Fitch Ratings revised Tanzania’s long-term issuer default rating outlook to positive from stable and affirmed the rating at B+ on August 21, 2026, in London. The agency cited improving macroeconomic and fiscal fundamentals, including gradually declining government debt projected to fall to 46.2% of GDP by 2028, as reasons for the outlook upgrade, according to Fitch.
The rating agency cited strong nominal GDP growth and low primary fiscal deficits as key factors supporting the debt reduction trajectory, which places Tanzania below the median debt level of about 55% of GDP for similarly rated ‘B’ sovereigns, Fitch said.
Fitch’s revision to a Positive outlook reflects expectations that Tanzania’s government debt will gradually decline to 46.2% of gross domestic product (GDP) by 2028, down from 48.9% in 2025, according to the agency’s August 21, 2026, announcement from London.
The agency affirmed Tanzania’s long-term foreign- and local-currency issuer default ratings at B+ while changing the outlook from Stable to Positive. Fitch noted that if current macroeconomic and fiscal trends continue, an upgrade of the sovereign rating is more likely over the medium term than a downgrade. The Positive outlook signals improved debt sustainability and fiscal discipline following previous stable outlook affirmations in March 2026 and June 2025, when the rating was also held at B+.
Fitch’s report highlighted Tanzania’s real GDP growth projections of approximately 6% for 2026 and 2027, well above the 4.5% median for B-rated peers. Growth is expected to be driven by expansion in agriculture, mining, and major infrastructure projects such as the Standard Gauge Railway and the East African Crude Oil Pipeline, the agency said. Sustained growth combined with moderate fiscal deficits is anticipated to generate strong nominal GDP increases, which mechanically reduce the debt-to-GDP ratio over time.
The agency also pointed to Tanzania’s improving external position, with international reserves forecast to rise to about $7.9 billion by 2028 from $6.3 billion at the end of 2025. Fitch attributed this to export performance, investment inflows, and prudent external borrowing, which together enhance the country’s capacity to absorb external shocks. Stronger reserves and contained external imbalances contribute to a lower overall sovereign risk profile, supporting the Positive outlook, Fitch said.
Fitch’s assessment underscores the importance of disciplined fiscal management and revenue performance in maintaining the declining debt trend. The agency cautioned that any reversal in debt dynamics, such as wider primary deficits or slower economic growth, could weaken the case for a future rating upgrade. Potential risks include fiscal slippages, increases in contingent liabilities, or shocks that undermine external reserves or macroeconomic stability. Fitch emphasized the need for policy consistency, particularly concerning infrastructure spending, revenue mobilization, and debt management, to sustain the Positive outlook.
The agency’s move follows previous affirmations of Tanzania’s B+ rating with a Stable outlook, reflecting a gradual but not yet decisive improvement in fiscal and external metrics. Fitch’s August 2026 revision incorporates new or stronger evidence of declining debt and improved external reserves compared with earlier reviews. The rating agency noted that avoiding fiscal slippage and maintaining Tanzania’s comparative advantage relative to peers will be important for any future upgrade from B+.
Local media and business analysts have described Fitch’s decision as a test of Tanzania’s prospects for a sovereign rating upgrade, noting that a Positive outlook often precedes an actual rating increase if positive trends continue. Analysts also suggest the move could lower future borrowing costs for the government and state-owned enterprises by signaling reduced sovereign risk, according to reports from Tanzanian outlets. The revision has been interpreted as international recognition of ongoing fiscal reforms and macroeconomic management since the 2025 general election.
Fitch’s outlook assumes Tanzania will maintain growth rates around or above 6%, supporting both fiscal consolidation and external reserve accumulation. The agency’s commentary also noted that governance, business environment, and political stability remain important factors influencing investment and growth prospects. Fitch’s sovereign criteria indicate that deterioration in these areas could weigh on future rating decisions.
The agency’s assessment comes amid Tanzania’s efforts to balance macroeconomic stability with financing for development, particularly through large infrastructure projects. Fitch’s emphasis on growth and declining debt aligns with this narrative, suggesting that continued fiscal discipline and economic expansion will be key to sustaining improvements in the sovereign credit profile.
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