The Tanzanian shilling did not enjoy the strengthening cycle experienced across the continent in 2025, losing 2% against the USD, and 16% against the euro, due to the government’s easing fiscal policy, as well as election instability. Foreign debt represents two-thirds of total outstanding debt, mainly owed to multilateral institutions such as the IMF and World Bank. The debt-to-GDP ratio is projected to continue expanding, reaching 50% by 2027, from 39.7% in 2024, as the government is spending on domestic investment. The government’s overall balance ended 2025 at -3% and it is projected to remain at the same level until 2027, at the Sub-Saharan Africa median. 

While the government’s revenues are growing, Tanzania’s revenue mobilization challenges and the USAID pull-off from Africa, underlined the country’s tax-collection problems, resulting in the introduction of a new revenue mobilization strategy aiming to increasing collections. However, the government also faces large debt-service payments in the short term of around 30% of its total revenues. In addition, Tanzania’s debt position is vulnerable to further currency fluctuations as around 65% of its public debt is held in foreign currency, a majority to multilaterals. Hence, while Tanzania’s fiscal profile is notunder risk, considering the anchor of the IMF program, a return to a high-interest-rate environment would present significant risks to the sovereign. Tanzania’s banking sector remains well capitalized, with NPLs at 3.5% as of March 2025. 

The financial account has remained solid, thanks to a healthy inflow of FDI valued at around 2% of GDP. However, following the opposition crackdown during the elections, risks emerged from hard currency inflows as the European Parliament announced intentions to suspend a EUR156mn aid program, pointing towards the possibility of more tense relations moving forward with Western partners, with potential ramifications for international investors if the situation does not improve. 

The undergoing diversification of the economy, supported by exports of commodities, manufacturing, as well as services, has experienced significant gains in recent years from tourism. 2025 is expected to have again been a ground-breaking year for, with tourism increasing by 4-5% y/y. In August 2025, five new special economic zones were launched dedicated to manufacturing, which has also become a growing industry. Domestically processed iron, steel and copper are among Tanzania’s largest manufactured exports, and the transformation of mining and metals remains a top priority for authorities in an effort of further diversify exports and reduce unemployment, which stands at around 10%, while youth unemployment stands between 15% to 25%.

Energy independence is among the leadership’s top priorities as Tanzania is currently an intensive importer of non-renewable energy. Crude oil remains its top import. In 2025, the country signed a deal with Rosatom, Russia’s nuclear energy company, to build a nuclear plant, diversifying its energy mix and becoming one of the first adopters of nuclear energy in Africa after South Africa and Egypt, which is currently building a plant. Other priorities include an LNG plan connected to Mozambique’s gas fields, as well as an oil pipeline bringing 200,000 barrels per day from Uganda’s, which should be operative in the next 24 months. A major change to Tanzania’s energy mix is the completion of the Juluis Nyem dam in 2025, which has a full capacity generating 1,175Mgw of power. Cross-border trains linking the economic hubs of the East Africa Community members, Tanzania’s natural region of trade and influence, have also been a focal point of the government’s priorities.

The weeks leading up to the reelection of President Suluhu Hassan, with 97% of votes, were faced with strong mobilization, and violent clashes that ended between 1,000-2,000 deaths. While the protests have since eased, given the current wave of the so called Gen-Z or youth protests taking place across South Asia and Africa, political unrest could ramp up again in 2026.

Tanzania’s economic ties have also expanded outside the region towards the Indian and Pacific Ocean, including with the UAE, China and India, which are now the country’s main export destinations. The strong ties with the Middle East remain, especially with the UAE, which operates part of the Dar Es Salam port via DP World – which should double cargo traffic by 2032 – as well as Egypt, which supported the construction of the Juluis Nyem dam. Tanzania has also been growing its political and military ties with the BRICS group, and most importantly with China, with whom it has performed military drills in recent years. 

With an average life expectancy at birth of 66 (seven years more than in Mozambique and five more than in Kenya), half of the country’s 55mn residents under the age of 15, a literacy rate of more than 80% and long-lasting poverty, the next decade may see a huge shift in politics and grassroots demands in Tanzania.