S&P, a global credit ratings agency, at the weekend, affirmed that Nigeria’s credit outlook will remain stable in 2024, with short-term foreign and local currency sovereign credit worthiness at ‘B-/B’, while long and short-term national scale ratings was pegged at ‘ngBBB+/ngA-2’.
The ratings agency stated that this position is on the back of ongoing monetary, economic and fiscal reforms, including the liberalisation of the naira and the elimination of the fuel subsidy as well as steps to boost non-oil revenues and increase domestic refining capacity.
But the report stated that while S&P believes these policies should benefit Nigeria’s creditworthiness over the long run, managing the current effects on inflation and the exchange rate remains challenging.
The stable outlook, it said, 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 as well as a volatile currency.
On the downside, the agency stated it could lower the ratings over the next 12 months if it sees increasing risks to Nigeria’s capacity to repay commercial obligations.