Tanzania's economy may be growing, but its currency is struggling to keep up. The Tanzanian shilling has plummeted 8.9% this year, earning it the dubious distinction of being the worst-performing currency in the world. On Tuesday, it slipped another 0.2% to 2,645.10 per dollar, its lowest closing level since late November, according to Bloomberg.

The decline is attributed to rising imports and increasing public debt linked to major infrastructure projects. Despite a projected 6% growth in GDP this year, the shilling's woes are expected to continue, with analysts predicting further weakening before stabilization.

Experts point to a widening current-account deficit and seasonal liquidity constraints as key short-term pressures dragging the currency down. Shani Smit-Lengton, a senior economist at Oxford Economics Africa, notes that the country's heavy infrastructure investments are expected to yield long-term economic benefits despite the current challenges.

Tanzania is in the midst of an infrastructure boom, with major projects underway, including a deep-water container port in Bagamoyo and a $5 billion East African Crude Oil Pipeline linking Uganda's oil fields to Tanzania's Tanga port. The country is also advancing plans for a massive $42 billion liquefied natural gas (LNG) facility in partnership with global energy giants Shell, Equinor, and Exxon Mobil.

While these developments are set to drive long-term economic growth, they are also contributing to rising imports and debt, adding pressure on the already struggling Tanzanian shilling. Tanzania's imports of goods and services increased by 5% over the year through January, reaching $16.9 billion, according to the Bank of Tanzania.

The rise was primarily driven by higher purchases of industrial supplies and transport equipment, reflecting growth in the manufacturing, construction, and transportation sectors, as noted in the central bank's monthly economic review. Meanwhile, the country's national debt remained "broadly stable" at $47.6 billion, with external debt rising by 11.5% to $33.9 billion over the same period, according to central bank data.

While these investments support economic expansion, they also contribute to mounting financial pressures, further straining the Tanzanian shilling. As the country continues to invest in its infrastructure, it remains to be seen how the shilling will fare in the long term.

In the meantime, the Tanzanian government will need to balance its economic ambitions with the need to stabilize its currency. With the shilling's value expected to continue its downward trend, the government will be under pressure to implement measures to mitigate the impact of rising imports and debt on the economy.

As the situation unfolds, it will be crucial to monitor the shilling's performance and its implications for Tanzania's economy. One thing is certain – the country's infrastructure boom has brought both opportunities and challenges, and it remains to be seen how the government will navigate these complexities to ensure sustainable economic growth.