News Desk
In a recent statement, S&P Global Ratings reviewed its outlook on Nigeria, changing it from negative to stable. The credit ratings agency cited the Nigerian government’s recent reforms as a key factor behind this decision, expressing optimism that these reforms could have a positive impact on the country’s growth and fiscal outcomes if effectively implemented.
Africa’s largest economy has been grappling with chronic dollar shortages, which have hindered the growth of businesses operating within its borders. In response to these challenges, President Bola Tinubu initiated a series of bold reforms aimed at jumpstarting economic growth and attracting foreign investments to the nation.
S&P Global Ratings praised the newly elected government for its swift actions in implementing both fiscal and monetary reforms. The agency believes that these measures will gradually benefit Nigeria’s public finances and improve its balance of payments.
Among the noteworthy reforms, President Tinubu’s decision to eliminate a costly subsidy on petrol and unify the country’s multiple exchange rates is expected to yield significant savings. In just over two months, Nigeria is said to have saved over 1 trillion naira ($1.32 billion) through these efforts.
While the reforms have been well-received by investors, they have also faced criticism from unions, who argue that the changes have led to soaring costs amid persistently high inflation rates. The World Bank, while acknowledging the potential for substantial savings this year alone, has warned of short-term inflationary pressures.
S&P Global Ratings’ sovereign analyst, Frank Gill, had previously highlighted the agency’s keen interest in monitoring Nigeria before this recent review. He noted that the implemented reforms were viewed positively by the agency.
Back in February, S&P maintained Nigeria’s credit rating at ‘B-/B’ but assigned a negative outlook. However, with the current stable outlook, the country seems to be on track to gain more confidence from international investors.
Other rating agencies, such as Fitch, have also affirmed Nigeria’s credit rating at ‘B-‘ earlier this year.
The recent developments indicate that Nigeria’s ongoing efforts to reform its economy are being recognized by international credit rating firms, which may boost the country’s prospects for attracting much-needed foreign investments in the future.
Source: [Reuters]
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