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Finance Minister John Mbadi set the government’s fiscal deficit for the financial year starting this month at 4.8% of economic output, narrower than the 2024/25 deficit of 5.7%, when he presented the budget to parliament last month. But Moody’s said that the target could slip as the government confronts acute fiscal pressures.
Kenya’s cost of servicing its debts is expected to remain stubbornly high, ratings agency Moody’s said on Wednesday. The rating agency said that the government leans on the domestic debt market to fund its budget shortfalls.
The East African nation has one of the highest debt interest costs to revenue ratio in the world, Moody’s said, and spends a third of government revenue on settling interest payments.
Finance Minister John Mbadi set the government’s fiscal deficit for the financial year starting this month at 4.8% of economic output, narrower than the 2024/25 deficit of 5.7%, when he presented the budget to parliament last month. But Moody’s said that the target could slip as the government confronts acute fiscal pressures.
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The government needs to secure a new financing program with the International Monetary Fund, the ratings agency said, to help it deal with annual external debt repayments, which is at USD 3.5 billion on average.