Global rating agency Standard & Poor’s (S&P) has upgraded Kenya’s sovereign credit rating, citing reduced external liquidity risks and improved economic resilience. The upgrade, announced on Friday, August 22, marks a reversal from last year’s downgrade and signals growing confidence in the country’s ability to manage its financial obligations.
According to S&P, Kenya’s stable outlook is anchored on robust export earnings, strong diaspora remittances, and a narrowing current account deficit. The inflows have helped shore up foreign exchange reserves, easing pressure on external balances and strengthening the shilling’s position.
The agency noted that Kenya’s Eurobond repayments, spread gradually over the 2025–2027 period, remain manageable, thanks in part to debt liability management operations carried out earlier this year. In addition, recent monetary easing has lowered domestic yields and boosted credit growth in the private sector, further supporting economic activity.
“The stable outlook reflects our view that Kenya’s robust growth and reduced near-term external liquidity risks balance still-high interest costs and challenges in consolidating the government’s fiscal position,” S&P stated.
The positive reassessment comes less than a year after S&P downgraded Kenya’s rating from “B” to “B-” in 2024, following the government’s decision to abandon the contentious Finance Bill 2024. The Bill, which aimed to raise Ksh346 billion in new taxes, was withdrawn by President William Ruto after nationwide protests turned deadly, leaving dozens killed and many injured. The downgrade at the time reflected concerns over Kenya’s debt sustainability and fiscal management in the absence of new revenue measures.
The abandoned tax proposals were tied to an International Monetary Fund (IMF)-backed programme designed to help Kenya rein in its debt burden. While the failure to implement the plan raised fears about fiscal deterioration, S&P’s latest outlook suggests that external factors including resilient exports and steady remittances have temporarily offset those risks.
Still, the agency cautioned that high interest costs and fiscal consolidation challenges remain critical risks. Sustained economic growth, coupled with prudent debt management, will be key in maintaining Kenya’s improved credit standing going forward.
