S&P Global Rating Agency has upgraded Kenya's long-term sovereign credit rating from 'B- to 'B', due to reduced near-term external liquidity risks.
This means the United States-based agency anticipates an improvement in Kenya's financial obligations, mainly stemming from the country's strong economic growth and better monetary policies.
The agency said on Friday, August 22, that the stable outlook was primarily boosted by Kenya's robust export earnings and dollar inflows from diaspora remittances, which helped narrow the current account deficit.
It noted that Kenya's Eurobond, the gradual payment of the debt, is expected to be manageable, with the agency adding that the recent monetary easing helped lower domestic yields and stimulate private-sector credit growth.
According to S&P, the stable outlook reflects the agency's view that Kenya's robust growth and reduced near-term external liquidity risks balance still-high interest costs and challenges in consolidating the government's fiscal position.
"Robust export earnings and diaspora remittances have strengthened Kenya's foreign exchange (FX) reserve position, helping to ease liquidity risks related to high external imbalances," the Credit Rating Agency said.
Adding that, "Eurobond amortisation will remain manageable over 2025-2027, supported by debt liability operations earlier this year."
S&P's rating comes hardly a year after it downgraded the country's sovereign credit rating from B to "B- citing uncertainties in Kenya's future economic stability and debt management.
The 2024 downgrade was a direct response to President William Ruto’s decision to abandon the Finance Bill 2024, which aimed to generate Ksh346 billion through new taxes.
"The downgrade reflects our view that Kenya's medium-term fiscal and debt outlook will deteriorate following the government's decision to rescind all tax measures proposed under the 2024/2025 Finance Bill," S&P stated.
The Head of State was 2024 forced to withdraw the Finance Bill following widespread protests that saw tens of people lose their lives, while others were left nursing injuries.
The abandoned tax increases through the defunct piece of legislation were part of an International Monetary Fund (IMF)-supported programme that sought to help the country manage its debt levels.
