Fitch Shows Support for Tinubu's Reforms, Upgrades Nigeria’s Credit Rating

• Fitch Ratings has decided to upgrade Nigeria’s credit rating, citing strong support for President Tinubu’s economic reforms
• The rating agency praised Tinubu's removal of the costly fuel subsidy and allowing the naira to float more freely
• The rating is timely as it is expected to boost investor confidence, reduce borrowing costs, and enhance Nigeria’s global financial standing

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Fitch Ratings has upgraded Nigeria’s credit rating to ‘B’ from ‘B—’, citing improved policy credibility.

However, the new rating remains within the speculative-grade category.

Why Fitch upgraded Nigeria's credit rating

Fitch said in a statement on Friday, April 11, that its decision to upgrade Nigeria was due to reduced short-term risks to economic stability under President Bola Tinubu’s reform-driven administration.

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Part of the statement read:

“The upgrade reflects increased confidence in the government’s broad commitment to policy reforms implemented since its move to orthodox economic policies in June 2023, including exchange rate liberalisation, monetary policy tightening and steps to end deficit monetisation and remove fuel subsidy"

The statement further endorses Tinubu’s sweeping economic overhaul, following Fitch’s move in May to revise Nigeria’s outlook from stable to positive while maintaining the B- B-rating.

Although a B rating signals progress, it is still classified as "below investment grade and highly speculative, BusinessDay reports.

Fitch credit rating boost comes amid fiscal headwinds for Africa’s largest oil producer. A recent drop in oil prices to $63 per barrel, below the government’s benchmark of $75 which has raised concerns over Nigeria’s revenue targets.

Oil remains a critical pillar of the economy, accounting for around half of federal budget revenues and the bulk of foreign exchange earnings.

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Despite ongoing challenges, the rating upgrade suggests a more optimistic outlook for Nigeria’s economic future, particularly if the government can maintain momentum on reform implementation and manage external risks effectively.

The drop in global oil prices has significantly impacted the realisation of budget goals.

Various reforms under President Tinubu

Since coming to power, President Bola Tinubu has introduced various policy changes, including the removal of costly fuel subsidies and allowing the naira to float more freely.

This move has drawn praise from international organizations such as the World Bank. However, the changes have also triggered domestic hardship, contributing to a sharp rise in inflation and increasing pressure on household incomes.

Dangote Refinery slashes petrol price

Earlier, Legit.ng reported that the Dangote Refinery has once again reduced its petrol price at its loading gantry for marketers.

The reduction is coming less than 24 hours, it was announced that the naira-for-crude agreement will now resume.

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The new price is a reduction of N15 from N880 per litre sold by the facility on Wednesday, April 9, 2024.

The new price is now expected to lead to changes in pump prices at various filling stations, especially those with special agreements with the Dangote Refinery.

Proofreading by Nkem Ikeke, copy editor at Legit.ng.

Source: Legit.ng