Globalcredit ratings agency, Fitch Ratings, has expressed concerns that scarce Foreign
Exchange (forex) would hamper the Nigeria’s economy in 2017 if nothing is done quickly to address the situation. The agency therefore, revised its Outlook on Nigeria’s Long-Term Foreign and LocalCurrency Issuer Default Ratings (IDRs) from stable to negative.
Fitch however affirmed Nigeria’s IDR at ‘B+’, four steps below investmentgrade.TheCountryCeilingwasalsoaffirmedat ‘B+’while theShort-TermForeignandLocalCurrencyIDRswereaffirmedat’B’.The Outlook downgradewasinformedbyanassumptionthatthenonoil economywould continue to be constrained by severely restrictedaccess to foreign exchange liquidity until the Central Bank ofNigeria (CBN) can restore the credibility of the Interbank Foreign ExchangeMarket (IFEM) and bring down the spread between the official rate and the parallel market rates.”
However, Fitch also highlighted factors that could lead to positive rating action, including: revival ofeconomic growth; reduction of the fiscal deficit and the maintenance of a manageable debt burden;increase in foreign exchange reserves to a level that reduces vulnerability to external shocks;andsuccessfulimplementationofstructuralreformssuchraisingnon-oilrevenues,increasingtheexecutionofcapital expenditures and passage of the Petroleum Industry Bill.
Analysts however, are concerned about thecurrent energy crises facing the country, especially the failure of power sector to achieve commercial market viability.Also, the inability of government to fully deregulate the downstream Petroleum sector mayleadtoanenergycrisisthatcouldhobbleeconomicrecovery,” they said.