Tanzania is emerging as East Africa’s strongest sovereign credit story after Fitch Ratings affirmed its B+ rating but upgraded the outlook to Positive from Stable, signalling the possibility of an eventual upgrade if the country sustains its fiscal and economic improvements.
An analysis by Mwango Capital, a Kenya-based financial services firm, shows Tanzania now has the most favourable Fitch outlook among major East African economies, with Rwanda also rated B+ but carrying a Stable outlook. Uganda is rated B/Stable, while Kenya is rated B-/Stable.
The Positive outlook reflects Fitch’s expectation that stronger foreign-exchange reserves, moderate fiscal deficits and continued economic growth will put the government debt on a downward trajectory. The agency also cited improvements in the country’s macroeconomic policy framework, including reforms to central bank independence, exchange-rate management and foreign-exchange operations.
“Fitch revised the outlook from stable to positive for Tanzania, on the B+ rating. Tanzania has the best sovereign ratings in East Africa,” Charlie Robertson, an emerging-markets specialist said on LinkedIn
Robertson attributed part of Tanzania’s improving credit profile to higher gold prices, which have strengthened the country’s foreign-exchange earning capacity.
