Moody's: Nigeria's ratings dropped to negative from stable over increasing risks to fiscal strength and narrow revenue base

President Muhammadu Buhari [vanguardngr]
  • Moody's changes outlook on Nigeria's B2 rating to negative from stable  
  • Moody's says weak government finances will likely weaken further given an extremely narrow revenue base and persistently sluggish growth that hinders fiscal consolidation.
  • The credit rating agency also maintains Nigeria's country risk ceilings at their current levels.

Moody's Investors Service on Wednesday changed the outlook on the government of Nigeria's ratings to negative from stable.

Concurrently, Moody's has affirmed the B2 long-term local and foreign currency issuer ratings, the B2 foreign currency senior unsecured ratings, and the (P) B2 foreign currency senior unsecured MTN programme rating.

The negative outlook reflects Moody's view of increasing risks to the government's fiscal strength and external position. Already weak government finances will likely weaken further given an extremely narrow revenue base and persistently sluggish growth that hinders fiscal consolidation. As pressures mount, there is a risk that the government resorts to increasingly opaque and costly options to finance a moderate but rising debt burden. Moreover, vulnerability to an adverse change in capital flows is building in light of Nigeria's increasing reliance on foreign investors to fund the country's foreign exchange reserves,” the report made available to Business Insider SSA, reads

The negative outlook reflects Moody's view of increasing risks to the government's fiscal strength and external position. Already weak government finances will likely weaken further given an extremely narrow revenue base and persistently sluggish growth that hinders fiscal consolidation. As pressures mount, there is a risk that the government resorts to increasingly opaque and costly options to finance a moderate but rising debt burden. Moreover, vulnerability to an adverse change in capital flows is building in light of Nigeria's increasing reliance on foreign investors to fund the country's foreign exchange reserves.

Moody's says its decision to affirm the rating at B2 recognises a combination of credit strengths including the country's large and diversified economy supported by vast oil and gas endowments, notwithstanding persistent credit weaknesses such as its very weak institutions and governance framework and in particular poor public finance management.

It also has maintained Nigeria's country risk ceilings at their current levels: Foreign Currency bond ceiling at B1, Foreign Currency deposit ceiling at B3, and Local Currency bond and deposit ceilings at Ba1.

JOIN OUR PULSE COMMUNITY!

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

Sonko’s reaction as daughter Sandra Mbuvi goes international

Sonko’s reaction as daughter Sandra Mbuvi goes international

Eliud Kipchoge's special Sh20,000 earphones he can't live without

Eliud Kipchoge's special Sh20,000 earphones he can't live without

Abel Mutua's movie makes over Sh4M in 5 days

Abel Mutua's movie makes over Sh4M in 5 days

Vera imports Baby Diapers from US, Help rebuild Boniface Mwangi's house & other stories on #PulseUhondoMtaani

Vera imports Baby Diapers from US, Help rebuild Boniface Mwangi's house & other stories on #PulseUhondoMtaani

Davido and Chioma spotted together for the first time since rumoured breakup

Davido and Chioma spotted together for the first time since rumoured breakup

How Janet Mbugua's husband Eddie landed Sh240 million deal with Chinese investors

How Janet Mbugua's husband Eddie landed Sh240 million deal with Chinese investors

Diana Marua in jubilation as she celebrates new milestone [Photo]

Diana Marua in jubilation as she celebrates new milestone [Photo]

5 things you should never do to please a woman

5 things you should never do to please a woman

Amazing transformation of 21-year-old man bullied for being born different (video)

Amazing transformation of 21-year-old man bullied for being born different (video)