Global credit rating agency Fitch has revised Nigeria’s long-term foreign-currency issuer default rating (IDR) outlook from Negative to Stable, upgrading the country’s rating from ‘B-’ to ‘B’. The IDR reflects an entity’s vulnerability to default on financial obligations, including distressed debt exchanges.

In a statement released on Friday, Fitch said the decision was driven by renewed confidence in Nigeria’s policy direction, following the implementation of significant economic reforms since June 2023.

“The upgrade reflects increased confidence in the government’s broad commitment to policy reforms implemented since its move to orthodox economic policies in June 2023, including exchange rate liberalisation, monetary policy tightening and steps to end deficit monetisation and remove fuel subsidies,” Fitch said.

These reforms, according to Fitch, have improved policy coherence and credibility, helping to reduce economic distortions and short-term risks to macroeconomic stability.

“These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks.”

Policy Outlook and Inflation Projections
Fitch expects Nigeria’s current macroeconomic stance to support a gradual decline in inflation and enhance the functionality of the foreign exchange (FX) market, even though inflation rates will likely remain high compared to peer economies.

“The stable outlook reflects Fitch’s expectation that the macroeconomic policy stance will support the move to lower inflation and sustain improvements in the foreign exchange (FX) market’s operation, though it will likely remain much higher than rating peers.”

The agency also pointed to continued reduction in external vulnerabilities and the formalisation of FX activity as positive developments. Recent moves by the Central Bank of Nigeria (CBN), including the launch of an electronic FX matching platform and a new FX code, are seen as steps toward greater transparency and stability.

“Greater formalisation of FX activity including the Central Bank of Nigeria’s (CBN) recent introduction of an electronic FX matching platform and a new FX code to enhance transparency and efficiency, along with monetary policy tightening, has led to a greater rise in FX liquidity and general stability in the FX market after a 40% depreciation in 2024, closing the spread between the official and parallel exchange rates.”

FX inflows through official and autonomous channels surged by 89% in Q4 2024, compared to just 8% in Q4 2023. Fitch anticipates modest depreciation in the short term but expects improved exchange rate stability.

The CBN has also adopted a tighter monetary policy to combat inflation, raising policy rates to 27.5%—an 875 basis point increase since February 2024.


https://www.vanguardngr.com/2025/04/fitch-upgrades-nigerias-credit-outlook-citing-policy-reforms-economic-stabilization/