By Ovunc Kutlu
ISTANBUL (AA) - Fitch Ratings announced it downgraded Kenya's long-term foreign currency issuer default rating to B- from B with a stable outlook.
The rating agency said the downgrade reflects heightened risks to Kenya's public finances, the increased risk to political stability and rising domestic debt costs even as authorities embark on expenditure cuts.
Fitch said it sees a moderately greater risk to external financing, partly reflecting elevated external commercial borrowing costs in the context of foreign exchange reserves.
"Violent social protests related to tax hikes in the Finance Bill 2024 and calls for governance reforms have increased socio-political risk," it said in a statement. "President William Ruto has responded by withdrawing the bill, and initiating efforts to form a broad-based government to replace the previous cabinet that was dismissed in July 2024."
"However, we consider the risk of prolonged social unrest remains, significantly complicating the environment for fiscal consolidation and presenting downside risks to economic activity," it added.
Fitch expects Kenya's GDP growth to average 5.4% over 2025-2026 but noted that its rating is constrained by weak governance, rising interest payments, a narrow revenue base and high external indebtedness.