NAIROBI, Kenya – The African Peer Review Mechanism (APRM), a specialized governance agency of the African Union, has slammed Moody’s recent upgrade of Kenya’s credit rating, calling it “irresponsible” and “premature.”
On Friday, Moody’s raised Kenya’s outlook from negative to positive, citing improving debt affordability and reduced liquidity risks.
The move came less than six months after the agency downgraded Kenya’s rating, citing political unrest and economic uncertainty during mid-2024.
In a statement, the APRM dismissed Moody’s assessment, arguing that it failed to factor in critical economic data and recent policy developments.
“The July 2024 downgrade was speculative, as it ignored spending allocations, the final budget, the finance bill, the new cabinet, and midterm review data on the Appropriation Bill,” the APRM said.
The AU agency further highlighted Moody’s track record of premature evaluations, pointing to its handling of Nigeria’s credit ratings as an example.
“In January 2023, Moody’s downgraded Nigeria from B3 to Caa1, citing anticipated fiscal deterioration under the new administration. This rating was challenged by the Nigerian government as inaccurate, and by December 2023, Moody’s reversed its outlook to positive after acknowledging improved economic policies,” the statement noted.
According to the APRM, such hasty assessments by Moody’s can harm African economies by triggering Eurobond sell-offs and exacerbating credit risks.
The agency advised Moody’s to await comprehensive term review data before issuing ratings, warning that speculative actions could undermine economic stability across the continent.
Moody’s announcement has sparked mixed reactions in Kenya.
While some experts remain skeptical about the country’s ability to navigate its debt challenges, President William Ruto welcomed the revised rating as a sign of progress.
“We are doing well,” the president said in a statement, sharing Moody’s report on social media.
With high debt levels and a weakened shilling, Kenya remains under close scrutiny by international lenders and credit rating agencies.
The APRM’s criticism of Moody’s actions highlights the delicate balance between market confidence and accurate economic assessments.
