For the three global rating agencies, the countries of West Africa is now investing “very speculative”.
Nine months after lowering the rating outlook Nigeria, Fitch has finally decided to reduce by one notch the rating of the first African economy, with stable outlook. The long-term rating in foreign currency changes from “BB-” to “B +” (category “very speculative”) while the local currency changes from “BB” to “BB-”.
a statement released June 23 in the afternoon, the rating agency explained that “fiscal and external vulnerability of the country has deteriorated due to the significant drop in oil and tax revenues and long-monetary adjustments to take shape and insufficient to mitigate the impact of lower oil prices. “
Fitch added that the return of the insurgency in the Niger Delta in the first half 2016 decreased oil production, exacerbating pressures on export revenues and limiting the entry of foreign currency.
for Fitch, the deficit is expected to grow to 4.2% of GDP in 2016, against an average of 1.5% between 2011 and 2015. Despite expected increases in the collection of non-oil tax revenues, the result of work done by the government in this area, public revenues are expected to fall to 5.5% of GDP in 2016 against 12% from 2011 to 2015.
of the country remains low debt to 14% of GDP in 2016, but Fitch fears a deterioration.
Highly speculative
the agency does not seem to totally satisfy the recent decisions in terms of flexibility of the naira. For her, the new exchange rate regime, adopted on 20 June, is not completely flexible because a parallel market remains, “importers of 41 types of products being excluded from the interbank market.”
growth of the Nigerian GDP is expected by Fitch to 1.5% in 2016, down from 2.7% in 2015 known.
in late April, Moody’s lowered the sovereign rating of Nigeria “B1″, first step in the bond category called “very speculative”. S & amp; P had passed the Nigerian notation very speculative grade early 2015, and just lowered the outlook on this rating
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