Kenya’s near term debt default risk has declined. This is according to Moody’s Rating of B3 which additionally changes the country’s outlook to stable.
In a press statement, Moody’s says the changes have been attributed to strengthening external liquidity, based on a higher foreign exchange reserves.
“Kenya has returned to the external bond market and used the proceeds to execute liability management operations that smooth the external maturity profile and reduce near-term refinancing risks,” the agency says.
It also credits the stable outlook rating to a narrower account deficit, and a more stable exchange rate.
On the flip side, the agency is still cautious of weak debt affordability and limited progress in fiscal consolidation. This it says reflects of a high domestic borrowing costs, political and social constrains that hinder durable reduction in the fiscal deficit.
“As a result, large fiscal deficit heightens Kenya’s sensitivity to changes in financing conditions”, it adds.
The outlook comes only days after President William Ruto hailed National Treasury Cabinet Secretary John Mbadi for steadying Kenya’s economic ship.