Kenya has made visible improvements on its "twin deficits" status on the back of strong merchandise exports and booming tourism and remittances, allowing the country to accumulate foreign reserves, while fiscal consolidation efforts have also tightened the primary fiscal deficit gap. Higher oil prices will erode some of these gains in the near term but are unlikely to completely derail the adjustment process for the time being.

As before, the main outstanding issue is Kenya's unabated high stock of external indebtedness relative to dollar earnings. The good news is that a light Eurobond repayment schedule and a potential new lending program from the IMF are likely to buy the country more time to play with, but the bad news is that Kenya is not "out of the woods" as a high-debt country with sizeable servicing costs.