Moody's pushes Kenya's rating deeper into junk
Adds details from Moody's report in last three paragraphs, background about planned tax hikes
July 8 (Reuters) -Moody's cut Kenya's sovereign rating deeper into junk territory on Monday, citing diminished capacity to implement a fiscal consolidation strategy to contain its debt burden.
The credit ratings agency downgraded the country's local- and foreign-currency long-term issuer ratings and foreign-currency senior unsecured debt ratings to "Caa1" from "B3".
In June, Kenyan President Willian Ruto withdrew planned tax hikes in response to mass protests that turned deadly, killing at least 24 people.
The scrapped finance bill contained measures intended to aid the government's aim to raise $2.7 billion in additional taxes to reduce budget deficit and state borrowing.
In order to compensate for the withdrawn finance bill, Ruto's administration has proposed cuts in spending.
Moody's said that while the spending cuts should narrow fiscal deficit, it would be at a more gradual pace than previously assumed, and as a result expect Kenya's debt affordability to remain weaker for longer.
"In the context of heightened social tensions, we do not expect the government to be able to introduce significant revenue-raising measures in the foreseeable future," the ratings agency said.
Moody's affirmed its 'negative' outlook for Kenya, stating that the larger fiscal deficits will push up borrowing requirements and subsequently increase government liquidity risks.
Reporting by Raechel Thankam Job; Editing by Maju Samuel
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
