Fitch Rating maintains positive outlook for Nigeria at B-

A global rating agency, Fitch Rating, has maintained a positive outlook for Nigeria, affirming the country’s Long-Term Foreign Currency Issuer Default Rating at ‘B-’.

The rating agency disclosed this in a statement at the weekend.

Fitch Rating attributed its decision to the sustained economic reforms in Nigeria in recent months aimed at implementing fiscal management and policy consistency.

However, the agency lamented the country’s weak governance indicators, dependence on hydrocarbons, high inflation, which stood at 32.70 percent in September, and insecurity.

“Nigeria’s ‘B-’ rating is supported by its large economy, relatively developed and liquid domestic debt market, and large oil and gas reserves.

“The rating is constrained by weak governance indicators relative to peers, high hydrocarbon dependence, weak net foreign-exchange reserves, high inflation, ongoing security challenges, and structurally low, albeit improving, non-oil revenue.

“The positive outlook reflects progress in implementing reforms that improve policy coherence and credibility and reduce economic distortions and near-term risks to macroeconomic stability.

“These include exchange rate liberalisation, monetary policy tightening, and efforts to restore fiscal discipline, including the absence of deficit monetization in recent months and phasing out fuel subsidies.

“The subsequent rise in foreign portfolio investment inflows, greater formalisation of FX activity, and official FX inflows (USD48 billion in 1H24, compared with USD34 billion in 1H23) have supported the recovery in international reserves”, the rating agency stated.

Recall that in May 2024, the rating agency raised Nigeria’s credit rating from stable to positive on the grounds of economic reforms.