Improved Fiscal Position Upgrades Nigeria’s Credit Rating

Improved fiscal and external positions have helped to lift Nigeria’s credit rating globally,

This much is acknowledged by credit rating agency Moody’s which has upgraded the country’ rating by a notch to ‘B3’ from ‘Caa1.

Citing significant improvements in the country’s external and fiscal positions, it revised Nigeria’s credit rating outlook to ‘stable’ from “positive’ while also expecting recent progress on external and fiscal fronts to continue, though at a slower pace, if oil prices fall.

“The recent overhaul of Nigeria’s foreign exchange management framework … has markedly improved the balance of payments and bolstered the CBN’s (Central Bank of Nigeria) foreign exchange reserves,” Moody’s said

According to it, the stable outlook reflects “our expectations that external and fiscal improvements will decelerate but will not reverse entirely.” even as it states that Nigeria’s inflationary risks driven by policy shifts, have diminished.

Domestic borrowing costs are also indicating a slowdown Moody’s stated.

The Eagle reports that Fitch Ratings, another rating agency had recently upgraded Nigeria’s Long-Term (LT) Foreign-Currency (FC) Issuer Default Rating (IDR) to ‘B’, from ‘B-‘. The Outlook is Stable.

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“ The upgrade reflects increased confidence in the government’s broad commitment to policy reforms implemented since its move to orthodox economic policies in June 2023”, the agency said, adding that this included exchange rate liberalisation, monetary policy tightening and steps to end deficit monetisation and remove fuel subsidies.

“These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks”, it added.