Fitch Ratings has revised the Outlook on Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable, and affirmed the IDR at ‘B-‘.
NAIRAMETRICS
Global credit ratings agency, Fitch, has revised Nigeria’s long-term credit default rating upward from stable to positive on the back of reforms in the foreign exchange market, oil industry and monetary policy over the past one year.
The agency noted that the upward revisions stem from actions of the Federal Government to bring about macroeconomic stability and improve credibility.
It listed some of the reforms informing its outlook as follows: adjustments in exchange rate and monetary policy frameworks, reduction in fuel subsidies, improved collaboration between the fiscal and monetary side of the economy, and reduction in Ways and Means borrowing and others.
- It stated, “Fitch Ratings has revised the Outlook on Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable, and affirmed the IDR at ‘B-”
- “The Positive Outlook partly reflects reforms over the last year to support the restoration of macroeconomic stability and enhance policy coherence and credibility.”
- “The reforms have reduced distortions stemming from previous unconventional monetary and exchange rate policies, resulting in the return of sizeable inflows to the official foreign exchange (FX) market. Nevertheless, we see significant short-term challenges, notably, inflation is high, and the FX market has yet to stabilise, and the durability of the commitment to reform is to be tested.”
Furthermore, the report praised the Central Bank of Nigeria (CBN)’s role in eliminating distortions in the foreign exchange market, attracting foreign inflows into the market and monetary policy tightening.
However, the agency raised concerns over continued volatility in the forex market, elevated inflation levels and opacity on the true size of the country’s foreign reserves.
