Credit ratings agency Moody's on Tuesday upgraded Kenya's long-term foreign currency ‍sovereign credit rating to "B3" ‍from "Caa1", saying the country's near-term risk of default has ​eased.

The agency said Kenya's external liquidity position has improved, supported by higher ⁠foreign-exchange reserves, a narrower current account deficit and a more stable shilling.

Kenya's ⁠economy, the largest ‌in East Africa, recorded improved growth in the third quarter of 2025, driven by a rebound in the ⁠construction industry and a faster-than-expected expansion in agriculture.

The country's rising international reserves, up to $12.2 billion at the end of 2025, equivalent to 5.3 months of import coverage, have strengthened its ability ⁠to absorb shocks.

However, Moody's said ​the rating remains capped by weak debt affordability and slow fiscal consolidation, as high ‍domestic borrowing costs and political and social pressures limit efforts to narrow the fiscal ​deficit, leaving Kenya vulnerable to shifts in financing conditions.

Kenya, which is laden with high public debt and repayments, has been seeking new sources of financing to create room for development spending and investments in infrastructure.

The Kenyan government is also discussing a new International Monetary Fund programme after the previous one ended in April and it is also exploring cheaper funding options, including a debt-for-food swap due in the ⁠first half of this year.

The agency has ‌also revised the country's outlook to "stable" from "positive", reflecting expectations that recent improvements in liquidity and financing conditions will be sustained, with ‌risks around ⁠the baseline broadly balanced.