One of the salient points highlighted by the Controller and Auditor General (CAG) when he submitted his Report to HE the President recently, was that, the total national debt had gone up and, as of February 2026, stood at $52.1 billion
Given that this is a national or public debt, there are commentators, including honourable MPs, who argued that this figure was alarming and possibly unsustainable. Debt sustainability is a matter which experts deliberate a lot upon.
It is not just about the gross figure of the national debt. Fortunately, figures are published regularly by the Bank of Tanzania and the Ministry of Finance to enable an informed discussion.
There is no doubt that the national debt has been growing over the years. The external debt has grown from $20,503.0 million in 2018, to around $35,859.1 million in February 2026.
Similarly, the domestic debt has grown from Sh13,742 billion in 2018, to, around Sh38,782 billion in February 2026. But we should look beyond these figures. It is also important to look into indicators like the debt-to-GDP ratio and its growth compared to GDP growth, external debt stock vs domestic debt stock, use of debt, creditor structure, currency composition and other factors.
All governments in the world manage a national debt, and it is common for those outside government, to see the debt as one area where they could take on the government in power.
Nevertheless, borrowing is important given the numerous duties that governments have to undertake, and the inadequacy of local revenue collections.
The situation is worse in developing countries, where there is a massive deficit of economic and social infrastructure which governments struggle to put in place.
Currently in Tanzania, the external debt share of the national debt is 70.2 percent while the domestic share is 29.8 percent, reflecting the country’s continued reliance on external financing to fund infrastructure and development programmes.
Moving from concessional loans to commercial loans would be a matter of concern, since the latter have high interest rates.
Analysts of the national debt have what they see as bad debt and what is good debt. The former is the one used for funding recurrent expenditure, while the latter funds development expenditure.
A look at the percentage share of disbursed outstanding, as of February 2026, reveals the following picture: Balance of Payment (BoP) support and Budget support, 22.5 percent; Transport and telecommunications, 21.9 percent; Social welfare and education, 19.3 percent; Energy and Mining, 12.0 percent; real Estate and Construction, 4.9 percent; Finance and Insurance, 3.5 percent; Agriculture, 5.3 percent; Industries, 3.7 percent; Tourism, 1.8 percent; others, 4.9 percent, making a total of 100 percent.
Despite rising debt levels, interest arrears have declined sharply from a high of $2,439.7 million in 2022 to around $524.7 million in February 2026. This represents a 78 percent reduction, indicating improved debt management discipline and timely debt servicing by the Government of Tanzania (GoT).
We also need to educate ourselves as to who the external debt stock borrowers are. The government has the highest share of borrowing, at 82.7 percent. The private sector’s share of borrowing is 17.3 percent. However, public corporations (TANESCO, ATCL, TRC, TPA, TFC and DAWASA) now hold zero outstanding external debt as of February 2026, compared to $3.8 million in February 2025. Clearly, this reflects debt clearance efforts within state-owned enterprises (SOEs).
Who are the creditors (lenders)? Multilateral institutions (World Bank Group, regional development banks such as AfDB and ADB;, and the IMF), are the dominant creditors at 57.8 percent of the external debt, followed by commercial lenders, such as Citibank, J.P. Morgan Chase, HSBC, Standard Chartered, and Absa Bank, at 35.7 percent, while bilateral creditors (such as China, Japan, France) account for just 4.4 percent. Export Credit Agencies (ECAs) account for 2.0 percent.
Another area of discussion would be the currency composition of the external debt. As of February 2026, the US dollar dominated Tanzania’s external debt currency mix, followed by the Euro at 17.7 percent and the Chinese Yuan at 6.5 percent. This concentration is not good, since it creates exchange-rate sensitivity.
When it comes to the domestic debt, Treasury Bonds dominate, at 80.8 percent of the total domestic debt, held predominantly by commercial banks and pension funds, collectively holding 54.9 percent of Tanzania’s domestic debt. This underscores the banking sector’s key role as a financing conduit for government operations, and the importance of pension fund governance in debt sustainability.
Last, not least, is an important consideration in debt sustainability: the debt-to-GDP ratio. The 48.2 percent debt-to-GDP ratio remains comfortably below the IMF's 55 percent threshold for low-income countries, while the 14.5 percent debt service ratio stays within the sustainable 18 percent limit, indicating Tanzania's capacity to meet its obligations while investing in development priorities.
Let us discuss the national debt, fine, but we should go beyond the total debt, and look into other factors which affect the sustainability of the debt.
