NAIROBI, Kenya, Aug 22 — Global credit rating agency S&P has upgraded Kenya’s long-term sovereign credit rating to ‘B’ from ‘B-’, citing stronger foreign exchange reserves and easing near-term external financing risks.
The agency highlighted robust export receipts and remittance inflows as key drivers behind the upgrade.
“Robust export earnings and diaspora remittances have strengthened Kenya’s FX reserves position, helping to ease liquidity risks related to high external imbalances,” S&P said in its report.
The stable outlook, it added, reflects expectations that Kenya’s resilient growth and improved external liquidity will balance ongoing fiscal consolidation challenges and high interest costs.
Kenya’s foreign reserves rose sharply to $11.2 billion (Sh1.46 trillion) in July 2025, up from $6.6 billion (Sh858 billion) at the end of 2023, while the current account deficit narrowed to 1.3 per cent of GDP in 2024, compared to 2.6 per cent in 2023.
On debt management, the $1.5 billion (Sh195 billion) Eurobond issuance and buy-back in February helped reduce annual Eurobond repayments to $108 million through 2027, down from $300 million (Sh39 billion) previously.
Looking ahead, S&P projects external debt amortizations will remain manageable at $2.7 billion (Sh351 billion) in FY2025/26 and $3.8 billion (Sh494 billion) in FY2026/27.
Domestically, the Central Bank of Kenya has cut rates by 350 basis points since August 2024, bringing the benchmark rate to 9.5 per cent.
This eased borrowing costs, lowering 91-day T-bill yields to 8 per cent in July 2025, from 16 per cent a year earlier.
Inflation stayed contained at 4.1 per cent, while private sector credit has begun to recover.
S&P, however, cautioned that the rating could face renewed pressure if reserves weaken or refinancing risks rise.
Conversely, stronger fiscal consolidation and sustained deficit reduction could pave the way for further upgrades.
