Moody’s
Moody’s Ratings has upgraded Nigeria’s credit rating by a notch to “B3” from “Caa1”, citing significant improvements in the country’s external and fiscal positions.
This upgrade reflects a growing confidence in Nigeria’s economic trajectory following recent policy reforms.
Earlier this month, the World Bank had already noted that Nigeria’s economy achieved its fastest growth in about a decade in 2024, driven by a strong fourth quarter and an improved fiscal position.
However, it also cautioned that persistently high inflation remains a challenge.
“The recent overhaul of Nigeria’s foreign exchange management framework… has markedly improved the balance of payments and bolstered the CBN’s (Central Bank of Nigeria) foreign exchange reserves,” Moody’s stated.
According to the ratings agency, these reforms have also strengthened the non-oil segment of the balance of payments, reducing Nigeria’s vulnerability to declining oil prices.
The Central Bank of Nigeria (CBN) reported that net foreign exchange reserves jumped to $23.11 billion at the end of December 2024, a significant leap from $3.99 billion at year-end 2023.
Moody’s further indicated that inflationary risks in Nigeria, influenced by policy shifts, have diminished. While inflation has been slow to temper, early signs of easing have now emerged.
Nigeria’s inflation rate stood at 23.71% in April 2025, a slight moderation from previous months.
The ratings agency highlighted that domestic borrowing costs are also showing nascent signs of easing, bolstering confidence in the stability of these policy changes.
Government efforts to reduce fiscal deficits, primarily driven by the elimination of the oil subsidy in mid-2023 and improved tax collection, have also yielded positive outcomes, with the primary balance shifting to a surplus of 0.8% of GDP in 2024 compared to a deficit of 2.6% in 2022.
Moody’s has revised Nigeria’s outlook to “stable” from “positive”, as it anticipates that recent progress on external and fiscal fronts will continue, albeit potentially at a slower pace if oil prices were to fall.
“The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely,” Moody’s concluded.
Outlook: Navigating Global Headwinds and Sustaining Reforms:
The Moody’s upgrade is a strong endorsement of the macroeconomic reforms implemented by the Nigerian government, particularly in foreign exchange liberalisation and fiscal consolidation.
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This improved rating could potentially lead to lower borrowing costs for Nigeria on international capital markets and attract increased foreign direct investment (FDI).
However, the stable outlook also signals that challenges remain, notably the persistence of high inflation and the sensitivity of external accounts to global oil price fluctuations.
Sustaining the reform momentum, managing inflationary pressures, and diversifying revenue streams beyond oil will be crucial for Nigeria to further strengthen its credit profile and achieve long-term economic stability.
