Fitch Scores has affirmed Nigeria’s Lengthy-Time period International-Forex Issuer Default Ranking (IDR) at ‘B’ with a Secure Outlook, citing improved international alternate liquidity and ongoing financial and monetary reforms, whereas warning that weak governance and excessive inflation stay key credit score challenges.
In its newest assessment launched on Friday, the worldwide scores company mentioned Nigeria’s ranking is supported by its giant economic system, a liquid home debt market, and substantial oil and fuel reserves.
Nonetheless, it famous that persistent inflation, income weak spot, and safety points proceed to weigh on the nation’s credit score profile.
“Nigeria’s ‘B’ ranking is supported by its giant economic system, comparatively developed and liquid home debt market, and improved financial and alternate price coverage framework,” Fitch acknowledged.
“It’s constrained by weak governance indicators, excessive hydrocarbon dependence, excessive inflation, safety challenges, and structurally low non-oil income.”
Improved FX liquidity and financial stability
Fitch noticed that latest reforms by the Central Bank of Nigeria (CBN) have strengthened international alternate market operations, leading to higher liquidity and relative naira stability.
Nonetheless, the company cautioned that knowledge transparency and high quality issues proceed to pose dangers to coverage credibility.
The report additionally famous that international reserves rose to $42 billion as of end-September 2025, exceeding the median for equally rated ‘B’ economies. Fitch projected a slight decline to $40 billion by end-2026, equal to five.8 months of import cowl.
Fitch mentioned Nigeria’s present account surplus climbed to six.8% of GDP in 2024 from 1.3% the earlier 12 months, pushed by strong remittances and lowered oil import prices as a consequence of greater home refining capability.
Inflation easing however nonetheless elevated
- In response to Fitch, Nigeria’s inflation price stays one of many highest amongst ‘B’-rated friends, regardless of indicators of moderation. Inflation stood at 20% in August 2025, down from a mean of 33% in 2024, and is projected to fall to 17% by 2027.
- The report mentioned the CBN’s resolution to chop its coverage price by 50 foundation factors to 27% in September, the primary minimize since 2020, displays efforts to steadiness financial easing with naira stability and disinflation objectives.
“We count on additional price cuts, though the CBN will transfer with warning to maintain relative forex stability and strengthen coverage transmission,” Fitch mentioned.
Fiscal and debt outlook stay pressured
Fitch projected that Nigeria’s finances deficit will widen to a mean of three.1% of GDP between 2025 and 2026, pushed by rising wages, safety spending, and election-related prices forward of 2027.
Whereas the federal government’s new tax legal guidelines—efficient January 2026—are anticipated to boost income to 12.4% of GDP by 2027, Fitch mentioned this stays properly under the federal government’s goal of 16.2% and much wanting the ‘B’ median of 17.8%.
Nigeria’s basic authorities debt is forecast to say no barely to 37% of GDP by 2027 from 39% in 2024, helped by nominal GDP progress and home financing capability.
Nonetheless, curiosity funds are projected to eat as much as 43% of presidency income in 2025, easing modestly thereafter.
Reasonable progress, oil restoration anticipated
Fitch expects actual GDP progress to extend barely to 4.2% in 2025, supported by alternate price stability and better oil output. Oil manufacturing (excluding condensates) is forecast to common 1.5 million barrels per day in 2025, up from 1.34 million bpd in 2024, although nonetheless under pre-pandemic ranges.
“The relative stability within the FX market will help non-oil exercise, however excessive inflation and rates of interest will constrain momentum,” the company famous.
Fitch additionally mentioned Nigeria’s banking sector is predicted to regulate to new capital necessities by end-2025 because the CBN phases out longstanding regulatory forbearance on mortgage classifications.
Governance and outlook
- Fitch maintained Nigeria’s Environmental, Social and Governance (ESG) Relevance Rating at ‘5’ for political stability, institutional high quality, and management of corruption, citing persistent institutional weaknesses and uneven rule of regulation enforcement.
- The ranking company mentioned Nigeria’s outlook might enhance if sustained reforms result in decrease inflation, stronger income mobilisation, and better progress, whereas coverage reversals, fiscal slippage, or renewed FX stress might set off a downgrade.
“Sustained progress in disinflation, stronger medium-term progress, and improved governance might help an improve,” Fitch mentioned.
“Conversely, renewed exterior liquidity stress or weakening fiscal self-discipline might result in a downgrade.”
What it is best to know
- In August, Fitch Scores revealed that whereas most banks are anticipated to exit the regulatory forbearance regime by December 2025, a choose few will proceed working below forbearance past the interval.
- Although no particular bank was talked about, the credit standing company added that this can be topic to stringent penalties, together with a prohibition on dividend funds.
- This growth comes amid broader efforts by the Central Bank of Nigeria (CBN) to strengthen monetary stability and guarantee banks enter 2026 with stronger capital buffers and cleaner steadiness sheets.
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