Moody’s Upgrades Tanzania’s Credit Rating to B1, Reflecting Economic Resilience and Fiscal Discipline

London, March 22, 2024 – Moody’s Investors Service has announced the upgrade of Tanzania’s long-term issuer ratings to B1 from B2, with a change in outlook from positive to stable. This decision underscores Tanzania’s robust economic performance amidst various external shocks and its commitment to fiscal prudence.

Tanzania’s upgraded rating to B1 is a testament to its consistent economic resilience, particularly highlighted by its ability to navigate through global challenges such as the COVID-19 pandemic and inflationary pressures. Moody’s acknowledges Tanzania’s diversified economic base, stable debt burden, and conservative fiscal policies as key factors supporting the upgrade. Despite weaknesses in institutional frameworks and reliance on foreign-currency debt, the rating reflects confidence in Tanzania’s capacity to absorb future shocks.

The stable outlook signals Moody’s expectation of continued economic and fiscal resilience in Tanzania. The country has demonstrated robust GDP growth, supported by increased private sector investment and gradual improvements in competitiveness. Fiscal discipline, alongside declining infrastructure investments, is projected to maintain a stable debt burden, while escalating social spending aims to alleviate poverty and social risks.

Structural reforms aimed at enhancing the business climate and attracting foreign direct investment are underway, although progress remains gradual. Moody’s notes the positive signs of increasing private sector lending and foreign investment but highlights the need for further regulatory reforms and improved administrative capacity.

Despite these positive developments, challenges persist, including low income levels, external imbalances, and weak institutional frameworks. Tanzania’s susceptibility to environmental shocks and limited access to basic services contribute to its credit constraints, according to Moody’s assessment.

The stable outlook reflects a balanced assessment of risks, with potential for further upgrades contingent on sustained reform implementation, improved governance, and reduction of external imbalances. Conversely, continued foreign currency shortages, escalating debt burdens, or interruptions in reform agendas could lead to downward pressure on the rating.

Tanzania’s upgraded credit rating signals confidence in its economic trajectory and fiscal management, providing a platform for continued growth and development. However, addressing persistent challenges will be crucial in securing further improvements in creditworthiness and ensuring long-term stability.

This article is based on Moody’s Investors Service’s recent rating action on Tanzania. For further details, please refer to Moody’s official publications.