This archive report was first published on 20 April 2020.
Kenya's economy is facing significant challenges, with the country's GDP growth expected to slow down to 3.5 percent in 2020. According to a recent credit rating report, the decline is attributed to the COVID-19 pandemic, locust invasion, and pressure on agricultural exports and tourism activities.
Published on April 20, 2020, the report by Agusto & Company Limited, a leading Pan-African credit rating agency, has given Kenya a 'B+' sovereign credit rating. The report highlights several key factors that contribute to this rating, including persistent fiscal slippages by the Government, rising budget deficit to GDP ratio, and high-risk debt distress.
Kenya has consistently missed its revenue target by at least 8 percent since the 2014/15 fiscal year, and the country's fiscal deficit for the 2019/20 budget cycle is expected to remain well above the Government's 5.1 percent target and the East African Community convergence benchmark of 3 percent.
According to Ikechukwu Iheagwam, Country Manager at Agusto & Company Limited, 'Fueled with these economic factors, we expect Kenya's debt-service to revenue in 2020 to be twice the recommended 30 percent threshold by the International Monetary Fund (IMF), which will put a strain on planned development expenditure and the country's ability to fight COVID-19 should there be a widespread outbreak in the country.'
The report also notes that Kenya's 2019 US$8.7 billion foreign reserve represents 5.5 months import cover, which is expected to remain about the same level as receipts of foreign currency loans from international lenders.
