In a significant development, Tanzania stands out as one of the select few African nations boasting high credit ratings, facilitating access to global financial markets and attracting foreign investments. The country's commendable creditworthiness has been reaffirmed by international credit rating agencies Moody's and Fitch, according to statements made by Mr. Elijah Mwandumbya, the Deputy Permanent Secretary in the Ministry of Finance.
Addressing the 56th session of the Economic Commission for Africa and Conference of African Ministers of Finance, Planning, and Economic Development in Zimbabwe on Wednesday, Mr. Mwandumbya expressed gratitude for Tanzania's position as a creditworthy nation, ensuring continued access to credit from global lenders.
As of the latest reports, Moody's has assigned Tanzania a credit rating of B2 with a positive outlook, while Fitch has rated the country at B+ with a stable outlook for the previous year. Fitch Ratings, in December of the preceding year, affirmed Tanzania's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+' with a Stable Outlook, highlighting the nation's robust macroeconomic performance characterized by high real GDP growth, low inflation, and a moderate level of debt. This positive assessment is reinforced by an increased reform momentum supported by an International Monetary Fund (IMF) program.
Fitch anticipates Tanzania's real GDP growth to reach 5.0% in 2023 and 5.5% in 2024, propelled by heightened activities in agriculture, mining, tourism, and infrastructure investment. The long-term growth trajectory is expected to benefit from the development of offshore gas fields and liquefied natural gas (LNG) production.
The importance of credit ratings extends beyond global financial markets, influencing borrowing costs for countries and entities considering investments in equity shares or bonds. Sovereign wealth funds, pension funds, and other investors rely on these ratings to gauge the creditworthiness of nations, with a significant impact on borrowing costs.
According to the Bank of Tanzania's monthly economic review for January this year, the national debt, comprising public (domestic and external) and private sector external debt, reached $41,782.6 million, reflecting a 0.73% increase from the previous month. External debt, including public and private components, saw a monthly uptick of 0.3%, totaling $29,541.7 million at the end of December last year.
The Deputy PS highlighted the challenges faced by African countries, with growing debt burdens attributed to fluctuations in global exchange rates and interest rates, impacting local currency values. He emphasized the need for alternative solutions to address these challenges.
Meanwhile, Finance Ministers from African countries, in agreement, are focusing on maximizing the use of existing resources and leveraging technology to enhance tax revenue collection. Mr. Mwandumbya emphasized the commitment to improving laws, regulations, and management of revenue collection institutions during the recently concluded meeting of the 56th session of the United Nations Economic Commission for Africa (UNECA).
The 56th session, opened by Zimbabwe's President Emmerson Mnangagwa, concluded with a call for innovative, green investment strategies to foster economic growth across the African continent.