Kibaki's government's economic policies and improved governance positioning allowed Kenya to enhance its international credit rating and its standing with international financial institutions. Kenya's credit rating, which had deteriorated during the Moi years due to concerns about governance and macroeconomic stability, improved under Kibaki as international rating agencies and donors assessed the new government as more professional and committed to orthodox economic management. The improved rating reflected confidence in Kibaki's administration and reduced Kenya's cost of external borrowing.
The international credit rating that Kenya achieved under Kibaki reflected multiple dimensions of the government's policy approach: commitment to macroeconomic orthodoxy, maintenance of relatively stable exchange rates and interest rates, efforts to reduce inflation, and the maintenance of relationships with international financial institutions. The rating also reflected Kenya's relative stability compared to some other African countries, its position as a regional economic hub, and its integration into the global capitalist system through trade, investment, and financial relationships.
However, Kenya's improved credit rating also had implications for the government's ability to borrow internationally and to use external financing to fund development projects and government operations. The improved rating meant that international markets were willing to provide financing at lower interest rates, reducing the cost to Kenya of external debt. However, it also meant that Kenya was expected to meet the conditions imposed by external creditors and international institutions, conditions that often required liberalisation, privatisation, and the reduction of government social spending.
Kenya's credit rating fluctuated during Kibaki's presidency, particularly following the 2007 post-election violence, which raised concerns about Kenya's political stability and the security of external investments. However, by the end of Kibaki's presidency, Kenya's credit standing had recovered and the country was increasingly integrated into international capital markets. Kenya had successfully transitioned from being viewed as a risky investment to being considered a relatively stable and promising emerging market.
The relationship between credit ratings and development outcomes is complex. While improved credit ratings indicate international confidence and reduce borrowing costs, they do not necessarily translate into improved development outcomes for ordinary Kenyans. Kenya's improved credit rating under Kibaki coexisted with high levels of poverty, inequality, and limited access to quality social services for large segments of the population. This gap between Kenya's standing in international financial markets and the lived experience of many Kenyans reflected the nature of Kenya's integration into the global economy.
See Also
Kenya's International Standing Credit Markets and Emerging Markets Macroeconomic Policy Kenya Kibaki Economic Record International Finance and Development Global Economic Integration Kenya
Sources
- Standard and Poor's. Kenya Sovereign Credit Rating Report 2002-2013. S&P Publications, 2013.
- Fitch Ratings. Emerging Markets Credit Assessment: Kenya 2013. Fitch Publications, 2013.
- International Monetary Fund. IMF Assessment of Kenya's Economic Performance 2002-2013. IMF Publications, 2013.