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Nigerian Economy gets Ratings Upgrade

By on November 9, 2012

 

Ratings Agency, Standard & Poor’s

Sub-Saharan Africa’s second largest economy Nigeria is on the path of great socio-economic transformation going by the recent ratings of internationally renowned credit rating agency Standards and Poors from ‘B+’ to ‘BB-‘ .

The agency believes the stable economic outlook resulting from the pursuit of viable economic reforms by the Government particularly in the Banking, Electricity and Fuel could really project and accelerate economic growth for the Nation.

It was noted that with no worsening political tension in the country, insurgence of the militia group ‘Boko Haram’, and no return to militancy in the Niger-Delta too will  guarantee a steady growth potential.

The Government was praised by the S&P for tighter fiscal policy; and said that they may consider raising the Nation’s credit rating again ‘If authorities consistently improve fiscal performance and significantly enhance foreign currency reserves, if transparency in the oil sector and on the fiscal and external accounts improve substantially.

Earlier this week the Nigerian Government received the boost of the Moody rating another renowned credit rating agency improved its outlook assigning a Ba3 citing economic stability for the improved scorecard.

President Goodluck Jonathan had already set out a 2013 budget, which will peg spending at a modest benchmark  oil price of $75 dollars per barrel, with all revenue earned above that price to be deposited in the excess crude account, which intended for savings.

The Nation’s fiscal assets in its excess crude account have risen to $8.4 billion(from US $2.0 billion at end- 2010), which provides a reasonable fiscal buffer,’ said S&P. ‘External buffers have also been rising on the back of high oil prices and strong exports, with foreign reserves standing at just above $42 billion as of November 1,2012.

S&P also warned that ‘if fiscal  and external balances deteriorate’, they may lower Nigeria’s credit rating back to ‘B+’ again. Downward pressure could also build if reform stagnates, growth falters, or if political tensions and violence increase.