A rapid build-up of public debt in the past five years has put the Kenyan economy at the risk of turbulence, global ratings agency Moody’s warned on Monday.
The agency said the growing debt burdens of Kenya, Tanzania, Rwanda and Uganda is weighing down on their fiscal strength and credit quality.
The economies will increasingly be tested in the coming years with deteriorating affordability, increasing reliance on non-concessional financing and exchange rate risk.
“Increasing debt burdens and deteriorating debt affordability, even when linked with public investment aimed at enhancing growth and generating foreign exchange to service outstanding debt, constrain fiscal space and weigh on our overall assessment of credit quality," said David Rogovic, a Moody's assistant vice president—analyst and co-author of the report.
Moody’s warning comes at a time when mounting debt has dominated public discourse in Kenya and after several think-tanks and experts expressed similar sentiments in recent months.
“Their ability to contain any further rise in debt burdens for the foreseeable future, and direct limited domestic resources toward productive uses will be important credit considerations in all four countries.”
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