This archive report was first published on 8 May 2020.
Moody's Investors Service has downgraded Kenya's credit rating to negative from stable, citing the country's huge borrowing requirements and debt structure.
According to Moody's, Kenya's fiscal health is deteriorating due to the COVID-19 pandemic, which has significantly reduced growth, created fiscal and external financing needs, and impacted nearly all facets of the economy.
The agency notes that Kenya's debt structure exposes its fiscal metrics to exchange rate and interest rate shocks, making it vulnerable to financial pressures.
Moody's negative rating follows closely from a recent deal reached between Nairobi and the IMF Executive Board for disbursement of $739 million to assist in dealing with the impacts of the COVID-19 pandemic.
IMF Deputy Managing Director and Acting Chair, Mr. Tao Zhang, said, 'The COVID-19 pandemic has delivered a large economic shock to Kenya. The pandemic has impacted nearly all facets of the economy—particularly tourism, transport, and trade—and led to urgent balance of payments and fiscal financing needs.'
Senior advisor at the Saudi Arabian Monetary Authority, Mr. Mohammed Wehliye, warns that the rating agencies may increase Kenya's risk of defaulting on debt repayments from moderate to high next week.
Professionals have differed on the status of credit rating, with some asking whether it is non-investment grade, high yield, speculative or junk.
