Standard and Poor’s revision yesterday of its outlook on Nigeria’s B+ long-term sovereign credit ratings for from stable topositive is a rare new year present for Nigeria and managers of the economy.
According to analysts at FBN Capital, this followed the change in outlook announced in lateOctober by Fitch, albeit from negative to stable on a BB- rating.
Both agenciesexplained their change in the context of a tighter monetary andfiscal stance, the determination of the federal government toremove petrol subsidies and the work of AMCON.
NgoziOkonjo-Iweala, the coordinating minister for the economy, told the annual FBN Capital investors conferencein November that the move by Fitch was a reward foreight weeks’ hard work by the new government.
Now it would seem a further eight weeks’endeavour has brought another reward.
S&P’s comment on Nigeria’s balance of payments in its statement yesterday suggests that ithas not taken on board the methodological advances in the data reported bythe CBN for 2010, notably the marked decline in errors and omissions.
“Our view”, according to FBN Capital analysts, “is that S&P remains behind the curve. We recall its downgrade ofthe sovereign from BB- to B+ in August 2009.”As it were then, late President Yar’Adua had just launched his amnesty programmein the Niger Delta at the time, and the agencymight have waited to watch the initiative in operation before rate review.
The analysts said S&P has a BB- rating for Angola and argue that Nigeria’s externalbalance sheet, banking system, government institutions and the foundations
for a market economy are the stronger of the two countries.
That said, the next move on the Nigeria rating is likely to be an upgrade provided that oil price does not collapse, that political tensions do notintensify markedly and that governance does not deteriorate.
