Bad news for Buhari as Fitch international ratings agency downgrades Nigeria
The Buhari-led administration's plans to diversify the economy and wean Nigeria from its total dependence on oil to the non-oil sector has been dealt a heavy blow by a new report by an international rating organization.
Fitch Ratings Ltd., the world-acclaimed international rating organization, has released a negative report about Nigeria’s economy.
The implication of this assessment which placed Nigeria four steps below investment grade means investors will find it difficult to come into the country to invest.
The Buhari led administration came on the mantra of change and the promise of diversifying the economy from total dependence on oil to the non-oil sector
Contrary to the persistent claim of the Buhari-led administration that the economy will soon recover, the release of Fitch ratings will have a negative effect on the recovery of an already bad economy since it will technically scare investors away from the country.
The revision of the economic outlook from stable to negative as released by the international rating company shows that the non-oil industry will continue to be constrained by foreign-currency shortages and technically, this will hamper the economy.
“We expect a limited economic recovery in 2017, with growth of 1.5%, well below the 2011-15 annual growth average of 4.8%. The non-oil economy will continue to be constrained by tight foreign exchange liquidity.”
Bad news for Buhari as Fitch international ratings agency downgrades Nigeria
“Access to foreign exchange will remain severely restricted until the Central Bank of Nigeria can establish the credibility of the interbank foreign-exchange market and bring down the spread between the official rate and the parallel market rates,” Fitch said.
According to Fitch, as at the end 2016, the government’s debt stood at 281 percent of revenue and while 77 percent of the debt is domestic, foreign-currency borrowing is increasing.
On a brighter note, Fitch believes that: “the recovery in oil revenues and increased fiscal spending could boost the economy in 2017, if the government can arrange and improve the execution of capital expenditures. However, the present lull in violence and oil infrastructure attacks will only hold if the government can come to a more permanent peace settlement.”
