Kenya gets 'moderately high risk' credit rating

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Kenya gets 'moderately high risk' credit rating

In Summary

  • The Bb- rating is reserved for a country with a history of violent changes in leadership, runs a large deficit, has high crime rate and whose significant proportion of its population cannot access all the basic needs.
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By GEORGE OMONDI
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Pan African ratings agency, Agusto & Co, has handed Kenya a ‘moderately high risk’ (Bb-) rating for the next one year citing improved political and revenue outlook.

The category, which is one rank above ‘high risk’, is reserved for a country with a history of violent changes in leadership, runs a large deficit, has high crime rate and whose significant proportion of its population cannot access all the basic needs.

The rating expires next year on September 30.

“The assigned rating reflects the relatively diversified sources of the country’s revenue, especially the huge contribution of income tax receipts to total revenue, its leading position as the hub of the East Africa sub-region as well as the relative stability of the Kenya shilling against major international currencies,” the agency said in a statement on Thursday.

“The rating is however moderated by high deficit to GDP (gross domestic product) ratio, low income per capita as well as the huge foreign currency debt as a percentage of exports.”

READ: Landmines in Kenya's piling debt

According to Agusto & Co., Kenya’s rating is also bolstered by the resolution of the 2017 political crisis and the subsequent improvement in the country’s macroeconomic environment, following the relative instability that trailed the conduct of the last general elections.

It notes that Kenya recorded its lowest real GDP growth of 4. 9 per cent in five years in 2017 on the back of the uncertain political climate, subdued agriculture production and tighter credit environment. The agency projects that Kenya’s economy will trend upward this year with an estimated real GDP growth rate of 5.5 per cent.


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Source: Google News Kenya | Netizen 24 Kenya

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