Dar es Salaam. The Monetary Policy Committee (MPC) of the Bank of Tanzania yesterday projected that economy will grow by six percent in the first quarter of 2026, underpinned by stable inflation and favourable macroeconomic conditions, as it retained the Central Bank Rate (CBR) at 5.75 percent for the first quarter.
The projection was made during the MPC meeting held on Tuesday, where members noted that inflation is expected to remain within the target range of 3–5 percent, providing room to support sustained economic expansion.
Briefing journalists in Dar es Salaam, Bank of Tanzania Governor Emmanuel Tutuba said the Committee noted that maintaining the CBR at its current level would continue to support strong economic growth while safeguarding price stability.
He noted that on the domestic front, the MPC assessed economic growth in 2025 as robust at about 5.9 percent, in line with the projection of 6 percent, driven mainly by agriculture, mining and construction.
"For the first quarter of 2026, growth in Mainland Tanzania is projected to remain strong at 6 percent, while the Zanzibar economy is expected to expand by 7.2 percent."
Mr Tutuba said in line with inflation and growth projections, the Bank of Tanzania will conduct monetary policy operations to ensure that the seven-day interbank rate evolves within a band of 3.75 to 7.75 percent.
He added that in its assessment of the global economy, the MPC noted that global growth in 2025 remained resilient despite elevated trade tariffs, geopolitical tensions and economic uncertainty.
According to the International Monetary Fund, global growth stood at 3.2 percent in 2025, slightly lower than 3.3 percent in 2024 and is projected to grow at the same pace in 2026.
“Global inflation remained low and trended downward, reaching central bank targets in many countries, largely due to low energy prices and the lagged effects of effective monetary policy. The MPC observed that the continuation of this trend is expected to help keep inflation low in Tanzania,” Mt Tutuba said.
Crude oil prices declined to a range of $62–65 per barrel in the fourth quarter of 2025 and are projected to remain at similar levels in the subsequent quarter, supported by ample supply and subdued demand.
The MPC observed that this development continues to offer relief to Tanzania’s inflation, foreign currency demand and exchange rate stability, given that oil imports account for about 17 percent of total goods imports.
Meanwhile, the price of gold reached a record high of $4,421.65 per troy ounce and is projected to rise further in 2026, a trend expected to boost foreign exchange earnings and support exchange rate stability, including in Tanzania.
The Zanzibar economy is estimated to have grown by 6.8 percent in 2025, supported by construction, tourism and manufacturing activities. Credit to the private sector expanded strongly by 20.3 percent in 2025.
For the first quarter of 2026, growth in Mainland Tanzania is projected to remain strong at 6 percent, while the Zanzibar economy is expected to expand by 7.2 percent.
Inflation remained low and stable within the target range. In the fourth quarter of 2025, inflation averaged 3.5 percent in Mainland Tanzania and 3.4 percent in Zanzibar. This outcome was attributed to prudent monetary policy and favourable global conditions that eased exchange rate pressures and reduced imported inflation. The MPC expects inflation to remain within the 3–5 percent target range throughout 2026.
On the banking sector, Mr Tutuba said it continued to demonstrate soundness, supported by adequate liquidity for lending and sufficient capital buffers to withstand shocks.
Loan portfolios expanded, reflecting a favourable business environment, while credit risk remained low, with the non-performing loan ratio at 3.1 percent, below the tolerable level of 5 percent. Payment systems remained resilient and operated efficiently.
The external sector showed notable improvement, with the current account deficit narrowing to a five-year low of 2.2 percent of GDP in 2025.
This was driven by stronger exports of gold, agricultural products, tourism and transport services, alongside declining global oil prices. Zanzibar recorded a current account surplus, largely supported by tourism activities.
Foreign currency liquidity remained adequate in the fourth quarter of 2025, mainly due to export proceeds from cashew nuts, tourism and gold. Consequently, the Tanzanian shilling remained stable against the US dollar, appreciating slightly by about 0.8 percent by the end of the quarter.
Foreign exchange reserves exceeded $6.3 billion, sufficient to cover about 4.9 months of imports, above the minimum requirement of four months. Reserves are expected to remain adequate in the first quarter of 2026, supported by strong export performance and moderate oil prices.
Tanzania Bankers Association representative Herman Kasekende expressed appreciation on behalf of the banking sector for the effective management of monetary policy, which has supported economic growth of 6 percent.
He noted that this performance has been achieved despite several headwinds, including tariffs and shifting geopolitical dynamics.
He further highlighted that the banking sector remains resilient, with strong performance and non-performing loans (NPLs) maintained at low levels.
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