adminKenya’s credit rating was recently downgraded by the data intelligence firm, Moody’s. This slash is a result of the recent Kenyan protest that coerced its Government into halting its plans to raise more than US$2 billion in new taxes.
The protest which turned deadly saw the loss of Kenyan lives and immense social tension within the East African country. This denotes that the government would probably not be suggesting any bold fiscal policies soon.
Moody’s lowered Kenya’s rating from B3 to Caa1, reflecting diminished capacity for fiscal consolidation.
A Bloomberg report revealed Moody’s updated evaluation of Kenya’s credit rating. The intelligence agency maintained its negative assessment of Kenya’s debt and lowered the country’s rating from B3 to Caa1.
According to a statement issued by Moody, it is unlikely that the Kenyan government would implement any major policy to curtail this issue given the lingering social tension from the protest.
“The downgrade of Kenya’s rating reflects significantly diminished capacity to implement revenue-based fiscal consolidation that would improve debt affordability and place debt on a downward trend,” Moody’s stated.
Kenya’s dollar bonds declined, with the 2031, 2032, and 2048 notes ranking among the 20 worst performances in developing countries. The 2031 notes fell 0,6 cents against the dollar, reaching 96,78 cents.
The yield on bonds increased for the first time in six days, soaring 11 basis points to 10,52 percent at 10:53 a.m. in Nairobi, according to Bloomberg data.
Moody’s noted that the revised projections still imply a reduction in the budget deficit through spending cutbacks, although at a slower rate than originally assumed.
“As a result, we now expect the fiscal deficit to narrow more slowly, with Kenya’s debt affordability remaining weaker for longer,” the intelligence agency stated.
In the past few weeks, the protest in Kenya against the new tax bill introduced by President Ruto spiralled out of control. — Business Insider Africa
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