Rating Release
Agusto & Co. hereby assigns a “B+” rating to the Federal Republic of Nigeria (“FRN”, “Nigeria”, “the Nation” or “the Country”) and attaches a stable outlook to the Sovereign.
Agusto & Co. hereby assigns a “B+” rating to the Federal Republic of Nigeria (“FRN”, “Nigeria”, “the Nation” or “the Country”) and attaches a stable outlook to the Sovereign. The rating reflects a series of bold policy reforms since mid-2023, including the unification of foreign-exchange markets, tighter monetary policy, fuel-subsidy removal and the end of deficit monetization, all of which have reinforced macroeconomic discipline. The rating also considers the country’s improving external position, evidenced by the rebound in foreign exchange reserves, bolstered by Eurobond issuances and renewed portfolio inflows, as reforms to the exchange rate framework restored investor confidence. This is in addition to the ongoing fiscal consolidation, aided by over ₦4 trillion in annual subsidy savings, recent tax reforms that are expected to boost collections and narrow budget deficit. As the Dangote Refinery ramps up output and crude oil production rises, the anticipated decline in fuel imports is expected to strengthen foreign exchange reserves, sustain the country’s current account surplus and ease inflationary pressures. In addition, agricultural exports and tech start-ups are gaining significant momentum, suggesting a gradual diversification away from oil & gas, and boosting foreign exchange earnings.
However, lower-than-expected oil revenues in 2025 amid the ongoing tariff wars and escalating geopolitical tensions in the Middle East could exacerbate fiscal deficit, prompting increased domestic and external borrowings. With elections on the horizon, policymakers may feel compelled to reverse critical reforms, particularly the implementation of the new tax regime, in pursuit of political advantage. Such policy reversals will undermine the progress achieved in fiscal consolidation and market stability, eroding investor confidence and jeopardising the credibility that has recently bolstered Nigeria’s economic growth and credit rating outlook.
