NAIROBI, Aug. 26 (Xinhua) — Kenya said Monday that it is actualizing its fiscal consolidation, bettering export performance, and expanding foreign reserves to improve its sovereign credit ratings.
The National Treasury said in a report that the activities will make the East African nation graduate to investment grade (BBB-) and attract cheaper debt from global markets.
The Standard & Poor’s (S&P) on Saturday lowered the country’s rating to B- on weaker fiscal consolidation. This followed Kenya’s repeal of its 2024/2025 revenue-raising plan, with S&P noting that the move will see debt servicing costs exceed 30 percent of government revenue over the 2024-2027 period.
Similarly, on July 7, Moody’s, the global rating agency, cut Kenya’s sovereign credit rating, citing “diminished capacity to maintain revenue-based fiscal consolidation that would improve debt affordability and place debt on a downward trend.”
Kenyan President William Ruto withdrew the plan to raise an additional 346.7 billion shillings (about 2.7 billion U.S. dollars) to fund its 31-billion-dollar budget for the 2024/2025 financial year.
This followed widespread protests across the country against the taxation plan.
Kenya has ramped up its exports, with earnings rising 28 percent to 2.28 billion dollars in the first quarter of 2024 due to increased shipments from tea and horticulture, according to the national statistics bureau.
The Central Bank of Kenya noted that the country’s debt stood at 79 billion dollars at the end of June while forex exchange reserves at 7.4 billion dollars.
Kenya’s economy is expected to grow by an average of 5 percent in 2024, according to the National Treasury, and the government is working to bring down the fiscal deficit to 3.3 percent from an average of 5 percent of the gross domestic product.
