S&P Global Ratings downgraded Kenya’s credit score after the government nixed controversial tax hikes meant to address fiscal imbalances.
The credit assessor downgraded Kenya by a notch to B-, six levels into junk.
Kenya is now at par with Egypt and El Salvador, according to a Friday statement but the former was rather kept at a stable outlook.
The downgrade follows similar cuts by the other two major rating agencies (Fitch and Moody’s) since early July.
“The downgrade reflects our view that Kenya’s medium-term fiscal and debt outlook will deteriorate,” analysts Giulia Filocca and Ravi Bhatia wrote in a report Friday.
S&P forecasts the budget deficit to widen almost two percentage points to 4.3% for the 2025 fiscal year, even as National Treasury rushed to issue a supplementary budget focused on spending cuts.
Also Read:Fitch Downgrades Kenya’s Long-Term Foreign-Currency Rating to B-
Finance Bill Protests
The Finance Bill, 2024 sparked widespread protests against tax hikes on bread, cooking oil, and car ownership, among other items.
Kenya is known for her structurally high external debt and large financing needs, even as external liquidity risks have eased, according to S&P.
S&P’s score is now on par with Fitch Ratings’, which lowered it earlier this month.
In July, Moody’s Ratings downgraded Kenya to Caa1 and maintained its negative outlook.
