Tanzania's Economy Booms, Shilling Plummets as Imports Surge and Debt Rises
Tanzania's economy is booming, with a projected GDP growth of 6% in 2025. However, the Tanzanian shilling is struggling, depreciating by 8.9% this year, making it the world's worst-performing currency in 2024.
The shilling's decline is linked to increasing imports and mounting public debt, driven by large-scale infrastructure projects. Imports surged by 5% to $16.9 billion, while external debt rose by 11.5% to $33.9 billion. These projects, such as the Bagamoyo deep-water port and the East African Crude Oil Pipeline, involve major international energy companies like Shell, Equinor, and ExxonMobil.
Analysts predict further depreciation of the shilling before any signs of stabilization. The currency hit a record low of 2,645.10 per dollar on Tuesday, raising concerns about currency stability amidst rapid economic growth.
Tanzania faces a challenge balancing its rapid economic growth with currency stability. While infrastructure expansion drives imports and debt, it also fuels growth. The government must carefully manage these dynamics to prevent further pressure on the Tanzanian shilling.
