Moody’s upgraded Nigeria’s credit rating to ‘B3’ from ‘Caa1,’ citing significant improvements in external and fiscal positions. The World Bank also reports record economic growth for Nigeria, though high inflation persists. Moody’s has a ‘stable’ outlook, cautioning potential slower progress ahead, especially if oil prices fall.
Moody’s, a credit ratings agency, has upgraded Nigeria’s rating to “B3” from “Caa1,” reflecting notable improvements in the country’s external and fiscal conditions. This announcement came on Friday, marking a significant adjustment that could impact investor confidence.
In a report released earlier this month, the World Bank indicated that Nigeria’s economy is bouncing back, achieving its fastest growth in nearly a decade during 2024. This growth was attributed largely to a robust fourth quarter and better fiscal management, though the World Bank did not shy away from mentioning ongoing challenges like persistently high inflation.
According to Moody’s, the recent overhaul of Nigeria’s foreign exchange management has made a positive impact, noting that it has improved the balance of payments. This has also helped the Central Bank of Nigeria (CBN) boost its foreign exchange reserves, a sign of increasing stability.
In this revised rating, Moody’s pointed out that inflationary risks, which had been concerning, are decreasing, indicating that both inflation rates and domestic borrowing costs are beginning to ease. This brings a glimmer of hope regarding the stability of Nigeria’s monetary policies.
However, Moody’s adjusted Nigeria’s outlook to “stable” from the previous “positive.” It does expect that while recent advancements on external and fiscal fronts should continue, growth may slow especially if oil prices decline, which could affect economic stability going forward.
“The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely,” Moody’s emphasized, capturing the cautious optimism surrounding Nigeria’s economic trajectory in the coming months.
Moody’s recent upgrade of Nigeria’s credit rating to ‘B3’ signals an optimistic shift for the country’s economic health, primarily due to improvements in external and fiscal positions. Despite some indications of slowing growth, the overall sentiment remains stable for now, but the ongoing challenge of high inflation looms. The agency’s comments reveal a complex balance as Nigeria navigates its economic reforms.
Original Source: www.tradingview.com
