A significant shift in Kenya’s financial landscape has been announces on January 24, 2025; Moody's upgraded the country's outlook from 'negative' to 'positive,' while reaffirming its Caa1 rating. This rare move means skipping over the 'stable' outlook and it signals a potential easing of liquidity risks and an improvement in debt affordability over time.
The CEO of Moody’s, Rob Fauber, who has been at the wheel since 2021, has a career span of nearly 35 years of experience in business information, finance, and risk management. His management has been the central guide in the agency's assessments of countries like Kenya, which has been facing its share of economic challenges.
In an exclusive interview with TUKO.co.ke, Bernard Njiri, a Senior Research Analyst at the Institute of Public Finance (IPF) Kenya, emphasized the importance of a good credit rating. "A country with a bad rating attracts a high-risk premium that makes borrowing both from the domestic and external markets expensive," he explained. He compared the situation to a bank customer applying for a loan, where factors such as credit history and account health play a crucial role in determining interest rates.
Njiri affirmed that Moody's positive outlook would facilitate easier access to credit for Kenya, both locally and internationally. However, he cautioned that despite this optimistic shift, the country's Caa1 rating still reflects elevated credit risks due to weak debt affordability and high gross financing needs compared to available funding options.
This update marks a hopeful turn for Kenya, but the question still stands - if the country is truly out of the woods regarding credit risk. The declaration from Moody's is a reminder that Kenyans should be alert and take well thought out financial strategies that will be essential in navigating challenges ahead.
@kushconcertseries
