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Moody’s says poll verdict to hurt credit plans

Supreme Court annulled presidential poll. FILE PHOTO | NMG
Supreme Court annulled presidential poll. FILE PHOTO | NMG 

Global rating agency Moody’s says the Supreme Court verdict nullifying the presidential election outcome is a “credit negative” and will prolong policy inertia and uncertainty.

The agency said the ruling would usher in a period of political uncertainty that has already damaged business confidence and undermined economic growth.

“The events would further stymie the development of policies to address the country’s main credit challenges, in particular the large fiscal deficit of 10 per cent of gross domestic product (GDP),” the agency said.

On Friday the Supreme Court annulled the results of August 8 presidential election, citing irregularities and gave a 60-day deadline for the poll to be conducted afresh.

The Independent Electoral and Boundaries Commission (IEBC) has announced a repeat on October 17, which the Opposition has opposed.

In April, Moody’s said the government’s attempt to cut the budget gap was likely to be frustrated by pre-election spending.

The rating agency made the comment after the Treasury said it planned to reduce the deficit by 2.6 per to 6.3 per cent of the GDP or the total domestic output.

The government borrowing has been rising rapidly in recent years mainly driven by infrastructure capital expenditure, which the agency termed as not abnormal compared to other countries in a similar development stage. But it warned the cost of debt is escalating.