MOODY’S FLAGS KENYA’S REVENUE STRUGGLES DESPITE KRA’S KSH 2.5 TRILLION COLLECTION

Credit rating agency Moody’s has raised concerns over Kenya’s fiscal health, warning that the country’s revenue performance remains structurally weak despite the Kenya Revenue Authority (KRA) collecting Ksh 2.5 trillion in the 2023/2024 financial year.
In a recent assessment, Moody’s noted that while the record tax collection demonstrates effort, it falls short of resolving deeper fiscal vulnerabilities. The agency said Kenya continues to miss revised revenue targets and remains heavily reliant on domestic borrowing, which has pushed debt servicing costs to unsustainable levels.
“Interest payments now consume around one-third of total government revenue, limiting the state’s capacity to fund development and social services,” the report said.
Moody’s also expressed doubt over the government’s ability to implement new tax measures following intense public opposition that forced President William Ruto to withdraw the controversial Finance Bill 2024.
The agency’s caution comes at a time when the government is facing pressure to stabilise public debt while addressing growing social demands. Kenya’s debt stands at over Ksh 11 trillion, and local borrowing remains high due to limited access to international credit markets.
Moody’s has previously downgraded Kenya’s credit rating, citing similar concerns over fiscal consolidation, rising interest costs, and revenue underperformance.
As the country navigates a difficult economic path, Moody’s says meaningful structural reforms and consistent revenue growth are essential to restore fiscal credibility and investor confidence.