Fitch Revises Kenya’s Outlook to Stable; Affirms at ‘B+’

A few weeks before the 2017 August 8th elections, Fitch Ratings had affirmed Kenya’s ratings at ‘B+’ and said that the outlook remained negative.

However, in February 2018, the rating agency revised the outlook to Stable from Negative and still affirmed the country’s rating at ‘B+’.

In a review to justify its latest rating stance, Fitch yesterday said Kenya’s public debt/GDP trajectory will stabilise as well as the expected strengthening of GDP growth in 2018, following a year in which the country’s economy faced political and fiscal shocks.

In Fitch’s view, Kenya’s fiscal deficit is likely to narrow following several years of expansionary policy. This shift towards fiscal consolidation will help to stabilise public debt/GDP levels and anchor Kenya’s macroeconomic framework.

Fitch expects that debt/GDP will increase slightly to 59% of GDP in FY18 from 58% at the end of the fiscal year ending June 2017 (FY17), from 40% at end-FY12.

Fitch forecasts Kenya’s general government fiscal deficit to narrow to 7.5% of GDP in FY18, from 8.9% in FY17. The forecast is larger than the 6.5% of GDP target published in the FY18 Budget.