A global credit rating agency Moody’s has downgraded the Government of Kenya’s (Kenya) local and foreign-currency long-term issuer ratings and foreign-currency unsecured debt ratings to Caa1 from B3 after the rejection of the Finance Bill 2024. This now means that the country’s risk of default is presumed to have gone up.
The decision to downgrade Kenya came shortly after the withdrawal of Finance Bill, 2024, with Moody’s saying it was driven by the country’s diminished capacity to implement revenue-based fiscal consolidation. This, they say, would have improved debt affordability, placing it on a downward trend. Moody’s also said that the government’s decision to cut back on expenditure instead of increasing taxes will affect the country’s financing needs.
The global rating agency has also taken note of the heightened social tensions in the country over the last two weeks while acknowledging that the government will not be able to introduce significant revenue-raising measures in the foreseeable future.
