Fitch revises Nigeria view to negative

Fitch Ratings said it revised the outlook on Nigeria’s long-term foreign-currency issuer default rating to negative from stable and affirmed the rating at B+.

The outlook revision mirrors the increasing vulnerability from the current macropolicy setting, raising risks of disruptive macroeconomic adjustment in the medium term amid continued real appreciation of the naira. A sharp devaluation of the exchange rate under the current policy framework would fuel macroeconomic volatility and weaken some of Nigeria’s key credit metrics, including its GDP per capita in U.S. dollars and its share in world GDP, said Fitch.

“The substantial real appreciation of the naira over the last year appears uncorrelated with macroeconomic fundamentals and is set to continue, driven by high inflation. Commodity terms of trade have deteriorated somewhat and will decline further, weighed down by lower oil prices,” said Fitch in a press release.

General government debt remains on an upward climb, while particularly low fiscal revenues and structural shortcomings in public finance management limit the sovereign’s ability to support a rising debt burden.

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