Fitch Affirms Nigeria’s ‘B’ Ratings with Stable Outlook

Fitch Ratings has affirmed Nigeria’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B’ with a Stable Outlook, a decision it said reflects Nigeria’s large economy, a relatively developed and liquid domestic debt market, large oil and gas reserves and an improved monetary and exchange rate policy framework.

This is as it said it expects the country’s external reserves to decline marginally to $47 billion by the end of this year while inflation is projected to hover around an average of 16 per cent. The rating agency in its latest report on Nigeria said the rating is constrained by weak governance indicators, high hydrocarbon dependence, high inflation, security challenges and structurally low revenue relative to peers.

Fitch while stating that expects disinflation trend to continue said the risks however remain, “Inflation has moderated since April 2025 supported by policy reforms, but remains structurally high, at 15 per cent yoy in February 2026. We expect inflation to average about 16% in 2026, from 23 per cent in 2024, but to remain well above the ‘B’ median of 5.5 per cent.

“The CBN began easing monetary policy in September 2025, cutting the policy rate twice by a total 100bp to 26.5 per cnet after an extended tightening cycle. However, a looser fiscal stance ahead of the general election scheduled in January 2027 or further fuel price increases could reverse disinflation and prompt renewed monetary tightening.”

Noting that external reserves are expected to remain strong, it said gross reserves rose to $49.4 billion at end-March 2026, from $32 billion in mid-April 2024, and “we forecast a marginal decline to $47 billion at end-2026, reflecting higher spending pressures and external risks. However, we expect reserves to cover seven months of current external payments (CXP), well above the ‘B’ median of 4.3 months.

“Official disclosure on the composition of the CBN foreign-currency balance sheet remains limited, but the CBN has made substantial progress in unwinding foreign exchange swaps with local banks.

It estimates net reserves at $35 billion at end-2025 (5.5 months of CXP), up from about $4 billion at end-2023.”

The authorities have continued to build on reforms implemented since May 2023 to restore macroeconomic stability and enhance policy credibility. Recent measures by the Central Bank of Nigeria (CBN), including the removal of forex restrictions on the repatriation of oil export proceeds by international oil companies, should support further forex market normalisation, improve confidence and support relative naira stability after a 40 per cent depreciation in 2024. However, we expect modest depreciation in the near term amid rising fiscal pressures and heightened external risks, while data quality concerns continue to weigh on policy credibility.