The Kenyan Treasury warns of a recent drop in credit ratings

Kenya’s National Treasury stated on Monday that the country’s capacity to obtain commercial loans from a variety of credit sources has been severely hampered by the recent lowering of its credit rating.

In Nairobi, the capital of Kenya, the Treasury announced its 2025 Public Debt Management Strategy. “Rating downgrades lead to increased borrowing costs, limiting access to credit markets, low investor confidence, currency depreciation, and debt sustainability risk,” the Treasury stated.

Due to deteriorating fiscal consolidation and rising governmental debt, the international credit rating agency Standard & Poor’s lowered Kenya’s long-term sovereign credit rating from B to B- in August 2024.

Kenya’s public debt, according to the National Treasury, is still manageable but faces a high risk of financial distress since it represents 63 percent of GDP, which is higher than the benchmark debt level of 55 percent.

According to the organization, until November 1, 2028, the present value of the public debt must be brought inside the barrier.

Additionally, the company stated that because of the downgrading, it plans to borrow 25% of its gross borrowing from outside sources and 75% from the domestic market at that time.