Nigeria may struggle to secure foreign loans to implement its 2023 national budget, following Moody’s downgrade of the country’s rating from B2 to B3, LEADERSHIP has learnt.
The downgrade puts Nigeria at par with Angola and Mongolia due to its declining finances, hence, could struggle to fund the ambitious N20.5trillion 2023 budget that solely rely on about N10 trillion borrowing to finance it.
Moody’s Investor Service is an international ratings agency.
Similarly, commercial banks and corporates whose ratings are tied to the sovereign rating of the country are also beginning to face possible downgrades.
Moody’s, at the weekend, issued a statement saying it has downgraded Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings to B3 from B2 and placed the country on review for downgrade.
This development could equally impact negatively on deposit money banks as the rating agency has also penned down commercial banks and corporates in the country whose ratings are tied to Nigeria’s sovereign rating for possible downgrades.
The rating agency had also put on review for possible downgrade some commercial banks in the country, as it expressed fears that the plans of the country to extend the maturity of some of its debt may result in default.
With Nigeria currently running a budget deficit, spending more than 100 per cent of its retained revenue on servicing loans and planning to run a deficit of more than N10 trillion in the 2023 fiscal year, the minister of Finance, Budget and Planning, Mrs Zainab Ahmed had said the government is considering an extension of its current debts to give the government fiscal space to borrow and finance its spendings.
This had, however, triggered investors as Moody’s said the ongoing fiscal and external weakening could accelerate, hindering the government’s capacity to service debt and thereby increase the nation’s risk of default.
