Fitch downgrades Nigeria to ‘B’, negative outlook

The international rating agency, Fitch has downgraded Nigeria’s long-term foreign-currency issuer default rating from ‘B+’ to ‘B’.

A plaque is pictured at the entrance of the Fitch offices in downtown Milan January 24, 2012.  REUTERS/Alessandro Garofalo

The negative outlook shows the pressures on Nigeria’s external finances after the recent fall in oil prices and the current COVID-19 pandemic.

Fitch said this downgrade will raise the government’s debt and interest payment-to-revenue ratios from the already high levels and lead to a renewed economic recession.

A statement from Fitch said “The plunge in international oil prices, which we assume will average of $35/barrel in 2020 after $64.1/barrel in 2019, highlights Nigeria’s high dependence on the oil sector, with hydrocarbon revenues representing 57 percent of current-account receipts and nearly half of fiscal revenue over the last three years. This shock exacerbates the overvaluation of the naira and remedial policy actions taken by the Central Bank of Nigeria will not suffice to address deteriorating external imbalances, in our view.”

“The CBN allowed the exchange rate on the Investor and Exporter Window, on which the bulk of foreign-currency transactions are held, to depreciate by 6.7 percent since mid-January and devalued the official exchange rate by 15 percent in March.”

It also said, “Continued pressures on the naira are illustrated by the drawdown in international reserves, which declined by 9.4 percent year-to-date, representing a cumulative fall of 22.5 percent since their peak mid-July.”

Our newsletter gives you access to a curated selection of the most important stories daily.

Welcome to the Pulse Community! We will now be sending you a daily newsletter on news, entertainment and more. Also join us across all of our other channels - we love to be connected!

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

Africa’s richest man Aliko Dangote poised to overtake another Russian billionaire Vladimir Lisin on Bloomberg billionaires list

Africa’s richest man Aliko Dangote poised to overtake another Russian billionaire Vladimir Lisin on Bloomberg billionaires list

Mzee Kibor's will made public, revealing how vast wealth and millions will be distributed

Mzee Kibor's will made public, revealing how vast wealth and millions will be distributed

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Mathias Pogba brands Paul Pogba 'a so-called Muslim steeped in witchcraft' amid fetish claims about Kylian Mbappe

Mathias Pogba brands Paul Pogba 'a so-called Muslim steeped in witchcraft' amid fetish claims about Kylian Mbappe

Referee behind chaos at AFCON was rushed to hospital after match

Referee behind chaos at AFCON was rushed to hospital after match

Ne-Yo speaks out after wife Crystal announced end of their 8-year marriage

Ne-Yo speaks out after wife Crystal announced end of their 8-year marriage

Eddie Butita speaks on his fallout with Miss Mandi, offers her a job

Eddie Butita speaks on his fallout with Miss Mandi, offers her a job

Sadio Mane the odd one out as Bayern Munich stars take team photo with glasses of beer

Sadio Mane the odd one out as Bayern Munich stars take team photo with glasses of beer

Africa's richest man, Aliko Dangote, adds extra $915 million to his vast wealth in Q1 2022

Africa's richest man, Aliko Dangote, adds extra $915 million to his vast wealth in Q1 2022