Global credit and sovereign rating agency, Fitch Ratings has affirmed Kenya's credit rating at B- with a Stable Outlook, citing improved near-term external liquidity after a sharp rebuild in foreign-exchange reserves and recent liability management operations, while warning that fiscal stress and high debt service continue to constrain the credit profile.
- •Fitch estimates gross FX reserves rose to KSh 1.60 trillion (US$ 12.4 billion) at end of 2025, supported by portfolio inflows, official loans, exports, tourism receipts, remittances, and recent central bank FX purchases.
- •Although the agency expects the current account deficit to widen to 2.6% of GDP in 2026 from an estimated 2.3% in 2025 due to higher imports and external interest costs, it projects reserves will still cover about four months of current external payments in 2026.
- •The agency also affirmed Kenya’s country ceiling at B, one notch above the sovereign rating, and affirmed senior unsecured debt at B- with a Recovery Rating of RR4.
External liquidity pressures eased after Kenya partly refinanced the KSh 129.0 billion (US$ 1.0 billion) 2028 Eurobond in October 2025 and the KSh 116.1 billion (US$ 0.9 billion) 2027 Eurobond in February 2025. Authorities also converted part of Export-Import Bank of China US-dollar debt into renminbi-denominated liabilities and renegotiated terms, generating savings of about 0.1% of GDP per year. Fitch said these steps reduced near-term refinancing risk but did not materially alter the longer-term debt burden.
Government external debt service, including amortisation and interest, is projected to rise to KSh 684.0 billion (US$ 5.3 billion) in FY26, equivalent to 3.7% of GDP, from about KSh 645.0 billion (US$ 5.0 billion) in FY25. Fitch expects debt service to moderate to KSh 580.5 billion (US$ 4.5 billion) in FY27 before climbing back above KSh 645.0 billion (US$ 5.0 billion) in FY28–FY30, keeping gross external financing needs elevated.
Fiscal performance remains the main drag on the rating. Fitch forecasts a FY26 deficit of 5.8% of GDP, well above the 4.7% budget target and the B median of 3.5%, following a FY25 slippage of 2.6 percentage points versus the initial budget plan. In the first half of FY26, Fitch estimates spending exceeded target by 0.6% of projected GDP, while revenue collection undershot target by 0.9% of projected GDP. Total revenue is forecast at 17.2% of GDP in FY26, below both the government’s 17.4% target and the B median of 18.7%.
Fitch also expects the deficit to be financed with greater reliance on domestic borrowing, limiting the pace of yield declines despite expectations of lower policy rates. Externally, Kenya plans to raise nearly KSh 774.0 billion (US$ 6.0 billion) in FY26, about 4% of GDP, through a mix of official and commercial borrowing, with roughly one-third expected on concessional terms from the World Bank and African Development Bank. Fitch does not expect an IMF programme in FY26 and flagged uncertainty around World Bank Development Policy Operation disbursements, increasing the risk of heavier commercial funding.
Debt affordability remains stretched with the interest-to-revenue ratio is expected to moderate slightly in FY26–FY27 after peaking at 33.8% in FY25 but remain above 30%, around double the B median of 16%. Fitch forecasts general government debt, including fuel levy securitization equivalent to 0.8% of GDP, edges down to 68.6% of GDP by FY27, still well above the B median of 54.7%. The share of foreign-currency-denominated debt fell to 46% at end-FY25, easing exchange-rate risk but keeping interest costs elevated.
The country ceiling affirmation extends a stabilization phase following a downgrade from B to B- in August 2024, after the sovereign had held at B+ through 2021 and B in 2022–2023. Any upgrade, Fitch said, would depend on sustained fiscal consolidation and a durable strengthening of external buffers.
