Fitch Ratings has affirmed Kenya's long-term foreign currency issuer default rating (IDR) at B+ and its local currency IDR at BB- with a stable outlook, the global ratings agency said in a statement. It noted that the rating is supported by the country’s diversified economy, which relies more on manufacturing and services and that results in more diversified and less commodity dependent exports compared to African peers. A more developed banking system and deeper domestic capital markets enable the government to raise half of its funds domestically.
On the other hand, the rating has been constrained by low GDP per capita, weak business environment and human development, and also by worsening governance in recent years.
Fitch forecast Kenya’s economic growth to speed up to 6% by 2015 from an average of 3.8% over the past five years. GDP growth may be even higher, depending on infrastructure investment, the development of the oil sector and a recovery in domestic demand following March 2013’s peaceful elections. The agency does not expect a dramatic rise in the country’s government debt-to-GDP ratio over the medium term. The ratio has increased to 50.3% as a result of an expansionary fiscal policy and a widening budget deficit over the past three years.
Fitch noted also that Kenya's widening current account deficit, which reached 10.9% of GDP in 2012, reflects deteriorating external and domestic competitiveness, which has hampered the expansion of its export base.
Fitch affirmed Kenya's short-term rating at B and country ceiling at BB-.
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