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Supreme Court ruling will have an significant impact on Kenya's economy

Fitch says that if the tensions over the election outcome dissipate for other reasons, its sovereign credit analysis will focus on economic and fiscal policy and outturns.

The Supreme Court ruling on the recent disputed Presidential elections will have a big impact on Kenya’s economy, Fitch Ratings says.

Although it is still possible that any court decision to reject the challenge could trigger new unrest, Fitch Ratings says that the election will not result in any significant deterioration in investor or economic sentiment toward the country.

The UK-based firm projects that the economy will grow at a slower rate of 5.4 per cent, which is lower than the 5.9 per cent growth projected by the National Treasury.

“Fitch forecasts GDP growth to slow to 5.4 per cent in 2017 from 5.8 per cent last year. GDP growth in the first quarter fell to 4.7 per cent as the agricultural sector contracted 1.1 per cent due to drought while slower credit growth and uncertainty around the elections have also weighed on activity this year,” said the rating agency.

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In July this year, Fitch asserted Kenya’s credit rating at B+ with a negative outlook, below the country’s ceiling affirmed at ‘BB-’, exposing a clear vulnerability to meet its financial commitments.

‘’Kenya’s public finances have deteriorated steadily since 2008, through weak revenue performance, increasing infrastructure spending and persistently high current expenditure. This is reflected in the negative outlook on Kenya’s ‘B+’ sovereign rating, which we affirmed in July,’’ stated the report.

Fitch noted that if the aftermath of the election were to lead to a major deterioration in the political or security environment that undermines Kenya’s growth performance, it would add to pressures on the rating.

Nonetheless, the agency has lauded the National Super Alliance (NASA) for contesting the recent presidential elections results in court, saying that it has helped to ease pressure on the country’s struggling economy that fell to 4.7 per cent in the first quarter.

It further stated that if the dispute is resolved through the courts, or if the tensions over the election outcome dissipate for other reasons, its sovereign credit analysis will focus on economic and fiscal policy and outturns.

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All eyes are now on the Supreme Court which is expected to make a ruling on the disputed Presidential election on Friday morning. The seven bench judge will either uphold President Kenyatta’s win or annul it and send back voters to the ballot in 60 days.

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