S&P revises Nigeria outlook
S&P Global Ratings confirmed Nigeria's long-term and short-term sovereign credit ratings in foreign and local currencies on Friday by revising its outlook on the West African nation from negative to stable.
The rating comes after Moody's Investors Service, another global credit rating agency, further downgraded Nigeria's rating to Caa1, saying it expects the government's fiscal and debt situation to improve. are deteriorating as the government grapples with considerable fiscal pressures.
A credit rating is used by sovereign wealth funds, pension funds and other investors to assess a country's creditworthiness.
The new rating shows that the country's financial situation varies significantly, with a slight change in its investment rating.
S&P said its negative outlook reflected growing risks to Nigeria's debt-servicing capacity over the next two years due to heightened fiscal and external pressures.
According to the rating agency, the revised outlook reflects its view that Nigeria's debt service capacity has weakened due to high fiscal deficits and increased external pressures.
“These strains stem from low oil production volumes (albeit on a recent increase), high refined oil subsidy costs, high debt service expenditures and a projected budget deficit. relatively large in the 2023 budget," the agency said.
“The economy is estimated to have grown by around 2.8% in 2022 and we expect real GDP to average 3.1% in 2023-26. Oil production below capacity will likely continue affect export growth, while inflationary pressures, fiscal constraints and sluggish investment will weigh on consumption and investment growth, although these factors are likely to be partially offset by a potentially more business-friendly new administration after the elections."
The agency sees pressure from low oil production volumes, which have recently increased. Oil production, including condensate, averaged about 1.37 million barrels per day last year, according to S&P.
He cites pressure from low oil production in the country (including condensate) which averaged around 1.37 million barrels per day in 2022, below the budgeted 1.60 mbpd and in below Nigeria's OPEC production quota of 1.8 mbpd.
"The significant underperformance of oil revenues in 2022 and rising debt service spending reinforce our view that the government's financial commitments look stretched unless there is credible fiscal consolidation after the elections," he said.
To reduce refined oil subsidies, S&P said it expects a substantial increase in refining capacity as a major refinery, owned by Dangote Group, is set to begin full-scale production by March 2023 .
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S&P Global Ratings confirmed Nigeria's long-term and short-term sovereign credit ratings in foreign and local currencies on Friday by revising its outlook on the West African nation from negative to stable.
The rating comes after Moody's Investors Service, another global credit rating agency, further downgraded Nigeria's rating to Caa1, saying it expects the government's fiscal and debt situation to improve. are deteriorating as the government grapples with considerable fiscal pressures.
A credit rating is used by sovereign wealth funds, pension funds and other investors to assess a country's creditworthiness.
The new rating shows that the country's financial situation varies significantly, with a slight change in its investment rating.
S&P said its negative outlook reflected growing risks to Nigeria's debt-servicing capacity over the next two years due to heightened fiscal and external pressures.
According to the rating agency, the revised outlook reflects its view that Nigeria's debt service capacity has weakened due to high fiscal deficits and increased external pressures.
“These strains stem from low oil production volumes (albeit on a recent increase), high refined oil subsidy costs, high debt service expenditures and a projected budget deficit. relatively large in the 2023 budget," the agency said.
“The economy is estimated to have grown by around 2.8% in 2022 and we expect real GDP to average 3.1% in 2023-26. Oil production below capacity will likely continue affect export growth, while inflationary pressures, fiscal constraints and sluggish investment will weigh on consumption and investment growth, although these factors are likely to be partially offset by a potentially more business-friendly new administration after the elections."
The agency sees pressure from low oil production volumes, which have recently increased. Oil production, including condensate, averaged about 1.37 million barrels per day last year, according to S&P.
He cites pressure from low oil production in the country (including condensate) which averaged around 1.37 million barrels per day in 2022, below the budgeted 1.60 mbpd and in below Nigeria's OPEC production quota of 1.8 mbpd.
"The significant underperformance of oil revenues in 2022 and rising debt service spending reinforce our view that the government's financial commitments look stretched unless there is credible fiscal consolidation after the elections," he said.
To reduce refined oil subsidies, S&P said it expects a substantial increase in refining capacity as a major refinery, owned by Dangote Group, is set to begin full-scale production by March 2023 .
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Good journalism costs a lot of money. Yet only good journalism can guarantee the possibility of a good society, an accountable democracy and a transparent government.
For free and continued access to the best investigative journalism in the country, we ask that you consider providing modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you help sustain relevant journalism and keep it free and accessible to everyone.
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