Next move: What Tanzania needs to do as IMF forecasts above 6pc growth

The October 2025 report explicitly praises Tanzania’s progress in modernizing its tax administration, compliance, and staff training.

Through the implementation of risk-based case selection and digital systems, these measures have led to a near 20 percent increase in assessed taxable income.

This successful reform positions the nation among the region’s leaders in strengthening fiscal capacity from within—a critical priority emphasized by IMF African Department Director, Mr Abebe Selassie, to secure macroeconomic stabilization across the continent.

“The projected sharp decline in foreign aid leaves several lower-income economies particularly exposed,” Mr Selassie noted, in his statement underscoring why Tanzania’s progress in self-funding development is so crucial.

At a projected 6 percent, Tanzania’s growth outperforms Kenya, which is forecast at 4.9 percent amid significant fiscal tightening and elevated debt service costs.

However, the East African neighbours of Rwanda (7.5 percent) and Uganda (7.6 percent) are projected to lead the region, driven largely by public infrastructure projects and private investment.

While the IMF report acknowledges that external financing terms have improved slightly, allowing some nations like Kenya and Angola to access international capital markets, it concurrently warns that the global trade policy and aid landscape is deteriorating.

Preferential access under the African Growth and Opportunity Act (AGOA) has expired, and foreign aid is set to sharply decline. Against this backdrop, Tanzania’s domestic fiscal shield becomes an invaluable asset.

Local economists affirm that Tanzania’s steady performance reflects more than just domestic policy.

Senior Lecturer at the University of Dar es Salaam’s School of Economics,Dr Wilhelm Ngasamiaku, links the current stability to broader geopolitical shifts.

“There’s been an economic war between major powers—the U.S., China, and Russia—and as a result, many countries are diversifying their reserves away from the dollar and into gold,” Dr Ngasamiaku explained.

This global realignment has boosted demand for Tanzania’s gold exports, stabilizing foreign exchange reserves and providing a timely economic opportunity.

However, the consensus among experts is that resource reliance is a fragile foundation. Dr Ngasamiaku cautioned that long-term stability requires a shift in economic focus.

 “To sustain our economy in the long term, we must diversify. That means building a strong domestic manufacturing base and expanding the export of manufactured goods,” he said.

A lecturer at Mzumbe University’s School of Business Dr Daudi Ndaki, , echoed the same message, warning that resource-intensive growth models can become fragile during periods of global instability.

“Resource-intensive countries depend heavily on exports to grow,” Dr Ndaki said. “But when there is conflict or political instability globally, the entire chain becomes risky — from export demand to foreign exchange earnings.”

He added that Tanzania’s long-term stability will depend on developing a strong domestic market and choosing trade partners more strategically.

“We need to build our internal market and understand clearly which countries we are engaging with,” he said. “It’s about identifying sustainable, reliable partners rather than depending on volatile export markets.”

“Strengthening the domestic market is essential,” he concluded. “That’s what will shield Tanzania from external shocks and ensure steady, homegrown growth.”

Moreover IMF African lead Mr. Selassie stressed that significant potential exists to raise revenues through modernized tax systems, digitalization, and streamlining tax loopholes.

He insisted that "these efforts must go beyond technical adjustments" to build public trust and ensure reforms are both effective and equitable via careful impact and distributional assessments.

Secondly, enhancing debt transparency and strengthening Public Financial Management (PFM) are key to reducing high borrowing costs and unlocking innovative financing.

Mr. Selassie urged publishing comprehensive debt data and reinforcing budget oversight as critical steps for building resilience and supporting inclusive, sustainable growth across the region.