This is yet another big blow S&P Global Ratings has downgrade Nigeria’s economy to a junk status.
S&P lowered Nigeria’s rating one level to B, five levels below investment grade and in line with Kyrgyzstan and Angola. The outlook was changed from negative to stable.
“Nigeria’s economy has weakened more than we expected owing to a marked contraction in oil production, a restrictive foreign exchange policy and delayed fiscal stimulus,” S&P said Friday in an e-mailed statement after markets closed.
While government debt remains low, “servicing costs as a percentage of general government revenues are high and rising,” the company said.
This rating is to an extent confirming what is already a consensus in Nigeria. Two weeks ago, the National Bureau of Statistics, NBS officially confirmed that Nigeria is in recession after two consequitive quarters of negative growth.
Also, inflation rate is still a big concern for Nigeria. At 17.6%, August inflation data shows that there is a gradual slowdown in consumer prices.
The next coming months will determine if Nigeria can exit it’s worst recession in the last 20 years.
Yesterday, the federal government confirmed that it has released another batch of NGN450 billion for capital projects. These stimulus spending are needed to stimulate the economy.