Fitch Scores has said that Nigeria’s ongoing power sector reforms, together with efforts to scale up renewable power, are anticipated to assist maintain a present account surplus over the medium time period.
This outlook was shared in its newest sovereign score launch, through which Fitch upgraded Nigeria’s long-term foreign-currency Issuer Default Ranking (IDR) to ‘B’ from ‘B-’, with a Steady Outlook.
It famous, “We anticipate a continued discount in exterior vulnerabilities by way of additional easing of home FC provide constraints, whereas renewed power sector reforms ought to assist maintain present account surpluses.”
In response to the score company, the nation’s exterior place is predicted to stay constructive, regardless of world headwinds, helped by bettering oil output and gradual progress in diversifying exports.
Fitch additionally famous that Nigeria’s dedication to reforms within the power area, together with the continued overhaul of its oil and gasoline sector and elevated funding in renewables, contributes to its constructive exterior outlook. These developments, alongside elevated alternate charge flexibility and the elimination of gasoline subsidies, are anticipated to assist improved macroeconomic fundamentals and exterior resilience.
Fitch’s optimistic outlook contrasts JP Morgan’s warning
The Fitch outlook stands in distinction to JP Morgan’s current evaluation, which highlighted rising dangers from world commerce dynamics. JP Morgan had earlier warned that the current tariffs imposed by the USA, coupled with falling worldwide oil costs, might reverse Nigeria’s present account surplus.
The US funding bank said {that a} sustained drop in oil costs under Nigeria’s fiscal breakeven of $60 per barrel might drive the present account into deficit and push the naira past N1,700 per greenback.
“Whereas Nigeria might effectively keep away from a recession itself, the substantial decline in oil costs under its break-even of $60/bbl, if sustained for a number of months, would push Nigeria’s present account stability into deficit,” JP Morgan said in its newest report on frontier markets.
Though Fitch took a extra reasonable view of Nigeria’s exterior challenges, it additionally famous, “We undertaking the present account surplus, estimated at 6.6% of GDP in 2024, to common 3.3% of GDP in 2025-2026.”
Dangers nonetheless current
Whereas Fitch acknowledged progress, it additionally cautioned that draw back dangers stay. These embody doable pressures from declining oil costs, capital move reversals, and delays in structural reforms. A weaker exterior surroundings or failure to implement reforms might weigh on the present account and put stress on worldwide reserves.
However, the rankings company maintained that Nigeria’s improved macro coverage combine, progress on FX liberalisation, and power sector reforms provide a supportive backdrop for exterior and monetary efficiency within the medium time period.
With Fitch’s improve and its recognition of power reforms, Nigeria’s prospects for sustaining exterior stability might stay beneficial—offered that reform momentum continues and world market situations stay comparatively secure.
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