Moody’s upgrades Nigeria’s outlook to positive, affirms B3 rating

Nigeria has received an upgrade from Moody’s Ratings from stable to positive while retaining its long-term foreign and local currency issuer ratings at B3.

The Federal Ministry of Finance, in a statement issued in Abuja on Saturday, said the decision reflects the impact of the Federal Government’s macroeconomic and fiscal reforms implemented over the past three years.

Moody’s attributed the improved outlook largely to Nigeria’s stronger external position, citing current account surpluses, rising foreign exchange reserves, improved functioning of the foreign exchange market and better transmission of monetary policy.

The rating agency projected that Nigeria’s current account surplus would increase to about 6.1 per cent of Gross Domestic Product in 2026.

The development also comes against the backdrop of a significant rise in the country’s external reserves. Data from the Central Bank of Nigeria showed that gross external reserves had climbed to $53.30 billion as of August 26, 2026.

The Federal Government described the latest assessment as an important indication that its economic reforms are beginning to produce measurable results.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the positive outlook represented external recognition of what he described as difficult but necessary policy decisions taken by the administration.

“Moody’s positive outlook is an important external validation of the difficult but necessary reforms this administration has implemented, from removing a costly and inequitable fuel subsidy to unifying the exchange rate, and the landmark tax reforms,” Oyedele said.

He said the reforms were aimed at rebuilding the fundamentals of the Nigerian economy, pointing to stronger reserves, a more resilient external position, declining inflation and improved monetary policy transmission.

Nigeria’s economic performance has also strengthened compared with earlier projections. According to the ministry, real GDP growth reached four per cent in 2025, exceeding previous expectations of about three per cent.

Similar growth is expected to continue through 2027, driven by increased activity in the non-oil sector as well as improved oil production.

Inflation, which has remained one of the major concerns for households and businesses, has also recorded a notable decline. Headline inflation fell to 15.4 per cent in July 2026 from 25.3 per cent in the corresponding period a year earlier.

The Moody’s decision follows a series of positive assessments of Nigeria’s economic trajectory by international financial and rating institutions.

FTSE Russell on August 27 confirmed Nigeria’s reclassification from “Unclassified” to “Frontier Market” status. This came after S&P Global Ratings upgraded Nigeria’s rating to B from B- in May 2026, while Fitch affirmed the country at B with a stable outlook.

The government said the series of assessments points to growing confidence in the direction of Nigeria’s economic reforms.

Oyedele, however, said the government would not become complacent, stressing that the ultimate objective was to improve the underlying strength of the economy rather than simply pursue better ratings.

“Our medium-term ambition is to place Nigeria firmly on the path to investment grade,” he said.

He added that achieving the target would require sustained improvements in the country’s external position, stronger domestic revenue mobilisation, greater spending efficiency and improved debt affordability.

“We are committed to doing the work required to get there, not for the rating itself, but because the underlying reforms are what will lower Nigeria’s cost of capital, crowd in private investment, and deliver shared prosperity for Nigerians,” Oyedele said.

The Ministry of Finance said it would continue to deepen tax reforms and improve revenue administration, maintain a transparent and market-reflective foreign exchange regime and strengthen public debt management.

It also pledged to maintain fiscal discipline in collaboration with state and local governments while advancing structural reforms designed to support non-oil growth and diversify government revenue.

According to the ministry, Moody’s has indicated that a further improvement in Nigeria’s rating could become possible if the recent gains in the external sector are sustained and revenue reforms produce a lasting increase in government receipts.

The Federal Government said both areas would remain central to its economic strategy as it seeks to consolidate recent gains and build a more stable and investment-friendly economy.