Kenya is among six Sub-Saharan Africa (SSA) that are increasingly vulnerable to a financing shocks, credit rating agency Moody's has said.
The study released Tuesday by the New York based agency said although the debt burdens of most Sub-Saharan Africa (SSA) governments will stabilise in 2020-21 after years of increase, several specific countries are increasingly vulnerable to a financing shock.
According to the report, credit risks are highest in countries where unfavourable debt structures coincide with narrow external buffers, financing constraints on domestic banking sectors and weak debt-management capacity.
''The Republic of the Congo, Mozambique and Zambia are most exposed, while Ghana, Angola and Kenya are also vulnerable but to a lesser extent,'' Moody's said.
The report said although those countries have diversified funding sources, fostered investor scrutiny on macro-fiscal policy and provided funding for development spending, increased exposure to global financing conditions, amplified foreign-currency exposures and increased refinancing risk remains a threat.
''Improvements in debt management have not been commensurate to the risks from higher debt levels and debt structures more exposed to financing shocks,'' the report said.
Last week, the agency said Kenya still held an issuer rating of B2 that is supported by its moderate economic strength, which reflects the relative diversification of the economy and high growth rates, despite low wealth levels.
It however said that Kenya's debt burden and poor revenue collection performance; and susceptibility to event risk predominantly stemming from government liquidity risk could pile pressure on the country’s ratings.
Moody's assessments on Kenya marries a similar one released recently by the Intentional Monetary Fund (IMF) which maintained Kenya's debt affordability rating at 'moderate', saying while the country's fiscal restructuring is the right direction, funding is still limited.
The Bretton-Woods institution urged Nairobi to opt for concessional loans to refinance its debt as opposed to commercial credit, which would allow it to stretch maturities.
The financial crunch has seen Kenyan government roll out austerity measures including budget cuts.
Despite slashing expenditure in a supplementary budget effected in November last year, Treasury yesterday announced further cuts in the allocation for development projects to plug a Sh161 billion budget hole, less than four months to the end of financial year.
