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  • on 17.06.2015
  • at 11:15 AM
  • by Kevin Hind

Fitch concerned over Kenya, Uganda aggressive borrowing 0

Kenya and Uganda risk losing their good credit rating if they continue borrowing heavily to support their ambitious infrastructure projects, analysts at Fitch Rating have warned.

“Kenya’s and Uganda’s financial year 2016 budgets (for the financial year to end-June 2016) push fiscal consolidation further out into the future, risking an increase in debt which, if sustained, could undermine their sovereign ratings.

“Rwanda’s budget foresees faster consolidation, but medium-term fiscal targets may prove challenging as direct budget support from foreign donors falls,” said analysts at Fitch.

Continue sourcing

Fitch has maintained a ‘B+’ rating with a stable outlook for Kenya while Uganda has a ‘B’ rating with a positive outlook.

Strong ratings enable governments to borrow at favourable rates and would be welcome since the Treasury has said it plans to go and borrow again from the international market.

“Last year our debut Sovereign Eurobond was received with a lot of enthusiasm by foreign investors, once again underscoring the confidence foreign investors have in our economy. “Going forward, we intend to continue sourcing these type of funds, including from export credit agencies and syndicated loans,” said Treasury Cabinet secretary Henry Rotich in the 2015-2016 fiscal year national budget.

Other analysts say Kenya is borrowing more than other countries in the region and wonder why the Treasury is increasingly borrowing even when some of the funds never reach their intended users.

Continue reading on The East African

by John Gachiri

Photo Credit: Flickr/H. S.

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