International rating agency Moody’s changed Nigeria’s outlook from “stable” to “positive,” while affirming the country’s B3 rating. The decision was linked to the strengthening of the country’s external position, including growing foreign exchange reserves, Premium Times Nigeria reports.
Reserves and economic growth
Moody’s noted that Nigeria’s foreign exchange reserves have risen substantially recently, strengthening the economy’s ability to withstand shocks. The agency also took into account the country’s active economic growth and the relative stability of macroeconomic indicators.
According to the publication, Nigeria’s foreign exchange reserves reached $53.3 billion, the highest level in at least 20 years. Oil export revenues contributed to the strengthening of reserves. Over the past four months, average production stood at 1.7 million barrels per day, including condensate.
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The B3 rating remained unchanged
Despite the outlook revision, Moody’s affirmed Nigeria’s B3 rating. The agency explained this by the government’s limited ability to mobilize revenue and its low debt-servicing capacity.
The Nigerian government plans to use the results of increased production and enhanced security in oil-producing areas to reach the target of 3 million barrels per day by 2030.
FTSE Russell also confirmed Nigeria’s reclassification to the frontier market category, which is set to take effect next month. Arnold Dublin-Green, head of Renaissance Asset Management, previously told Premium Times that, under the most favorable scenario, this reclassification could attract up to $800 million in foreign inflows into the country’s stock market.
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