Behind Kenya’s economic rebound

The National Treasury, has played an important role in stabilising the economy through innovative policies and fiscal discipline. Key reforms targeting revenue mobilisation, debt management, and expenditure rationalisation have significantly reduced fiscal deficits and bolstered investor confidence.

As a result, Kenya has transitioned from a position of vulnerability to one of cautious optimism, cementing its place as a model of economic recovery in the region.

Revenue-led fiscal consolidation has been at the heart of these efforts. The Kenya Revenue Authority (KRA) has implemented aggressive tax reforms, expanding the tax base, closing loopholes, and modernising collection systems through automation. This has allowed the government to reduce reliance on borrowing, ensuring that public finances are managed sustainably.

Notably, the commitment to fund development projects through domestic resources rather than external debt has strengthened the country’s fiscal position.

On the monetary front, the Central Bank of Kenya (CBK) has maintained a stable macroeconomic environment by managing inflation and reducing domestic borrowing costs.

This has enabled the government to access cheaper credit, easing liquidity pressures while ensuring that essential services and development projects are adequately financed. Kenya’s foreign reserves, currently standing at $9.2 billion—equivalent to 4.7 months of import cover—have further fortified the country’s economic resilience against external shocks.

The government’s Bottom-Up Economic Transformation Agenda has also prioritised grassroots empowerment. Investments in agriculture, affordable housing and small businesses have provided tangible benefits to ordinary Kenyans.

For instance, the introduction of fertiliser subsidies has improved agricultural productivity and food security, while the Hustler Fund has offered affordable credit to micro and small enterprises, stimulating economic activity at the grassroots level. Additionally, the affordable housing initiative has addressed urban housing challenges while creating jobs and boosting local industries.

Prudent public spending has complemented these grassroots-focused initiatives. The government has implemented measures to eliminate wastage, improve accountability and channel resources toward high-impact projects. Strategic partnerships with multilateral institutions, such as the International Monetary Fund (IMF) and the World Bank, have also provided concessional financing for critical infrastructure and development programs.

Kenya’s efforts to address climate risks and enhance social protection have further strengthened its economic outlook. Investments in renewable energy, water conservation, and drought mitigation have supported agriculture while reducing the impact of climate change.

Concurrently, social programmes targeting vulnerable groups have alleviated poverty and ensured that the benefits of economic growth are widely shared.

Moody’s upgrade is a vote of confidence in Kenya’s economic policies and reform agenda. It reflects improved investor sentiment, enhanced access to external financing, and a reduced risk of fiscal distress. The decline in domestic borrowing costs, coupled with a robust foreign reserve position, underscores the government’s commitment to sound economic management and sustainable development.

For Kenyans, these developments translate into real benefits. Stable inflation has eased the cost of living, while reduced borrowing costs have made credit more affordable for small businesses and individuals.

Grassroots initiatives have created jobs, improved livelihoods, and empowered communities. Moreover, the government’s focus on strengthening public services, such as healthcare and education, ensures that economic progress is inclusive and far-reaching.

Kenya’s economic rebound is not merely a result of circumstance but of strategic decision-making and effective implementation. The government’s focus on fiscal discipline, grassroots empowerment, and long-term sustainability has set the country on a path to recovery and growth. While challenges remain, Kenya’s economic transformation offers a blueprint for other nations grappling with similar hurdles.

The journey ahead will require continued commitment to reform, innovation, and accountability. However, with its strong foundation and clear vision, Kenya is well-positioned to sustain its progress and achieve long-term prosperity.

The country’s story is one of resilience, determination, and hope—a reminder that bold leadership and collective effort can turn even the toughest challenges into opportunities.

The writer is the Cabinet Secretary for National Treasury and Economic Planning.