Global credit rating agency Fitch has reaffirmed Kenya’s sovereign credit rating at ‘B-’ with a stable outlook, pointing to the country’s consistent debt repayment record and a relatively resilient economy compared to regional peers.
In its latest assessment, Fitch said Kenya’s economy remains stronger than many countries in the same rating category and is projected to expand steadily over the coming years. The agency linked the stable outlook to improving foreign exchange reserves, which it said have strengthened Kenya’s ability to service debt and finance imports.
“Stronger foreign-exchange reserves reduce external financing risks, but fiscal policy is hampering prospects for multilateral financing,” Fitch stated.
According to the agency, Kenya’s foreign exchange reserves rose to Ksh1.6 trillion ($12.4 billion) by the end of 2025. Fitch attributed the increase to robust export earnings, a recovery in tourism, steady remittances from Kenyans abroad, and sustained dollar purchases by the Central Bank of Kenya.
Despite the positive indicators, Fitch warned that structural challenges continue to weigh on the country’s credit profile. High debt repayments, governance weaknesses, and political and social pressures are limiting President William Ruto’s administration’s ability to rein in public spending.
“The government’s liability management operations have helped reduce near-term external liquidity risk, but the external debt service burden remains high,” Fitch noted.
The agency acknowledged improvements in Kenya’s capacity to meet external obligations. These include the partial issuance of a Ksh129 billion Eurobond due in 2028, the buyback of a Ksh115 million Eurobond maturing in 2027, and the restructuring of some Chinese loans from US dollars to Chinese yuan, a move that slightly lowered annual debt servicing costs.
Fitch Flags Three Key Risks Facing Kenya
Rising Debt Servicing Pressure
Even with the stable outlook, Fitch warned that Kenya will require substantial funding to meet its external debt obligations, with financing needs expected to rise sharply from 2026.
“Government external debt service, including amortisation plus interest, after the buybacks of Eurobonds, is expected to rise in the financial year ending June 2026,” the agency said.
“Government external debt service will rise back above $5 billion in the 2028–2030 financial years, keeping gross external financing needs high,” it added.
Revenue Collection Shortfalls
Fitch also raised concerns over Kenya’s persistent revenue underperformance. The agency projects government revenue to reach 17.2 per cent of GDP in FY26, falling short of official targets.
“Fitch expects revenue shortfalls in FY26, consistent with Kenya’s record of underperformance and structural weaknesses in public financial management, including the government’s limited capacity to raise taxes,” the agency said.
Uncertainty Over IMF and World Bank Funding
Fitch further noted that it does not expect Kenya to operate under an International Monetary Fund (IMF) programme in the 2026 financial year. The agency also expressed uncertainty over Kenya’s ability to meet reform requirements tied to World Bank financing.
“Uncertainty over meeting reform criteria under the World Bank’s Development Policy Operation programme could delay the disbursements,” Fitch said.
While Fitch’s decision signals confidence in Kenya’s short-term stability, the agency made it clear that sustained fiscal discipline, improved revenue mobilisation, and progress on governance reforms will be critical to strengthening the country’s credit outlook in the years ahead.
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