International Monetary Fund (IMF) staff visiting Tanzania this week approved the country’s macroeconomic fundamentals, but warned of a potential economic slowdown resulting from the upcoming general election.
After a week-long assessment visit, which concluded on September 24, the mission praised the local authorities for maintaining a positive economic outlook, based on low inflation, exchange rate flexibility, a falling current account deficit and persistence with key structural reforms.“Tanzania’s economic activity has been robust, with the economy growing at 5.4 percent in the first quarter of 2025, while inflation remained low at 3.4 percent (year-on-year in August). Strong mining activity, healthy growth in agriculture, and manufacturing are driving the expansion,” team leader Nicolas Blancher said in a statement.
But, he also warned that, despite the rosy outlook, risks remained tilted to the downside due to a global economic and trade slowdown, geo-economic fragmentation and reduced foreign development assistance.“On the domestic front, the upcoming national elections may increase risks of fiscal pressures and reform slowdown, while insufficient and erratic rainfalls could affect growth and inflation,” Mr Blancher said.
Tanzania goes to the polls on October 29 amid widespread internal and external concerns over a systematic crackdown on opposition voices by the current administration in the run-up to the vote.
The IMF delegation was in the country from September 17 to 24 to discuss economic and financial development, and programme performance with senior government officials, development partners, private sector representatives and civil society organisations.
It was the first such visit since the Fund disbursed new loans totalling $448.4 million in June under its Extended Credit Facility (ECF) and Resilience and Sustainability Facility (RSF) programmes.
Although end-of-mission statements are only meant to convey preliminary findings after visiting countries and do not necessarily lead to discussions by the IMF’s Executive Board about fresh loans, Tanzania is still in line to receive an additional $550 million from both programmes before their scheduled wind-up dates in mid-2026.
According to the IMF, the latest ECF disbursement of $155.7 million in June brought the total loans to the country under the facility to $908.3 million. This is out of the initial approval of just over $1 billion when the programme began in July 2022 for 40 months. This was later extended by six months to April 2026.
The RSF disbursement of $292.7 million in June brought Tanzania’s total access to about $345.4 million, out of $791.6 million under that arrangement, which was approved in June 2024, covering 23 months to May 2026.
Each disbursement is subject to the country passing regular programme assessment reviews arranged by the Washington DC-based lender.
In their statement this week, the IMF team noted that the Bank of Tanzania (BoT) was succeeding in its efforts to keep inflation within its three to five percent target range, allowing it to reduce the central bank rate from six percent to 5.75 percent in July, while preserving price stability.“Higher tolerance for exchange rate flexibility and the improved functioning of the foreign exchange market have helped bring back foreign exchange transactions into the formal market, increasing its liquidity and reducing the parallel market premium. Continuing to enhance exchange rate flexibility will be critical to the further development of the interbank FX market,” it said.
Gross international foreign exchange reserves stood at “an adequate level of $6.2 billion” in July 2025, enough to cover about four months of prospective imports, and the current account deficit narrowed to 2.5 percent of GDP in 2024/2025 “driven by strong exports of minerals, agricultural products, and tourism services against declining oil imports.”
“In 2025, high gold prices and strong tourist arrivals are expected to support the export momentum and help maintain a moderate current account deficit,” the delegation said.
Their discussions with Tanzanian authorities also touched on the importance of accelerating the pace of structural reforms under the country’s Vision 2050 blueprint, which was launched in July, and climate resilience and sustainability reforms supported by the RSF programme and other development partners.
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