DAR ES SLAAM: MOODY’S Investors Service upheld the country’s stable outlook and confirmed its long-term foreign and local currency issuer ratings at B1 on February 20, 2026.
This indicates consistency in Moody’s evaluation of the country’s creditworthiness, since the country maintained the same rating and outlook at the end of 2024.
What steps must Tanzania take to improve its grade going forward? As an analyst trained at Moody’s, the country’s B1 rating is speculative but creditworthy for now.
Higher letters (such as A or B++, etc.) indicate stronger credit quality and lower risk. B1 thus indicates that the country can meet its financial obligations but remains vulnerable to unfavourable economic developments, according to Moody’s sovereign ratings scale.
Unless there are unforeseen shocks, the stable prognosis suggests no appreciable improvement or worse in the foreseeable future. The indicators supporting the B1 rating reflect a mix of strengths attained to date.
Strengths or credit supports, include strong economic growth, with the country expected to maintain 6.0 per cent annual GDP growth, bolstered by mining, manufacturing, tourism and transport services.
Regarding macroeconomic stability, measures taken so far by the Bank of Tanzania (BoT) have improved foreign currency markets and exchange rate flexibility and inflation has been maintained at or below 5.0 per cent for several years.
From an economic perspective, this indicates that revenue performance has improved: Budgetary reforms and improved tax administration are increasing non-grant revenue as a share of GDP, thereby strengthening budgetary credibility.
Crucially, Moody’s B1 rating indicates that the government’s debt is moderate, about 50 per cent of GDP, and that, compared with many peers, debtservicing pressure is rising but remains manageable in the country.
Moody’s B1 rating, however, indicates that it still views low per capita income and inadequate institutional capacity as structural barriers that reduce Tanzania’s creditworthiness. Political risk was briefly elevated by the unrest that followed the 2025 general elections, but stability has since largely returned.
There has been no political conflict, as the country has always prioritised peace as an instrumental tool before anything else, even political differences.
A stable outlook indicates that Moody’s believes Tanzania’s fiscal metrics and economic fundamentals are unlikely to change substantially over the next 12 to 18 months, neither warranting an upgrade nor a downgrade.
As a result, rather than sharply increasing rating pressure or falling on an upgrade, the country’s borrowing rates in international markets may remain stable and investor confidence particularly among foreign capital, remains stable. What does Tanzania need to do to get a better rating in the future?
Moody’s has provided clear guidance on what could lead to a future rating increase or decrease.
To enhance its rating, the following actions are required. In the bigger picture, the country must boost non-grant revenue as a percentage of GDP by broadening the tax base and improving compliance to strengthen revenue mobilisation.
Ensuring more effective tax systems can reduce the need for excessive borrowing and enhance fiscal sustainability, but this must go hand in hand with reduced reliance on erratic revenue sources.
This is significant because a higher grade requires consistent revenue growth, which lowers the cost of debt and interest. Crucially, however, B1 reflects a solid base with potential for expansion.
Looking at specific areas, we need to understand that the state’s main role in any economy is to facilitate corporate investment, production and competition by establishing a stable, predictable environment.
The Dr Samia-led government has placed strong emphasis on developing its workforce’s skills, upgrading technology, expanding industrial infrastructure, creating Special Economic Zones and promoting export-led growth anchored in the SMEs sector.
ALSO READ: Investors bullish as Moody affirms TZ at B1
Through organised government-to-government and business-to-business interactions, the overarching goal is to increase the productivity and competitiveness of domestically produced goods in global markets, attract foreign direct investment and expand market access.
The government’s administration has sought to strike a balance between short-, medium- and longterm structural reforms and immediate stabilisation measures for the current fiscal year.
Therefore, political stability, efficient government and regional cooperation remain essential preconditions for long-term economic growth in Tanzania, and this will lead to a higher Moody’s rating in the future.
In addition to promoting value-added items such as clothing, home textiles and technological textiles, the Ministry of Trade and Industries continues to focus on modernisation through public-private partnerships and on fortifying supply chains from raw materials to final exports.
By using incentives for technological adoption, design capability and training more efficiently, domestic manufacturing has all it takes to expand production and hence create employment opportunities.
What will give a higher rating in the future is the ongoing cooperation between the public and private sectors, which remains crucial. Infrastructure development, technology transfer, innovation and export diversification can all be fuelled by publicprivate partnerships.
If carried out consistently and protected from policy reversals, sectorspecific reforms in Tanzania, as outlined in the Dira 2050, have the potential to convert industrial capacity into sustained economic development and resilience. Thus, the rating of B1is a good sign.
Th country’s reliability in global financial markets is confirmed by maintaining this rating, but it also underscores the need for further work.
Future policymakers would need to prioritise inclusive growth, better governance, sustainable fiscal reforms and greater policy coherence to raise the country’s credit rating.
Hence, such advancements would improve Tanzania’s standing abroad, lower borrowing costs, attract more substantial international investment and accelerate the longterm development of the Tanzanian people.
Why does Tanzania care about this rating? Access to international capital markets is one of the most crucial factors. Tanzania’s interest rates on external loans are influenced by its sovereign credit rating; lower borrowing costs are often associated with better ratings.
Importantly, investor confidence is affected. Before investing in infrastructure projects or government bonds, lenders and institutional investors evaluate these ratings to assess risk.
Tanzania may finance infrastructure and development needs without experiencing unwarranted cost increases by maintaining a stable rating, which makes it easier to borrow on predictable terms.