Ratings agency Moody’s on Friday revised its outlook on Nigeria to positive from stable, citing possible reversal of the deterioration in the country’s fiscal and external position due to authorities’ reform efforts.
The agency also affirmed its “Caa1” long-term foreign currency and local currency issuer ratings.
Nigerian President Bola Tinubu is seeking to boost growth and attract billions in new investment after taking charge of Africa’s biggest economy, which is grappling with shortages of foreign exchange, low oil output and widespread insecurity.
Tinubu has undertaken the country’s boldest reforms in decades by scrapping a popular but costly fuel subsidy in May, removing exchange controls and ending a ban on some imports.
The reforms have been welcomed by investors, but unions say they led to soaring costs while inflation has been in double-digits in Nigeria since 2016, further eroding savings and incomes.
“These policy changes, and those potentially to come, have raised the prospects of a fiscal and external improvement in the country’s credit profile,” Moody’s said in a statement.
Last month, Tinubu urged the parliament to approve $8.69 billion and 100 million euros ($107.47 million) for projects across infrastructure, agriculture, health, education, water supply, growth, security, employment generation, as well as financial management reforms.
The Central Bank of Nigeria in November started clearing $7 billion outstanding foreign currency forwards in a bid to attract new dollar inflows and stabilise the Naira, which has been weakening to record lows.
In August, S&P Global Ratings revised its outlook on Nigeria to stable from negative and affirmed its rating at ‘B-/B’.