Percy Onyeka
Standard and Poors, S&P Global rating agency has affirmed Nigeria’s rating at ‘B-/B’; Outlook remains stable, saying that the monetary and fiscal reforms of President Tinubu will benefit the country’s creditworthiness in the long term.
The rating agency however noted that managing the effects of the reforms on inflation and exchange rate remains challenging.
In a statement announcing its rating decision on Nigeria, S&P said: “Since coming to power at end-May 2023, the Tinubu administration has launched a series of important monetary, economic, and fiscal reforms, including the liberalization of the naira and the elimination of the fuel subsidy, and taken steps to boost non-oil revenues and increase domestic refining capacity.
“While we believe these policies should benefit Nigeria’s creditworthiness over the long run, managing the current effects on inflation and the exchange rate remains challenging.
“We therefore affirmed our ‘B-/B’ long- and short-term ratings on Nigeria. The outlook is stable.
“On Feb. 2, 2024, S&P Global Ratings affirmed its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings on Nigeria. We also affirmed our ‘ngBBB+/ngA-2’ long- and short-term Nigeria national scale ratings. The outlook is stable.
“The stable outlook balances the government’s capacity to continue the reform agenda, which, if delivered, should support growth and fiscal outcomes, against below-potential oil production and risks to macroeconomic stability and confidence from inflationary pressures and a volatile currency.
“We could lower the ratings over the next 12 months if we see increasing risks to Nigeria’s capacity to repay commercial obligations. This could arise, for instance, from significantly reduced usable foreign currency (FX) reserves, much higher fiscal deficits or debt-servicing needs, or because domestic financial markets are unwilling to absorb additional local currency debt issuance.”
Agency Report
