Dar es Salaam. The Bank of Tanzania (BoT) has announced it will keep the Central Bank Rate (CBR) steady at 6 percent, aiming to safeguard the national economy amid ongoing global trade uncertainties and geopolitical tensions.
This decision seeks to mitigate the negative impacts of escalating trade tariffs and global market volatility.
The BoT indicated that the exchange rate fluctuations observed in the first quarter of 2025 were seasonal and are expected to stabilize with anticipated increases in foreign currency inflows in the coming months.
The decision was reached during a Monetary Policy Committee (MPC) meeting held on April 3, 2025, where the committee evaluated the nation’s recent economic performance and assessed prospects for the second quarter.
The MPC determined that sustaining the CBR at 6 percent would contribute to economic stability.
Speaking on behalf of the BoT Governor, the Deputy Governor emphasized the economic outlook remains favorable, despite persistent global uncertainties that may influence inflation and overall economic growth.
The Bank aims to maintain the 7-day interbank lending rate between 4 to 8 percent and pledged to enhance the interbank market for better interest rate control. The BoT will continue to monitor inflation trends closely and make adjustments to monetary policy as necessary.
Early 2025 has witnessed robust growth across both advanced and emerging economies, with global inflation easing due to diminished economic shocks and tighter monetary policies, prompting several central banks to begin lowering their policy rates.
However, potential challenges loomed with the introduction of new trade tariffs that could affect future inflation rates.
Domestically, Tanzania’s economy has shown resilience, with positive performance noted since January 2025. Recent market surveys indicate an optimistic economic trajectory, further supported by a recent credit rating affirmation.
The Deputy Governor highlighted that Tanzania experienced significant economic growth in 2024, with Mainland Tanzania reporting a 5.5 percent growth rate, an increase from 5.1 percent in 2023. Sectors such as agriculture, finance, mining, and construction, alongside a revived tourism industry, contributed to this growth.
In Zanzibar, economic performance exceeded expectations with a reported 7.2 percent growth by late 2024, compared to 2.2 percent in the same period the previous year, driven primarily by tourism and trade, and projected to continue growing into 2025.
Inflation rates have remained manageable, supported by stable food supply, strict spending measures, and decreased global energy prices. In Mainland Tanzania, inflation averaged 3.1 percent in 2024 and 3.2 percent in the first quarter of 2025, staying well below the 5 percent target. In Zanzibar, inflation dropped to 5.1 percent in 2024 and 4.8 percent in February 2025, with expectations to stabilize around 3.2 percent in the upcoming quarter.
The money supply saw robust growth in 2024, driven by increased lending to the private sector, especially targeting small and medium-sized enterprises (SMEs), agriculture, trade, and manufacturing.
The banking sector in Tanzania remains stable and well-capitalized, with non-performing loans at a low rate of 3.6 percent, below the recommended ceiling of 5 percent.
Tax revenues for both Mainland Tanzania and Zanzibar met expectations for the third quarter of the 2024/25 financial year, reflecting improved tax collection and compliance, while the governments exercised prudent spending to maintain sustainable public debt levels.
Tanzania’s trade dynamics have improved, with the current account deficit narrowing to 2.6 percent of GDP from 3.7 percent the prior year, mainly due to increased exports in sectors such as tourism, gold, cashew nuts, and tobacco.
Zanzibar’s trade surplus grew to $563.5 million, up from $407.4 million, bolstered by heightened tourism earnings.
Foreign reserves remained robust at over $5.6 billion, sufficient to cover 4.5 months of imports, with stable expectations through the second quarter of 2025.
Addressing concerns about the influence of global tariffs and shifts in gold exports, the BoT’s Director of Policy and Research emphasized that Tanzania’s economy is diversified and not solely dependent on gold, citing cashew nuts, tourism, and agriculture as key economic pillars.
The Chairman of Tanzania Bankers Association expressed optimism regarding the country’s economic performance, underscoring strong GDP growth, improved trade balance, and sound public financial management as indicators of resilience in the economy.
