Fitch Affirms Nigeria’s Rating, Says Outlook Stable on Reforms

Fitch Ratings has affirmed Nigeria’s long-term foreign-currency issuer default rating at ‘B-‘, with a stable outlook, citing the reforms being implemented by the administration of President Bola Tinubu.

A year ago, the global rating agency lowered the country’s credit score to ‘B-‘ from ‘B’ and attributed the downgrade to continued deterioration in government debt servicing costs and external liquidity despite high oil prices in 2022.

It affirmed this in May this year. “Reform progress since President Bola Tinubu’s government came to power in May 2023 has been faster than we anticipated at our last review,” it said in a statement, citing the removal of fuel subsidies, the unification of the multiple exchange rate windows and the devaluation of the naira.

However, there has recently been some backtracking on reforms, notably a lower degree of price discovery in the FX market than in late June, raising doubt about the strength of this positive momentum, Fitch said.

“In addition, new data on the Central Bank of Nigeria (CBN) suggests its net foreign-exchange position is substantially weaker than we previously understood,” it said.

The country’s rating is constrained by weak governance, structurally very low non-oil revenue, high hydrocarbon dependence, security challenges, high inflation.

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