Moody’s Ratings has upgraded Nigeria’s long-term foreign currency and local currency issuer ratings to B3 from Caa1 and changed the outlook to stable from positive, citing improved external and fiscal positions
Moody’s Ratings upgraded Nigeria’s sovereign credit rating to B3 from Caa1 on Friday, citing significant improvements in external reserves and fiscal stability driven by key reforms. The agency also revised the outlook to stable, reflecting confidence in sustained policy direction despite lingering inflation risks.
The upgrade follows Nigeria’s shift to a flexible exchange rate and removal of fuel subsidies—moves that initially spiked inflation but now show “nascent signs of easing,” Moody’s noted. “Tax reforms have started yielding results,” the report stated, while cautioning that oil price volatility and exchange rate pressures remain challenges. Debt is projected to stabilize at 50% of GDP, with interest payments consuming 35% of government revenue.
The rating aligns with the World Bank’s recent report highlighting Nigeria’s decade-high 2024 growth, attributed to “new policy direction [that] boosts international competitiveness.” However, both institutions flagged persistent inflation (24.5% in January) and structural hurdles like power shortages.
Moody’s observed easing food inflation (down to 21.3% in April) and reduced social unrest risks since mid-2024 protests. “The pass-through to inflation has been reduced alongside external rebalancing,” it concluded, endorsing Nigeria’s economic trajectory while underscoring the need for deeper reforms.