Kenya is among developing countries facing an economic crisis, according to a report released by Moody’s Investors Service.
Moody’s, is an international financial firm that provides investors with credit ratings, risk analysis, and research for stocks, bonds, and government entities.
The survey, analysed and reported by Reuters, indicated that Kenya, Egypt, Tunisia, Ghana and other African countries are experiencing financial crises, as evidenced by traditional warning indicators.
Collapsing currencies caused by an almost depleted foreign exchange reserve were said to partly be part of the economic crisis, especially in Kenya.
David Rogovic, vice president and senior analyst at Moody’s Investors Service, stated that the quantity of debt owed compared to reserves and the fiscal difficulties Kenya is facing in managing debt loads make it vulnerable.
“These countries are the most vulnerable just because of the amount of debt coming due relative to reserves, and the fiscal challenges in terms of stabilising debt burdens.”
Kenya was reported to be spending almost 30 per cent of its income on interest payments.
Since it now lacks access to financing markets and has bonds worth over half a billion dollars that mature in 2024, Reuters noted that this situation is problematic.
Two weeks ago, Fitch, an international credit rating firm, also raised similar concerns noting that Kenya’s debt profile was at B+ which is a negative outlook.
This suggests Kenya may default on its loans or fail to honour its borrowing agreements.
The US Fed rate increase, a strong dollar, and high inflation, according to the agency, will make financial conditions difficult.
However, the rating agency indicated that Kenya’s grade was underpinned by a history of rapid growth and comparatively stable macroeconomic conditions.
Given that dollar payments make up 70 per cent of Kenya’s external debt, Fitch warned that the currency devaluation that has seen the shilling drop 3.6 per cent versus the US dollar could put additional strain on the country’s ability to repay its debt.
Source-https://www.kenyans.co.ke/
US Financial Firm Warns About Kenya Economic Crisis-Debt Owed
