WASHINGTON – The US rating agency Fitch on Friday downgraded Kenya’s credit rating, following its president’s decision to scrap key measures of a controversial finance bill in the face of strong public opposition. 

Kenyan president William Ruto cancelled a raft of planned tax hikes in late June after the rallies that were initially peaceful, held by those opposing the measures, turned violent.

This left more than 20 people dead and the country’s parliament ransacked.

“The downgrade reflects heightened risks to Kenya’s public finances after the government backtracked on revenue measures in the Finance Bill 2024,” the agency stated, adding that the outlook is “stable”.

Fitch’s announcement follows a similar decision last month by Moody’s, another major US ratings agency, which cut Kenya’s debt rating further into junk territory, and warned that the outlook is negative due to the tax hike reversal.

Ruto’s decision to withdraw the controversial tax measures failed to quell the protests, leading him to sack almost his entire 22-person cabinet two weeks later, and replace them with a “broad-based” government, which included four heavyweight opposition politicians.

But despite these steps, Fitch said “the risk of prolonged social unrest remains, significantly complicating the environment for fiscal consolidation, and presenting downside risks to economic activity”. 

– Nampa/ AFP