The US agency Standard & amp; Poor’s downgraded the sovereign rating of Nigeria to “B +”, due to the impact of falling oil prices and political uncertainty in general elections this year.
The agency Standard & amp rating; Poor’s lowered the rating one notch from Nigeria to “BB-” to “B +” with a stable outlook. Sovereign bonds of the first African economy is now rated at the same level as those of Senegal and Rwanda. Similarly, the gap between Nigeria and other leaders of the continent, such as Morocco and South Africa, both of which have an investment grade (‘BBB-’), is found in significantly increased.
In a statement issued on 20 March, the US agency explains its decision by the impact of the fall of oil prices on the country’s finances and general election-related political risks organized this year, including the planned presidential elections on March 28th. Hydrocarbons account for two thirds of tax revenues and 90% of exports, according to S & amp estimates; P
& gt;. & Gt; & gt; & gt; Nigeria suffered the shock against the full force
If in its press Standard & amp; Poor’s applauds the efforts of the Nigerian authorities to mitigate the impact of the decline in oil prices, particularly through monetary and fiscal policy more conservative, the US Agency highlights the vulnerability of these measures to political tensions.
“In our view, general elections and tight oil production below expectations could pose risks to the implementation of proactive fiscal consolidation plans and ambitious incurred by the federal government’s economic team” says S & amp; P in its note
The US agency expects a current account deficit of 1.8% of GDP per year on average between 2015 and 2018, against a surplus of. about 4% between 2010 and 2014. S & amp; P now expects an annual growth rate of GDP by 5% by 2018, down from 6.2% announced by the agency in September.
On a more positive note, S & amp; P highlights the contribution of non-oil sector which should support the growth of Nigeria, whose economy, as revealed by the GDP revision carried out the year Last, is less dependent on hydrocarbons previously thought.
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