The Bank of Tanzania (BoT) says Tanzania’s economy remained resilient in August 2026, supported by strong private-sector credit growth, increased exports and continued foreign exchange inflows, although rising global energy costs and geopolitical tensions continued to pose risks to inflation and the external sector.
According to the Bank’s September 2026 Monthly Economic Review, headline inflation increased slightly to 4.3 percent in August 2026 from 4.2 percent in July, but remained within Tanzania’s target range of 3–5 percent.
The report also highlights continued expansion in credit to the private sector, strong demand for government securities, rising national debt and a widening current account deficit amid higher import costs.
Inflation remains within target
Headline inflation rose to 4.3 percent in August 2026, compared with 4.2 percent in July and 3.4 percent in August 2025.
The increase was mainly attributed to the delayed impact of earlier fuel price increases on fares for buses, taxis and motorcycle taxis.
However, food inflation continued to moderate, falling to 3.7 percent in August from 4.1 percent in July and 7.7 percent in August 2025. The Bank attributed the improvement to better food supply conditions, particularly for staple crops such as maize, rice and beans.
At the same time, underlying inflationary pressures are becoming more prominent. Core inflation, which excludes unprocessed food, energy and utilities, increased to 4.1 percent from 3.9 percent in July and 2.0 percent a year earlier.
The Bank noted that core inflation has been rising steadily since March 2026, with services inflation reaching 5.9 percent in August.
Energy, fuel and utilities inflation also increased to 8.5 percent, the highest level since October 2024, largely due to higher charcoal and firewood prices.
BoT maintains tighter monetary policy stance
The Bank continued implementing a less accommodative monetary policy following the Monetary Policy Committee’s decision in July to raise the Central Bank Rate (CBR) to 6.25 percent.
The move was aimed at containing emerging second-round inflationary pressures associated with higher energy, fertiliser and transport costs linked to the Middle East conflict.
During August, monetary operations were conducted to ensure adequate liquidity in the banking system while keeping the seven-day interbank cash market rate within the policy corridor of 4.75 percent to 7.75 percent.
Growth of extended broad money supply (M3) moderated to 25.5 percent in the year ending August 2026, from 26.9 percent in July.
Private sector credit grows by 33 percent
One of the notable developments highlighted by the report is the continued strong expansion of credit to the private sector.
Private sector credit grew by 33 percent in the year ending August 2026, up from 31.2 percent in July, reflecting continued expansion in economic activity. The Bank expects the prevailing monetary policy stance to gradually moderate the pace of credit growth.
Credit expansion was broad-based, with transport and communication recording the highest growth, followed by mining and quarrying and trade.
Personal loans remained the largest component of banks’ credit portfolios, accounting for 34.1 percent, followed by trade and agriculture.
The figures indicate continued demand for bank financing across key productive and commercial sectors of the economy.
Lending rates remain broadly stable
Banks’ lending and deposit rates were largely unchanged in August.
The overall lending rate eased slightly to 15.05 percent from 15.10 percent in July, while the negotiated lending rate for prime borrowers declined to 11.93 percent from 12.04 percent.
The overall time deposit rate remained unchanged at 8.78 percent, while negotiated deposit rates increased marginally to 11.06 percent from 10.99 percent.
As a result, the spread between the up-to-one-year lending rate and the 12-month deposit rate narrowed to 5.95 percentage points from 6.20 percentage points in July.
Strong demand for government securities
Demand for government securities remained strong during August, with auctions continuing to be oversubscribed.
Two Treasury bill auctions conducted during the month had a combined tender size of TZS 580 billion and attracted bids worth TZS 981.7 billion, representing a bid-to-cover ratio of 1.7. A total of TZS 520.8 billion was accepted.
The overall weighted average yield increased to 4.86 percent from 4.74 percent in July.
The Bank also offered 15-year and 25-year Treasury bonds with a combined tender size of TZS 621.5 billion. The auctions attracted bids worth TZS 2,136.3 billion, equivalent to a bid-to-cover ratio of 3.4, with TZS 595.4 billion accepted.
Shilling depreciates marginally against US dollar
The Interbank Foreign Exchange Market remained liquid, supported by foreign exchange inflows from gold and traditional commodity exports as well as continued tourism activity.
Total transactions in the market amounted to USD 190.3 million in August, compared with USD 227.1 million in July.
The Bank sold a net USD 45.4 million in the market to help manage excessive volatility.
The Tanzanian shilling averaged TZS 2,657.01 per US dollar in August, compared with TZS 2,653.52 in July. On an annual basis, the shilling depreciated by 6.7 percent, with the Bank noting that the comparison was significantly affected by a sharp appreciation of the shilling in August 2025.
National debt rises to USD 52.2 billion
The stock of national debt increased by 1.7 percent month-on-month to USD 52.22 billion at the end of August 2026.
External debt accounted for 70.3 percent of the total.
External debt stood at USD 36.73 billion, an increase of 0.8 percent from July, with public debt accounting for 83.7 percent of external debt. Multilateral institutions remained the largest category of external creditors, accounting for 59.5 percent.
Meanwhile, the Government’s domestic debt stock increased by 3.6 percent during August to TZS 40.90 trillion, driven mainly by the issuance of Treasury bonds.
The Government raised TZS 632.5 billion from the domestic market through government securities to finance development projects, comprising TZS 178.1 billion in Treasury bills and TZS 454.4 billion in Treasury bonds.
Export growth remains strong, but current account deficit widens
Tanzania’s external sector remained sustainable, although higher petroleum and intermediate input costs continued to put pressure on the trade balance.
Exports of goods and services increased by 16.4 percent to USD 20.22 billion in the year ending August 2026.
Goods exports increased by 19.8 percent to USD 11.96 billion, supported particularly by gold and manufactured goods.
Gold exports rose to USD 5.63 billion from USD 4.32 billion a year earlier, driven by higher global prices and export volumes. Manufactured goods exports also increased to USD 2.21 billion from USD 1.53 billion.
Service receipts increased by 11.7 percent to USD 8.26 billion, supported by transport and travel receipts. Travel receipts reached USD 4.39 billion, reflecting continued resilience in tourism, while transport receipts increased to USD 3.30 billion, supported by freight earnings from transit trade.
However, imports of goods and services increased at a faster rate of 21.4 percent to USD 21.27 billion.
Petroleum product imports increased by 51.7 percent to USD 3.43 billion, accounting for about one-third of the increase in the goods import bill.
Consequently, Tanzania’s current account deficit widened to USD 2.48 billion in the year ending August 2026, compared with USD 1.70 billion in the corresponding period of 2025.
Despite this, foreign exchange reserves remained adequate. Gross official reserves stood at USD 5.89 billion at the end of August, equivalent to 4.2 months of projected imports excluding FDI-related imports and above the national adequacy benchmark.
Zanzibar records stronger current account surplus
The report also highlights positive developments in Zanzibar’s external sector.
Headline inflation in Zanzibar eased to 5.6 percent in August 2026 from 6.0 percent in July, although it remained above the 3.9 percent recorded in August 2025. Higher food and transport costs were among the factors behind the elevated inflation rate.
Zanzibar’s current account surplus increased by 19.3 percent to USD 953.7 million in the year ending August 2026, from USD 799.3 million a year earlier.
Exports of goods and services increased by 18.8 percent to USD 1.85 billion, driven mainly by tourism-related service receipts.
Goods exports more than doubled to USD 69.2 million, supported largely by higher exports of traditional crops, particularly cloves.
At the same time, imports increased by 40.4 percent to USD 909.5 million, mainly due to higher imports of capital and intermediate goods.
Global developments remain a key risk
The BoT report says the global economy remains resilient, with growth projected at 3.0 percent in 2026.
However, disruptions to shipping through the Strait of Hormuz, higher energy and fertiliser prices and geopolitical tensions remain important risks.
In August, crude oil prices increased by 5.8 percent to USD 84.4 per barrel, while European natural gas prices rose by 16.9 percent. Gold prices also increased by 8.3 percent to USD 4,411 per troy ounce.
The Bank also highlighted climate-related risks, noting that the El Niño phenomenon could affect agricultural production and food supply towards the end of 2026 and early 2027.
Key takeaways for businesses and investors
The September 2026 BoT review presents an economy characterised by continued credit expansion and strong export and tourism performance, alongside emerging pressures from energy costs, imports, inflation and the exchange rate.
For businesses, the 33 percent annual growth in private-sector credit points to continued availability and demand for financing, while relatively stable lending rates provide an important indicator for borrowers and investors.
For investors, strong demand for government securities and continued growth in key export earnings remain notable developments, while the widening current account deficit and higher global energy costs underline the importance of monitoring external-sector risks.
For consumers and businesses, inflation remains within the national target, but the increasing contribution of core inflation and services prices suggests that underlying price pressures will remain an important area to watch.
Source: Bank of Tanzania, Monthly Economic Review, September 2026.
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