CS Mbandi Faults Sovereign Credit Ratings: Wants Review Amid Economic and Political Stability

By Mwakwaya Raymond & Mbungu Harrison

Email, thecoastnewspaper@gmail.com

Finance cabinet secretary John Mbadi has called for a re-evaluation of Kenya’s sovereign credit rating arguing that recent economic progress and political stability warrant a more favorable assessment from international rating agencies.

Speaking during the National Workshop on Sovereign Credit Ratings in Mombasa, the CS emphasized that Kenya’s creditworthiness should reflect its resilient economic fundamentals rather than being anchored in past political unrest.

“Sometimes we feel there is unfairness in the credit rating against us. Kenya has proved beyond reasonable doubt that it is a resilient economy, Political unrests should not be the basis for risk assessments. Instead, evaluators should consider broader indicators, especially our economic growth.”

According to him Kenya’s economy recorded a 5% growth in the second quarter of 2025, an uptick from the 4.9% average in 2024, with projections pointing to 5.3% growth by the end of 2025 and into 2026.

Inflation has remained under control, with the rate easing from 4.3% in July 2024 to 4.1% in July 2025, before rising slightly to 4.6% in September 2025.

This, Mbadi said, was due to a mix of tight monetary policy, declining energy prices, and eased food costs.

The Central Bank of Kenya (CBK) has also moved to ease monetary pressure by gradually lowering the central bank rate (CBR) from 13% in July 2024 to 9.5% in August 2025, a move expected to stimulate credit growth and private investment.

The Treasury projects revenues of Ksh3.32 trillion (17.2% of GDP) for the 2025/2026 financial year with ordinary revenues accounting for Ksh 2.75 trillion (14.3% of GDP). 

Expenditures are expected to reach Ksh 4.27 trillion, resulting in a fiscal deficit of Ksh 901 billion (4.7% of GDP).

Kenya’s public debt stood at Ksh11.7 trillion by the end of June 2025, representing 67.8% of GDP, with 46.1% being external debt and 53.9% domestic.

However, the CS noted that the debt-to-GDP ratio is on track to decline to 55±5% of GDP in present value terms by 2030 in line with medium-term fiscal consolidation strategies.

The Treasury also reported that private sector credit has rebounded, growing by 3.3% in July 2025, compared to a contraction of -2.9% in January 2025.

Additionally, the Kenya shilling has remained relatively stable, trading between 128-130 to the US dollar since early 2024.

Mbadi highlighted that economic recovery and macroeconomic stability have enhanced investor confidence leading to increased foreign direct investment (FDI) and renewed activity on the Nairobi Securities Exchange (NSE).

“The stability in exchange rates, the easing inflation, and the overall economic performance have created an environment conducive to investment, this is the kind of progress that must be reflected in our sovereign ratings.”

The CS stressed the importance of transparent and coordinated engagement with credit rating agencies, emphasizing the need for clear communication, acknowledgement of risks, and presentation of credible reforms.

“Effective engagement with ratings agencies requires transparent, consistent communication and strong coordination, rating defense demands a well-prepared narrative one that acknowledges risks, outlines responses, and highlights ongoing reforms,” he said.

Kenya Revenue Authority (KRA) chairperson Ndiritu Muriithi said that Kenya remains politically stable and should not be subjected to unfair credit ratings due to external misperceptions about its political environment.

“Kenya has demonstrated resilience, and the conversation around credit ratings should be led by analysts who understand Africa deeply and have an intimate grasp of the Kenyan economy,” he said.

His remarks were echoed by Sam Omukoko, founder of Metropol, who emphasized the need for inclusive dialogue among all stakeholders to ensure fairness in the credit rating process.

“There must be thorough research to address the recurring concerns that influence credit ratings. While rating agencies have quantitative criteria, there are also subjective elements tied to institutional frameworks. It’s important that entities seeking ratings meet set standards, but there must also be room for consultation,” he noted.

UNDP Kenya Resident Representative Jean-Luc Stalon also weighed in, stating that Kenya, as one of the region’s major economies, deserves an accurate and fair credit rating.

“The UNDP is committed to facilitating these conversations to ensure that Kenya secures the investment it needs and fully realizes its development potential,” he said.

The meeting brings together Ministry of National Treasury & Economic Planning, in collaboration with the United Nations Development Programme (UNDP), AfriCatalyst, and the African Peer Review Mechanism (APRM).

Other members present include the United Nations Economic Commission for Africa (UNECA), and the African Center for Economic Transformation (ACET).

Organized under the Africa Credit Ratings Initiative, a joint initiative between UNDP and AfriCatalyst, the workshop brings together government institutions, private sector leaders, development partners, and technical experts.

Its aim is to strengthen Kenya’s engagement with international credit rating agencies, enhance institutional frameworks, and build institutional capacity towards the establishment of a national inter-agency credit ratings coordination committee.