Global credit rating agency Moody’s has pointed out high and rising government debt and declining revenue as key factors that weaken Kenyas credit profile.
The firm has since February this year maintained Kenya’s credit scores at B2 stable after putting its earlier score of B1 on downgrade review in October last year.
In an annual credit analysis report released on Tuesday, the agency also reported low institutional growth as a challenge to a positive credit profile.
The low institutional strength stems from Kenya's low ranking on the Worldwide Governance Indicators.
"The government debt burden has increased consistently and we expect it to reach 60 per cent of GDP over the medium-term," said Lucie Villa, senior credit officer and co-author of the report.
Kenya is expected to start servicing the first trench of Sh280 billion Eurobond taken in 2014 in June next year. The first five-year tranche expected to cost taxpayers Sh97.71 billion with the second 10-year trench of Sh400 billion maturing in 2024.
Moody's expects Kenya's growth rate to return to its long-term average of around 6 per cent in the medium-term thanks to a recovery in business and investor confidence and the fading effects of the drought.
