Kenya's medium-term fiscal consolidation, critical for any potential ratings upgrade and access to more affordable international capital, is likely to get more challenging, Moody's Ratings has warned. The assessment by the global ratings agency issued on Wednesday signals significant headwinds for the Kenyan economy, which is slowing and battling a raft of headwinds.
Kenya's current credit rating from Moody's is Caa1 with a positive outlook.
This indicates a high risk of default, but the positive outlook suggests that Moody's might consider upgrading the rating in the future if certain conditions improve. The credit rating impacts Kenya's borrowing costs and its ability to access international financing.
A lower rating like Caa1 can make it more expensive for Kenya to borrow money internationally. According to Moody's "Issuer In-Depth" report dated July 22, 2025, "Kenya's path to fiscal consolidation remains constrained by weak revenue performance, rigid spending structures, and public resistance to tax increases." The ratings agency notes that while Kenya's debt-to-GDP ratio saw a modest decline to around 66.5 per cent in fiscal year 2025, the fiscal deficit "exceeded target at 5.7 per cent of GDP, highlighting continued fiscal pressures." This suggests the government's current revenue generation and spending patterns are insufficient to significantly reduce its debt burden.
