Business & Economy
Fitch Ratings Upgrades Nigeria’s Credit Outlook Amid Reforms and Economic Stability
- On the impact of the 14 per cent US tariff imposed on Nigeria, Fitch said the effect would be limited.
- “The Stable Outlook reflects Fitch’s expectation that the macroeconomic policy stance will sustain improvements in the functioning of the FX market and support the move to lower inflation, although it will likely remain far higher than rating peers.
- This decision reflects the global rating agency’s growing confidence in the Nigerian government’s commitment to implementing policy reforms
In a positive development for Nigeria, Fitch Ratings has upgraded the country’s Long-Term Foreign-Currency Issuer Default Rating from ‘B-‘ to ‘B’ with a stable outlook.
Eko Hot Blog reports that this decision reflects the global rating agency’s growing confidence in the Nigerian government’s commitment to implementing policy reforms, as well as the nation’s progress in stabilizing its economy.
EDITOR’S PICK
- LASUBEB and Lagos Sports Commission Team Up to Discover Young Talents in Schools
- 11 PDP Governors Yet To Serve FG, AGF In Suit Against Rivers Emergency Rule
- ‘Tell Your Papa’: Senator Offered Me ₦200 Million For My Song – Eedris
According to the rating commentary issued late Friday, “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, including exchange rate liberalisation, monetary policy tightening and steps to end deficit monetisation and remove fuel subsidies.
“The Stable Outlook reflects Fitch’s expectation that the macroeconomic policy stance will sustain improvements in the functioning of the FX market and support the move to lower inflation, although it will likely remain far higher than rating peers.
Additionally, we anticipate a continued reduction in external vulnerabilities through further easing of domestic FC supply constraints, while renewed energy sector reforms should help sustain current account surpluses.”
While commending the increased transparency in the FX market, Fitch projected a modest depreciation of the naira in the short term.
“Greater formalisation of FX activity including the Central Bank of Nigeria’s recent introduction of an electronic FX matching platform and a new FX code to enhance transparency and efficiency, along with monetary policy tightening, has led to a greater rise in FX liquidity and general stability in the FX market after a 40 per cent depreciation in 2024, closing the spread between the official and parallel exchange rates.
“Net official FX inflows through the CBN and autonomous sources rose by about 89 per cent in 4Q24, compared to an 8 per cent rise in 4Q23. We expect continued formalisation of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term,” the rating firm said.
On the impact of the 14 per cent US tariff imposed on Nigeria, Fitch said the effect would be limited.
“Fitch expects the impact of US tariffs on Nigeria’s trade position with the US to be limited, amid the exclusion of oil-related exports, which accounted for about 92 per cent of total exports (nearly 2 per cent of GDP) to the US in 2023.
Lower oil prices pose a bigger risk as they would weaken external buffers and fiscal metrics and test the new policy framework. Nevertheless, greater policy flexibility enhances Nigeria’s ability to deal with shocks,” part of the commentary read.
FURTHER READING
- PHOTOS: Ganduje, Other APC Leaders Meet Buhari Hours After Atiku, El-Rufai’s Visit
- EPL Predictions: City, Liverpool, Arsenal to Win – Newcastle to Stun Man Utd
Click here to watch video of the week
Advertise or Publish a Story on EkoHot Blog:
Kindly contact us at ekohotblog@gmail.com. Breaking stories should be sent to the above email and substantiated with pictorial evidence.
Citizen journalists will receive a token as data incentive.
Call or Whatsapp: 0803 561 7233, 0703 414 5611
