Faith Nyasuguta
Tanzania has been acknowledged by the International Monetary Fund (IMF) as the least indebted nation in Africa, a testament to its fiscal responsibility amid regional economic challenges. The latest IMF report reveals Tanzania’s noteworthy achievement, boasting a commendable debt-to-GDP ratio of 41.8 percent.
This accomplishment underscores Tanzania’s prudent and balanced monetary approach, contributing significantly to the nation’s economic stability and resilience. The debt-to-GDP ratio, a pivotal metric comparing a country’s total debt to its economic output, reflects Tanzania’s commitment to responsible financial management.
Economist Dr. Isaac Safari emphasized the positive implications of this recognition, stating, “By being listed as the least indebted country in Africa by the IMF, Tanzania still has the ability to obtain loans from development funders and service them.”
He emphasized the government’s role in ensuring loans contribute to development projects that stimulate production and generate income for repayment.
Dr. Safari further called for diversifying production to shift Tanzania from lower middle-income status to upper middle-income, fostering inclusive development for all citizens. In this context, debt becomes a tool for achieving development outcomes rather than a burden.
For Tanzania, the relatively low debt-to-GDP ratio signifies robust economic stability, instilling confidence in global investors and influencing interest rates on government bonds. This positive indicator reflects Tanzania’s capacity to meet debt obligations, setting the stage for sustained economic growth.
The IMF’s Regional Economic Outlook report from the previous year provides an optimistic outlook for sub-Saharan Africa, forecasting a notable 4.2 percent growth in the region’s economy in 2024—a marked improvement from the 3.6 percent recorded in 2023.
Approximately 80 percent of countries are anticipated to experience accelerated GDP growth, propelled by increased private consumption and investment.
Tanzania’s outstanding debt management and its consequent low debt-to-GDP ratio position the nation favorably in the eyes of international investors. This financial prudence not only strengthens economic resilience but also signals a commitment to sustainable growth.
The dip in the growth rate from 3.9 percent in 2022 to 3.6 percent in 2023, as outlined in the report, is attributed to various factors. Tanzania’s exemplary debt management, however, stands out, showcasing the nation’s dedication to responsible financial practices.
In the dynamic global economic landscape, Tanzania’s achievements highlight the importance of sound fiscal policies in navigating challenges. The nation serves as an example for others, encouraging the adoption of similar strategies for a more robust and stable economic future across the African continent.
RELATED:
