NAIROBI, Kenya, Jan 25 – Credit rating agency Moody’s has upgraded Kenya’s credit outlook from negative to positive, citing signs of easing liquidity risks and improved debt affordability as key drivers of the revision.
The shift is attributed to recent monetary easing measures that have reduced domestic financing costs and the government’s efforts to enhance fiscal management.
Moody’s stated that continued fiscal consolidation and effective handling of social demands could further alleviate liquidity pressures.
While acknowledging Kenya’s high external debt burden and weak debt affordability, Moody’s highlighted the country’s resilience, supported by a diversified economy and well-developed local capital markets, as stabilizing factors for its credit profile.
“The change in outlook to positive reflects the increasing likelihood that Kenya’s liquidity risks will ease, and its debt affordability will improve over time,” Moody’s said.
However, the agency maintained Kenya’s Caa1 credit rating, signaling persistent risks, including high fiscal deficits, substantial financing needs, and environmental and social vulnerabilities such as climate change.
Moody’s emphasized that improved revenue collection and fiscal measures could enhance debt sustainability if they lead to a more stable fiscal environment.
A credit rating upgrade could follow if domestic financing conditions improve and fiscal reforms effectively reduce liquidity risks and borrowing costs.
Conversely, setbacks in fiscal reforms or rising borrowing costs could result in a downgrade. Moody’s noted that Kenya must address institutional weaknesses and unpredictable fiscal policies to sustain long-term economic stability.
