Kenya’s climb to the position of Africa’s sixth-largest economy has been linked to a series of tough financial decisions that President William Ruto says were necessary to stabilise the country. Speaking at the State House during the presentation of the Jukwaa la Usalama report, the President outlined how Kenya was previously weighed down by escalating external debt and the risk of default, placing the nation among six African countries projected to fail on repayments.
President Ruto revealed that he had to make what he described as “painful decisions” to protect the country’s financial credibility. He explained that Kenya’s foreign reserves had dipped to 5.7 billion dollars, sparking widespread concern that the country was nearing a point where it would not meet its obligations. “Today I can confidently tell you our economy is in sound footing. Had I not made those decisions we would be among the countries that defaulted their debts,” he said.
He described how urgent meetings were held to prevent Kenya from becoming the nation that defaulted. “Foreign reserves had reduced to $5.7 billion and everybody believed Kenya will not be able to pay its debt. I sat in an office called number 6 with some people and agreed that we cannot be the country to default and I had to make very difficult decisions.”
The President added that Kenya’s inflation rate has since dropped significantly, while the country’s dollar reserves rose to 12.1 billion dollars, the highest ever recorded. “Inflation has gone from 9.6 to 4.6, the dollar has recovered from Ksh.167 to Ksh.129,” he said, emphasising that the long-term benefits justify the tough choices made.
How did the tough economic decisions shape Kenya’s current ranking?
The International Monetary Fund’s October 2025 World Economic Outlook projected Kenya’s GDP to reach 140 billion dollars in 2026, up from 136 billion dollars in 2025. This places the country sixth among Africa’s largest economies. The projections were based on a dollar exchange rate of Ksh129 and reflected strong national performance across several economic indicators.
Kenya’s improved standing also drew recognition from global rating agency Standard & Poor’s, which upgraded the country’s long-term sovereign credit rating from B- to B. “The outlook is stable. At the same time, we affirmed our ‘B’ short-term sovereign credit rating on Kenya,” S&P noted in its August report.
What global factors supported Kenya’s improved financial position?
S&P highlighted several contributors to Kenya’s strengthened performance. The agency reported that near-term external liquidity risks had eased, thanks to revised external data and positive outcomes from coffee exports and diaspora remittances. It also noted that Kenya’s 1.5 billion dollar Eurobond issuance, together with a buy-back operation in February 2025, reduced Eurobond principal repayments from 300 million dollars annually to 108 million dollars between 2025 and 2027.
These combined factors reflect a notable shift in Kenya’s economic trajectory. According to the President, the country’s current stability and improved regional standing show that the difficult choices made were necessary to put Kenya on a sustainable path forward.
By Lucky Anyanje