S&P shifts Kenya view to negative

S&P said it revised its outlook on Kenya to negative from stable given the deteriorating fiscal and external outlook and higher debt and interest burdens.

“We expect that the negative economic fallout of the pandemic shock will drive real GDP growth down to 1% in 2020, followed by a rebound to 4% in 2021. The economic shock will also widen Kenya's twin fiscal and external deficits. In particular, we project that in fiscal year 2020 (FY2020; ending June 2020) the general government deficit will widen to 8.7% of GDP, before falling slightly to 7.9% in FY2021. The financing of these deficits in turn will raise external debt levels and increase external vulnerabilities,” S&P said in a press release.

A diversified economic base, including large agricultural and services sectors, should help cushion the economy, the agency said.

At the same time, S&P affirmed its B+ long-term sovereign credit ratings on Kenya.

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