst Christopher Makombe said Tanzania already had some of the fundamentals underpinning its current rating, including strong economic growth, low inflation and relatively low debt compared with its peers. But he said the country would need to address weaker areas of its economic and institutional framework to move towards a higher rating.

“In my opinion, as correctly pointed out by Fitch, Tanzania already has strong growth, low inflation and relatively low debt compared to peers,” Mr Makombe said.

“To move toward BB-, it needs to fix the weaker areas—raise more revenue without hurting growth, strengthen governance, and lock in macroeconomic stability.”

Mr Makombe said one of the priorities should be increasing government revenue without undermining private-sector activity and economic growth.

He said this could be achieved by broadening the tax base, improving tax compliance and reducing unnecessary tax exemptions.

The approach, he said, should avoid policies that discourage investment and economic expansion.

Fitch has already identified revenue mobilisation as an important part of Tanzania’s improving fiscal position. According to the agency, tax revenue increased by one percentage point to 15.6 percent of GDP between financial years 2023 and 2025, while it expects continued gains under the government’s Medium-Term Revenue Programme.

For Mr Makombe, however, sustaining that progress will be important if Tanzania is to strengthen its credit profile.

Beyond fiscal and economic indicators, Mr Makombe said institutional reforms would be critical.

“Improving transparency, accountability, rule of law, public procurement and policy predictability to address Tanzania’s governance weakness,” he said.

Independent financial analyst Oscar Mkude said sovereign credit ratings should primarily be understood as an assessment of a government’s ability to borrow and service its debt obligations.

He said Tanzania’s move from B+ Stable to B+ Positive indicates that Fitch sees potential for improvement in the country’s creditworthiness, rather than confirming that an upgrade has already occurred.

“The direction or trend shows a clear possibility of improvement,” Mr Mkude said.

He said Tanzania would need to continue strengthening the underlying factors that contributed to the latest assessment, particularly public debt sustainability, foreign exchange reserves and economic growth.

“If we want to climb higher, we must continue improving those underlying drivers by further reducing public debt so it becomes increasingly sustainable, maintaining strong economic growth, and strengthening foreign reserve buffers,” he said.

Mr Mkude said measures that strengthen foreign exchange reserves, support economic growth or reduce the debt burden would help Tanzania move in the right direction.

He said a B+ Positive rating has the potential to improve its credit standing if current economic trends and reforms are sustained.

“This rating might prompt investors to take a closer look at Tanzania and pay more attention, but it is not expected to be a major pull factor on its own,” he said.

Mr Mkude said Tanzania should therefore focus on moving beyond its current rating to secure stronger investor confidence.

“We should strive to upgrade from B to BB, and ideally reach BBB, where we will see investment activity pick up in a far more substantial way,” he said.

Fitch’s positive outlook is based partly on its expectation that Tanzania’s international reserves will strengthen and government debt will gradually decline.

The agency projects reserve to reach $7.9 billion by 2028, up from $6.3 billion at the end of 2025, while government debt is expected to fall to 46.2 percent of GDP, from 48.9 percent in 2025. But Fitch has also cautioned that recent improvements in Tanzania’s macroeconomic policy framework remain relatively new and need to be tested over time.

The agency has identified continued strengthening of foreign exchange reserves, improved revenue mobilisation and expenditure controls, and greater confidence in the macroeconomic policy framework as factors that could support a positive rating action.

Mr Mkude said the country had reason to welcome the shift from stable to positive, but cautioned against viewing it as the destination.

“Our journey is still long. We have reason to be encouraged that we moved from stable to positive, but there is still a long way to go,” he said.