Moody's, a global credit rating agency, upgraded Kenya's outlook to "positive" from "negative," citing potential easing of liquidity risks and improved debt affordability.
"Given low inflation and a stable exchange rate, there is potential for further reductions in domestic borrowing costs as past monetary policy rate cuts pass through to lower long-term borrowing costs," Moody's said.
Moody's stated that a new IMF program would boost Kenya's external financing, while other creditors like the World Bank would remain important sources of funding. Despite this, Moody's affirmed Kenya's "Caa1" rating, citing ongoing high credit risks due to weak debt affordability and high financing needs.
Kenya has faced heavy debt and sought new financing since last year due to protests against tax hikes. However, domestic financing costs have begun to fall with monetary easing, which could continue if the government manages fiscal consolidation, potentially opening up external funding.