Representatives from the United Nations Development Programme (UNDP), global credit rating agencies, and development partners have held a high-level workshop with Cabinet Secretary for Finance and Economic Planning, John Mbadi, to deliberate on how African countries can attain fairer credit ratings in the global financial system.
CS Mbadi underscored Kenya’s solid economic performance, noting that the country continues to enjoy a stable macro-economic environment supportive of growth.
“In the second quarter of 2025, our economy grew by 5%, up from an average of 4.9% in 2024, and is projected to rise further to *5.3% by the end of 2025 and into 2026,” he stated.
He attributed the improved performance to prudent fiscal management and easing inflationary pressures, noting that inflation had eased from 4.3% in July 2024 to 4.1% in July 2025, and stood at 4.6% in September 2025—driven by lower energy prices, easing food costs, and tight monetary policy.
Consequently, the Central Bank of Kenya (CBK) has gradually eased its policy stance, lowering the Central Bank Rate (CBR) from 13% in July 2024 to 9.5% in August 2025, in line with the improving macroeconomic outlook.
In the 2025/2026 financial year, total revenues are projected at KSh 3.32 trillion (17.2% of GDP), with ordinary revenue accounting for KSh 2.75 trillion (14.3% of GDP). Expenditures are estimated at KSh 4.27 trillion (22.2% of GDP), leaving a fiscal deficit of KSh 901 billion (4.7% of GDP).
As of June 2025, Kenya’s public debt stock stood at KSh 11.7 trillion (67.8% of GDP) — composed of 46.1% external debt and 53.9% domestic debt. Mbadi said government consolidation efforts aim to reduce the debt-to-GDP ratio to the anchor target of 55±5% by 2030.
Mbadi emphasized that economic recovery, exchange rate stability, and sustained macroeconomic discipline have strengthened investor confidence, fueling Foreign Direct Investment (FDI) inflows and renewed activity at the Nairobi Securities Exchange (NSE).
“If ever there was a ripe time for this conversation, it is now. Credit ratings shape development finance and are a vital part of the financial development ecosystem,” Mbadi noted.
He added that a stronger sovereign credit rating would act as a catalyst for economic transformation, lowering borrowing costs and widening access to international capital markets.
The Cabinet Secretary highlighted the need for transparent and consistent engagement with global credit rating agencies to ensure African economies receive fair and contextual evaluations.
“Effective engagement requires open communication, strong coordination, and a credible narrative that acknowledges risks while outlining tangible reforms,” he said.
Mbadi urged stakeholders — including policymakers, investors, and development partners — to work in concert to enhance Kenya’s sovereign credit profile.
The CS pointed out that Kenya’s revenue-to-GDP ratio, which averaged 15–17% over the past five years, dipped to 13.1% in 2020 due to the COVID-19 pandemic before recovering to 14.4% in 2023.
However, he noted that the figure still lags behind the Medium-Term Revenue Strategy target of 20% and the East African Community (EAC) aspiration of 27%.
“Increasing the ratio is not simply a fiscal exercise — it’s a national development imperative. We must broaden the tax base, enhance compliance, and maintain a fair, predictable, and growth-friendly tax regime,” Mbadi emphasized.
Kenya’s current sovereign ratings stand at B/B-/Caa1 (Negative) from S&P, Fitch, and Moody’s, respectively — a position that has historically translated to higher borrowing costs.
Nonetheless, recent credit rating improvements reflect Kenya’s deliberate fiscal and policy reforms — including the 2025 Finance Act, which enhanced tax compliance and signaled fiscal credibility. These steps have bolstered investor confidence and reaffirmed Kenya’s commitment to responsible and transparent economic management.
“The recent upgrade demonstrates that fairer assessments can lower borrowing costs, freeing up resources for critical investments in infrastructure, agriculture, and climate resilience,” Mbadi concluded.
As global development financing tightens, Kenya is positioning itself to compete strategically on international capital markets, strengthen domestic resource mobilization, and ensure that every shilling delivers maximum value to its citizens.
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