Global credit rating agency Fitch Ratings affirmed Kenya’s long-term foreign currency rating at B+, supported with its strong macroeconomic performance.
“The rating agency noted that Kenya’s track record of macroeconomic stability is a support for the rating and observed that Kenya has exhibited lower growth volatility than peers with GDP growth between 4.6% and 6.3% and single-digit inflation since 2012.”
However, the agency expects GDP growth to slow ahead of the 2022 general election, ‘Kenya has a specific history of instability around national elections’, they note.
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They noted that the country’s public finances remain weak due to a combination of structural and administrative issues that have caused the GDP to stagnate in recent years.
“General government revenues have fallen to an estimated 17.5% in the fiscal year ending June 2019 from a recent high of 19% of DP in FY15. Weak tax compliance and expansion of tax exemptions have also hampered revenue growth.”
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With the introduction of an increase in capital gains tax, new excise taxes, and widening of the withholding tax, Fitch says will help to increase revenue but to less than 20% of DP targeted in the FY20.
“Medium-term growth prospects are favourable, supported by an improving business environment and infrastructure development.”
