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S&P Ratings affirmed Nigeria’s credit rating at “B-/B” but turned negative on its outlook, citing increasing risks to the country’s debt servicing capacity over the next two-to-two years.
This comes after another global rating firm, Moody’s, downgraded Nigeria’s ratings to Caa1, citing high debt and weak fiscal buffer. Nigeria’s total public debt printed at N44 trillion, excluding about N24 trillion overdraft from the Central Bank ways and means window.
According to the rating note released, the global rating agency revised its outlook on Nigeria to negative from stable. It affirmed the nation’s B-/B long- and short-term foreign and local currency sovereign credit ratings.
S&P said the new outlook reflects “increasing risks to Nigeria’s debt servicing capacity over the next one-to-two years due to intensifying fiscal and external pressures.”
It sees pressures arising from low oil production volumes, which have recently been rising. Oil production, including condensates, averaged about 1.37 million barrels per day 2022, according to S&P.
Oil production was below the budgeted 1.60 million barrels per day (mbpd), and below Nigeria’s Organization of the Petroleum Exporting Countries’ production quota of 1.8 mbpd, S&P said.
In its rating note, S&P observed large refined-petroleum subsidy costs, high debt service expenditure, and a relatively large planned fiscal deficit in the 2023 budget.
The 2023 federal budget, excluding that of the states, estimates a fiscal deficit of N11.34 trillion or $24.6 billion, translating to 5% of the nation’s gross domestic product (GDP) for 2023, S&P said.
Zainab Ahmed, the finance minister said on Thursday ( February 2, 2023) she disagreed with what she said was a “surprise” downgrade by Moody’s, saying that the government was addressing the agency’s concerns, which included a deteriorating fiscal and debt position.
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