Thursday, August 29, 2024 – Kenyans are now deeply concerned about their country's future after the U.S. agency S&P followed Fitch and Moody's in downgrading Kenya's credit rating from ‘B’ to ‘B-’.
The downgrading decision points
to the financial challenges facing Kenya, raising significant concerns about
the country’s future economic stability and debt management.
The ratings cut is a direct
response to President William Ruto’s decision to abandon the Finance Bill,
which aimed to generate Ksh346 billion through new taxes after protests by the
Gen Zs and deaths as a result of those protests.
S&P's downgrade indicates a
growing skepticism about Kenya's ability to stabilise its economy in the medium
term.
"The downgrade reflects our
view that Kenya's medium-term fiscal and debt outlook will deteriorate
following the government's decision to rescind all tax measures proposed under
the 2024/2025 Finance Bill," S&P stated in its release.
The downgrades have put Kenya
under intense international scrutiny, raising alarms about the government’s
fiscal management and its capacity to service its substantial debt load.
This comes at a time when the
government has revised its budget for the 2024/25 financial year, cutting
spending and increasing its local borrowing target to cover the wider fiscal
deficit.
Kenya’s economic woes are
further exacerbated by its heavy reliance on external financing, particularly
from institutions like the International Monetary Fund (IMF) and the World
Bank.
The downgrades by S&P, Fitch, and Moody’s collectively paint a picture of a nation on the brink of a fiscal crisis.
With rising borrowing costs and a limited capacity to introduce
new revenue measures, Kenya’s path to economic recovery appears increasingly
uncertain.
The Kenyan DAILY POST
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