An extended political stand-off may hit Kenya’s economy and trigger a downgrade of its credit scores, global rating agency Standard & Poor’s has warned.
The warning came in spite of the agency’s affirmation that Kenya’s short- and long-term foreign and local currency sovereign credit ratings at “B+/B” with a stable outlook on strong external position and monetary policy flexibility.
“The stable outlook reflects our expectation that strong growth prospects will facilitate fiscal consolidation and contain increases in external debt over the next year, against a backdrop of uncertainty surrounding the forthcoming presidential election re-run,” S&P said in its latest assessment on Kenya.
It added: “We could lower the ratings if political tensions flared up and undermined Kenya’s stability-oriented economic policy-making, if fiscal consolidation were markedly slower”.
The country is going through a political uncertainty ahead of the repeat presidential elections scheduled for October 26.
“We could also lower the ratings if the new presidential election leads to a significant rise in tensions.” But it could raise Kenya’s credit rating should there be stability.
Kenya’s economy remains under a direct threat from high government fiscal deficits and debt, it warned.
“While Kenya’s current account deficits are declining, financing that is increasingly geared toward external debt could create a vulnerable external position.”