Fitch downgrades Kenya after policy reversal

Global credit ratings agency Fitch downgraded Kenya’s sovereign rating to “B-” from “B” on Friday, citing heightened risks to the East African country’s public finances after the government backtracked on key revenue measures following protests.

Bowing to pressure from protesters, the Kenyan government had to withdraw its 2024-25 tax plan in June to raise $2.7 billion more in revenue. The plan was recommended by the International Monetary Fund (IMF) to address fiscal imbalances.

Fitch said the risk of prolonged social unrest remains, significantly complicating the environment for fiscal consolidation.

The agency also expects some challenges for Kenya in securing external financing, partly due to high borrowing costs on the back of low foreign exchange reserves. Rival ratings agency Moody’s last month downgraded Kenya’s credit rating further into junk status, while S&P will wait until August 23 to make any key rating change.