Fitch Ratings has affirmed Kenya’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating at ‘B-’ with a Stable Outlook, citing the country’s solid medium-term growth prospects, relatively diversified economy and a strengthening external liquidity position.
In a statement on Friday, the global rating agency said the rating reflects Kenya’s resilience compared with peers, underpinned by rising official foreign-exchange reserves and proactive debt-management measures.
“These strengths are balanced against weak governance indicators relative to peers, including risks to social stability and public security, high debt-servicing costs, and fiscal consolidation constrained by a large informal sector alongside political and social challenges,” Fitch said.
Fitch noted that stronger foreign-exchange reserves have helped reduce external financing risks, even as fiscal policy challenges continue to weigh on prospects for multilateral financing.
The agency added that government liability-management operations have lowered near-term external liquidity pressures, although the overall external debt-service burden remains elevated.
External liquidity pressures have eased in recent months, supported by the build-up of FX reserves and active refinancing efforts. Kenyan authorities partially refinanced the $1 billion Eurobond due in 2028 in October 2025 and the $900 million Eurobond maturing in 2027 in February 2025.
The government also converted part of its US dollar-denominated debt owed to China’s Export-Import Bank into renminbi-denominated liabilities and renegotiated repayment terms, generating estimated savings of about 0.1 percent of GDP per year.
Fitch estimates that gross foreign-exchange reserves rose to $12.4 billion at end-2025, supported by higher portfolio inflows and official loans, alongside strong export earnings, tourism receipts, remittances and recent central bank FX purchases.
The agency projects that Kenya’s current account deficit will widen to 2.6 percent of GDP in 2026, from an estimated 2.3 percent in 2025, driven by higher imports and rising external interest costs.
Despite this, Fitch expects FX reserves to cover around four months of current external payments in 2026, supported by modest capital inflows.
Government external debt service—covering amortisation and interest—is forecast to rise to $5.3 billion (3.7 percent of GDP) in the financial year ending June 2026, up from about $5.0 billion in 2025, before easing to $4.5 billion (2.9 percent of GDP) in full-year 2027.
However, Fitch cautioned that external debt service is expected to climb back above $5 billion annually between 2028 and 2030, keeping Kenya’s gross external financing needs elevated over the medium term.
