Why Moody’s sees erosion risks on Kenya forex reserves

Increased foreign borrowing would pile pressure on dollar demand and hit forex reserves already threatened by high external debt service needs.

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High external debt service needs will strain Kenya’s forex reserve buffers if no new concessional inflows are received, global sovereign credit rating firm Moody’s has warned.

Although the country has a five-month import cover, it said, external loans amortisation of around three percent of the Gross Domestic Product (GDP) could lead to a drawdown on reserves or renewed commercial borrowing in the absence of fresh multilateral funding.

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