S&P Upgrades Kenya’s Credit Rating

Kenya’s credit rating has improved as S&P Global Ratings upgraded the country’s long-term sovereign rating from ‘B-’ to ‘B’. 

This revision reflects a reduction in immediate external liquidity pressures, supported by strong economic performance, better monetary management, and increased foreign exchange reserves. The upgrade offers relief following a downgrade earlier this year, which followed the government’s withdrawal of the Finance Bill 2024 amid widespread public protests.

The Finance Bill was a key part of Kenya’s fiscal consolidation plan under the International Monetary Fund (IMF), aiming to raise KSh346 billion through new taxes. Its rejection had raised doubts about Kenya’s ability to manage its growing debt and maintain fiscal discipline, leading to the initial downgrade. However, current economic indicators are more positive. 

Strong export performance and steady diaspora remittances have helped boost foreign currency reserves and reduce the current account deficit, easing pressure on Kenya’s external finances. S&P also expects Kenya’s Eurobond repayments from 2025 to 2027 to be manageable, thanks to earlier efforts to manage debt liabilities effectively. The recent easing of monetary policy, which has lowered domestic interest rates, has encouraged private-sector lending and supported economic growth.

Despite these improvements, S&P has maintained a stable outlook, indicating that significant structural challenges remain. High interest costs and slow progress on fiscal consolidation continue to strain public finances. Questions remain over the government’s ability to address these issues without implementing unpopular tax reforms, an important concern as Kenya prepares its next budget.

President William Ruto, speaking at the Japan-Africa summit in Yokohama, forecast a GDP growth rate of 5.6% for 2025. This optimistic projection exceeds estimates from the Central Bank and National Treasury, highlighting a gap between government expectations and external assessments of Kenya’s economic prospects.