Global ratings agency, Moody’s, yesterday, revised its outlook on Nigeria to positive, from stable, citing possible reversal of the deterioration in the country’s fiscal and external position due to authorities’ reform efforts.
The agency also affirmed its “Caa1” long-term foreign currency and local currency issuer ratings on the West African country.
President Bola Tinubu is seeking to boost growth and attract billions in new investment after taking charge of Africa’s biggest economy, which is grappling with shortages of foreign exchange, low oil output and widespread insecurity, Reuters report.
Tinubu has undertaken the country’s boldest reforms in decades by scrapping a popular but costly fuel subsidy in May, removing exchange controls and ending a ban on some imports. The reforms have been welcomed by investors, but unions said they led to soaring costs while inflation had been in double-digits in Nigeria since 2016, further eroding savings and incomes.
“These policy changes, and those potentially to come, have raised the prospects of a fiscal and external improvement in the country’s credit profile,” Moody’s said in a statement.
Last month, Tinubu urged the parliament to approve $8.69 billion and 100 million euros ($107.47 million) for projects across infrastructure, agriculture, health, education, water supply, growth, security, employment generation, as well as financial management reforms.
The Central Bank of Nigeria in November started clearing $7 billion outstanding foreign currency forwards in a bid to attract new dollar inflows and stabilise the naira, which has been weakening to record lows.
In August, S&P Global Ratings revised its outlook on Nigeria to stable from negative and affirmed its rating at ‘B-/B’.
Tinubu had assured investors that every commitment by his administration towards resolving forex backlogs through injection of funds into the market would be fulfilled.
Speaking at the opening of the 2023 Bank Directors’ Summit in Abuja, during the week, Tinubu said funding of liquidity in the FX market, even though a short-term solution, remained critical for the economy at the moment.
The summit was organised by the Bank Directors Association of Nigeria (BDAN), with the theme, “Emerging Issues: Navigating the Complex Balance Between Regulation and Compliance.”
Tinubu, who was represented at the summit by Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, had stressed that there was “no reason to feel that the indications that were made earlier had changed”, adding, “It just takes time.” He said the government was doing everything in its power to try to attract funds that would shore up liquidity in the FX segment.