WASHINGTON, Aug 4: The US ratings agency Fitch downgraded Kenya's credit rating Friday following its president's decision to scrap key measures of a controversial finance bill in the face of strong public opposition.
Kenyan president William Ruto cancelled a raft of planned tax hikes in late June after the initially peaceful rallies by those opposing the measures turned violent, leaving more than 20 people dead and the country's parliament ransacked.
"The downgrade reflects heightened risks to Kenya's public finances after the government backtracked on revenue measures in the Finance Bill 2024," Fitch said in a statement, adding that the outlook was "stable".
Fitch's announcement follows a similar decision last month by Moody's, another major US ratings agency, which cut Kenya's debt rating further into junk territory and warned that the outlook was negative due to the tax hike reversal.
Ruto's decision to withdraw the controversial tax measures failed to quell the protests, leading him to sack almost his entire 22-person cabinet two weeks later and replace them with a "broad-based" government that included four heavyweight opposition politicians.
But despite these steps, Fitch said Friday that "the risk of prolonged social unrest remains, significantly complicating the environment for fiscal consolidation and presenting downside risks to economic activity." —AFP
