Tanzania Cuts Current Account Deficit by Nearly 14 Percent. Here Is What Changed

DAR ES SALAAM — Tanzania's current account deficit narrowed 13.9 percent from USD 2,379.8 million in 2024 to USD 2,049.4 million in 2025, according to the National Development Plan 2026/27. The improvement reflects a combination of factors whose structural character makes the external position improvement more durable than price-cycle-driven variations. Export growth outpacing imports The core driver of the current account improvement is that Tanzania's export earnings are growing faster than its import costs. Goods export earnings grew 12.5 percent to USD 10,262.9 million against goods import growth of 4.2 percent to USD 14,787.7 million. The export-import ratio improved materially as a result. The composition of import growth is also encouraging. Capital goods imports, whose growth signals productive investment, rose 11.8 percent to USD 6,745.8 million. This category includes transport vehicles, machinery, and construction equipment whose import represents investment in productive capacity rather than consumption. Intermediate goods imports fell 7.9 percent, partly reflecting the petroleum import cost reduction. Petroleum import cost reduction Petroleum imports fell 21.9 percent from USD 2,837.2 million to USD 2,216.0 million in 2025. Petroleum accounted for 15.0 percent of total goods imports in 2025, down from a higher share in prior years. The reduction reflects a combination of global oil price moderation and the progressive substitution of petroleum-based electricity generation by the Julius Nyerere Hydropower Project's 2,115MW of hydroelectric capacity. Every megawatt of hydro generation that displaces a diesel or heavy fuel oil generator reduces petroleum import demand directly. Reserves reaching their highest level Foreign exchange reserves reached USD 6,329.0 million by December 2025, up from USD 5,546.9 million in December 2024, covering 4.9 months of import requirements. This is the highest reserve level in Tanzania's history and exceeds both the national minimum of 4 months and the EAC convergence criterion of 4.5 months. The gold reserve accumulation programme contributed to the reserve level: 17.64 tonnes purchased at USD 2,616.77 million in the FY2025/26 period brought the cumulative gold reserve to 24.21 tonnes valued at USD 3,591.39 million. Gold reserves provide a reserve asset not subject to the counterparty risk that foreign currency deposits carry and whose value has historically been maintained during dollar weakness episodes. The investment income deficit remains The investment income account deficit widened from USD 1,887.4 million to USD 2,050.1 million, reflecting growing dividend and interest payments as the foreign investment that has financed Tanzania's infrastructure decade begins generating returns that repatriate to the investing countries. This structural outflow will persist and grow as the investment stock matures, making the expansion of domestic capital participation in major investments an increasingly important policy objective. Read the full analysis on www.uchumi360.com and on the Uchumi360 Mobile App, available on the App Store and Google Play.