Moody’s Investors Service (Moody’s) has assigned in early March 2018 a first-time local- and foreign-currency issuer rating of B1 to the Government of Tanzania.
The B1 rating indicates high credit risk. The rating outlook is also negative.
Among the issues that explain the rating, the company includes:
-Moderate economic strength balancing the country’s very high economic growth;
-Very low institutional strength constrained by governance challenges that have hampered effective fiscal policy-making;
-Low fiscal strength driven by a moderate level of government debt.
The rationale for the negative outlook is based on an increasingly unpredictable policy environment weighing on the business climate, particularly in the mining sector, that could have a long-term negative impact on the country’s growth potential and ability to attract foreign investment.
In addition, Moody’s indicates that an upgraded rating from negative to stable is unlikely in the foreseeable future unless the government of Tanzania was to exhibit a more predictable policy framework that continues to support very high economic growth over the medium term.
Conversely, a deterioration in the business and regulatory environment would put downward pressure on the credit profile, the rating company concludes.
Moody’s, along with Standard & Poor’s and Fitch Group, is considered one of the Big Three credit rating agencies.