Moody's changes Tanzania's outlook to positive from stable

Rating agency Moody's recently announced a significant change in the government of Tanzania's economic outlook, upgrading it from stable to positive and affirming the B2 foreign and local currency long-term issuer ratings. This move signifies a positive shift in Tanzania's creditworthiness, which is crucial for attracting foreign investment and financing development projects within the country. Constantine Manda, the Director of Impact Evaluation Lab at the Economic and Social Research Foundation, emphasized the importance of Moody's rating change. According to Manda, the upgrade not only signals a favorable environment for foreign investors but also enables the government to access cheaper debt financing options, allowing for the implementation of much-needed infrastructure and development projects. The key theme of this rating upgrade is the potential economic growth and investment opportunities it presents for Tanzania. The three key points to consider are: 1. Improved Perception: The rating upgrade indicates a shift in how Tanzania is perceived by foreign investors and tourists, highlighting a more favorable environment compared to previous administrations. 2. Debt Management: Tanzania now has the opportunity to access cheaper debt with more favorable terms, potentially lowering the burden of servicing existing debts and facilitating the funding of ambitious infrastructure projects. 3. Foreign Investment: The rating change is expected to attract increased foreign direct investment, driven by the government's efforts to create a conducive business environment and welcome foreign capital. Manda also addressed Tanzania's current debt situation, noting that the country's debt-to-GDP ratio is relatively low compared to its neighbors. He expressed confidence in Tanzania's ability to handle more debt, especially considering its development agenda and ongoing economic growth. Furthermore, in terms of foreign direct investment, Manda highlighted the positive steps taken by President Samia Suluhu Hassan to attract foreign capital. The government's proactive measures, including COVID-19 policy adjustments and legal reforms to facilitate business operations, have already started to yield results in terms of access to financing and investment opportunities. However, Manda also pointed out the need for substantial intervention to stabilize key institutions in Tanzania. He emphasized the importance of strengthening institutions to ensure adherence to legal provisions and international agreements, addressing past issues of non-compliance with court rulings and constitutional provisions. In conclusion, Moody's positive shift in Tanzania's economic outlook reflects a promising future for the country's economy, with increased opportunities for foreign investment and sustainable development. As Tanzania continues to focus on economic stability and institutional strengthening, it is poised to attract more investors and drive growth in key sectors.