Fitch: Kenya post-election will not result in deterioration in economic growth
By David Indeje / August 30, 2017
Kenya’s disputed Presidential Election will not result in any significant deterioration in investor or economic growth according to Fitch Ratings.
Fitch says the National Super Alliance (NASA), the country’s opposition’s decision to seek legal resolution after it disputed this month’s general election result has helped reduce risk that tensions may escalate.
“Pursuing legal action rather than focusing on popular protests has helped contain the social unrest sparked by the result, which saw violent clashes and some fatalities in parts of Nairobi and western Kenya.”
However, “While it is still possible that any court decision to reject the challenge could trigger new unrest, we believe that the election will not result in any significant deterioration in investor or economic sentiment toward the country.”
In terms of the Kenyan economy, Fitch says, “Failure to consolidate budget deficit and stabilise government debt/GDP would be negative for Kenya’s credit profile, while effective implementation of a fiscal consolidation plan and stabilisation of government debt/GDP could lead to a positive rating action.”
Read: Fitch Affirms Kenya at ‘B+, constrained by budget deficits and political risks
They forecast that the fiscal deficit to narrow to 6.4 percent of GDP from 8.4 percent, as expenditure falls closer to average historical levels and improvements to revenue administration and collection begin to show results.
“Risks to our forecast include slower-than-expected growth and lower revenue collection.
Further, they forecasts GDP growth to slow to 5.4 percent in 2017 from the 5.8 percent last year.