(Bloomberg) -- S&P Global Ratings downgraded Kenya’s credit score deeper into junk after the government nixed controversial tax hikes meant to address fiscal imbalances.
The credit assessor downgraded Kenya by a notch to B-, six levels into junk and on par with Egypt and El Salvador, according to a Friday statement. S&P kept a stable outlook. The downgrade follows similar cuts by the other two major rating agencies since early July.
“The downgrade reflects our view that Kenya’s medium-term fiscal and debt outlook will deteriorate,” analysts Giulia Filocca and Ravi Bhatia wrote in a report Friday.
S&P forecasts the budget deficit to widen almost two percentage points to 4.3% for the 2025 fiscal year, even as authorities rushed to issue a supplementary budget focused on spending cuts.
The Finance Bill, as the legislation is known, sparked widespread protests against tax hikes on bread, cooking oil, and car ownership, among other items.
The nation still has structurally high external debt and large financing needs, even as external liquidity risks have eased, according to S&P.
S&P’s score is now on par with Fitch Ratings’, which lowered it earlier this month. In July, Moody’s Ratings downgraded the nation to Caa1 and maintained its negative outlook.
©2024 Bloomberg L.P.
