Fitch revises Nigeria’s outlook to positive on recent economic reforms

Global ratings agency Fitch has revised Nigeria’s outlook to positive from stable, citing the country’s economic reforms. Since taking office about a year ago, President Bola Tinubu has embarked on sweeping reforms, including slashing costly petrol and electricity subsidies and devaluing the Naira currency twice within a year to narrow the gap between the official and parallel market exchange rates. The reforms have reduced distortions stemming from previous unconventional monetary and exchange rate policies,” the agency said in a statement. Moody’s and S&P also revised their outlook on Nigeria last year, citing the potential impact of reforms.

Nigeria has grappled with anaemic growth, dollar shortages, a mounting debt burden and widespread insecurity. However, Fitch said significant short-term challenges such as persistently high inflation and the currency market that has yet to stabilise.  The central bank has raised its monetary policy rate by 600 basis points since the start of the year to curb galloping inflation and asked banks to raise their minimum capital to help enhance resilience and strengthen the country’s financial system. The agency maintained the African country’s rating at “B-” within the junk territory.