Treasury mandarins are breathing a sigh of relief. In a major endorsement of the government’s fiscal tightening measures, Fitch Ratings has affirmed Kenya’s long-term foreign-currency issuer default rating at 'B-' and, crucially, revised the outlook to "Stable."

This upgrade from a "Negative" outlook is more than just alphabet soup; it is a signal to global investors that Kenya is no longer teetering on the edge of default. The decision comes after the successful settlement of the 2024 Eurobond and a series of aggressive tax measures that, while unpopular at home, have impressed international creditors.

Why the Shift?

Fitch cited the government’s commitment to fiscal consolidation and the stabilization of foreign exchange reserves. The shilling’s recent rally against the dollar also played a key role in easing debt servicing costs.

• The Eurobond Factor: The buyback of the $2 billion Eurobond calmed market jitters, proving that Kenya could honor its obligations despite the liquidity crunch.
• Fiscal Discipline: The Treasury’s move to cut non-essential spending and streamline tax collection was noted as a positive step towards debt sustainability.
• The Risk Remains: However, Fitch warned that the high cost of living and potential social unrest could derail these gains. The rating is still "junk" status, meaning borrowing remains expensive.

What It Means for You

For the common wananchi, the impact will be slow but significant. A stable outlook should theoretically stabilize the shilling, lowering the cost of imports like fuel and cooking oil. It also keeps interest rates from skyrocketing further.

"We have turned the corner," declared CS National Treasury. But with taxes still biting, ordinary Kenyans will be waiting to feel this "stability" in their pockets.