Kenya’s score on the credit rating was upgraded to B from a previous B- on August, 22, 2025 by S&P Global, a global credit ratings agency. This upgrade marks a noteworthy advancement in the country’s financial ranking despite the fact that Kenya is experiencing persistent fiscal challenges that could potentially pose a threat to the nation’s capacity to sustain its newly attained status.
The rating agency pointed that the upgrade stemmed from; reduced near-term risks of external liquidity shortages, stronger foreign exchange reserves and steady economic growth. The agency also predicts that Kenya’s firm economic growth coupled with an enhanced liquidity outlook will serve as a safeguard against pressures arising from high interest cost and a slow-moving fiscal consolidation process.
Concerning the fiscal front, Kenya’s February Eurobond deal, which involved a USD 1.5billion issuance paired with a buy back of part of the 2027 notes, remarkably relieved near-term repayment pressures. The Annual Eurobonds repayments were cut to 108 million USD through 2027 reducing roll over risk.
Locally, the Central Bank of Kenya has lowered policy rates by 350 basis points as of August 2025 propelling treasury bills yields down to 8% in July 2025 from a 16% peak the previous year. This reduction has lowered borrowing costs opening space for private sector credit although banks remain vigilant due to a high cost of non-performing loans.
Improved Kenya’s Credit Rating Despite Failed Fiscal Consolidation Efforts
Despite the improved rating, Kenya faces a continuous fiscal strain that has slowed the fiscal consolidation efforts. Consequently, the budget deficit is expected to reach 5.5% of GDP in fiscal year 2026 and 5.2% over fiscals 2026-2028. This will necessitate the government to rely more on expensive domestic borrowing and external financial facilities to finance the shortfalls. Moreover, this mounting pressure to increase debt would project lower ratings.
Kenya’s Credit Rating, Economic Growth Outlook
President William Ruto shared that Kenya’s economic growth for the year will exceed the stated predictions defying the high US tariffs and other huddles. Kenya’s economy is estimated to expand by 5.5% this year, outperforming the finance ministry estimate of 5.3% together with Central Bank’s projection of 5.1%. This year’s economic growth projections reflect an upward trajectory as Kenya saw an economic growth rate of 4.7% in the previous year.
Also Read: Fitch Revises Kenya’s Outlook to Negative
