The US rating agency S&P has downgraded Kenya’s credit rating, citing President William Ruto’s decision to repeal a controversial financial law following deadly protests.
“S&P Global Ratings has downgraded its long-term sovereign rating for Kenya from B to B-,” the rating agency said on Friday.
“The downgrade reflects our view that Kenya’s medium-term fiscal and debt outlook will deteriorate following the government’s decision to withdraw all fiscal measures proposed in the 2024/2025 Finance Bill,” it said in a statement.
The agency gave its outlook as “stable” and pointed to the expectation of “strong economic growth and continued access to concessional external financing”.
However, the statement goes on to say: “Kenya’s structurally high external imbalance remains a key vulnerability.”
Ruto reversed the unpopular tax increases after initially peaceful youth-led nationwide demonstrations turned violent, leaving more than 60 people dead, according to Kenyan human rights groups.
The demonstrations triggered the worst crisis of his presidency, forcing Ruto to promise cuts in public spending and subsequently sacking almost his entire cabinet. Although physical protests have largely stopped, many young Kenyans continue to demand his resignation online.
Ruto’s government is still grappling with the country’s $78 billion debt. The finance minister indicated earlier this month that the government intends to raise about $1.2 billion by reinstating some unpopular taxes included in the abandoned 2024 finance bill.
S&P’s announcement follows the decision by US agency Fitch earlier this month to also downgrade Kenya’s credit rating. Moody’s had also downgraded the country’s credit rating in July, pushing it further into junk territory.
