Global leading rating agency, Standard & Poor’s has affirmed Nigeria’s sovereign credit rating at B+ and revised its outlook from negative to stable.
This comes about a week after another rating firm, Moody’s Investor Services changed its outlook on Nigeria’s economy to Stable from Negative.
In a statement released today, U.S. based Standard & Poor’s, says its stable outlook on Nigeria, indicates that covid-19 related pressures will continue to weigh on the country’s GDP growth and fiscal and external metrics, but improved oil prices will support GDP growth.
S&P furthers stated that improved oil prices are supporting Nigeria’s rebound to positive GDP growth in 2021 and onwards, but COVID-19-related pressures, foreign exchange shortages, and structural bottlenecks remain significant.
Speaking to other headwinds for Nigeria’s economic growth, Standard & Poor’s highlighted that fiscal and external pressure will remain reasonably high over the next few years, and fiscal flexibility constrained by very low revenue mobilization.
On the upside, the rating firm pointed to the upcoming increase in Nigeria’s Special Drawing Rights (SDR) allocation from the IMF, alongside planned Eurobond issuances as positives for the country’s foreign exchange inflows in 2021, with central bank advances to the government forecast to decline this year.
The economy is forecast to grow 1.8% this year and by average of 2.2% in 2021 to 2024.