Global Credit rating agency Fitch has revised Kenya’s outlook from negative to stable affirming the country’s rating at B+. Kenya overcame Political and Fiscal shocks to achieve a stable outlook on its Long-Term Foreign and Local-Currency Issuer Default Rating says the agency.
This gives a clear indication that Kenya is effectively implementing its fiscal consolidation plans and decline of government debt to GDP.
Fitch also forecasts Kenya’s general government fiscal deficit to narrow to 7.5 per cent of GDP in financial year 2018, from 8.9 per cent reported in financial year 2017.
“This shift towards fiscal consolidation will help to stabilize public debt/GDP levels and anchor Kenya’s macroeconomic framework,” Jermaine Leonard Fitch Rating Analyst
The country got to the negative outlook following increased capital expenditure and government borrowing in support of large infrastructure projects under Kenya Vision 2030.
The report also shows that the country is on the right track on implementing structural reforms that foster an improved business environment and faster economic growth.
The forecast is larger than the 6.5 per cent of GDP target published in the 2018 fiscal year Budget to reflect revenue under-performance and a number of one-off expenditure overruns, including food imports and election-related spending.
The B+ rating further exhibits Kenya strong macroeconomic stability, which will be supportive of its medium-term growth outlook.
Banks will need stronger evidence of a negative impact on the population before convincing Parliament to repeal or amend the cap.