Nigeria’s External Reserves to Fall to $47bn by 2026, Fitch Warns Amid Economic Pressures

Fitch Ratings has projected that Nigeria’s external reserves will decline to around $47 billion by the end of 2026, despite ongoing economic reforms aimed at strengthening stability in the foreign exchange market. The global rating agency made the forecast while reaffirming Nigeria’s Long-Term Foreign Currency Issuer Default Rating at ‘B’ with a Stable Outlook.

According to Fitch, Nigeria’s rating continues to reflect the country’s large and diversified economy, relatively liquid domestic debt market, and improvements in monetary and exchange rate management. The agency also noted that recent reforms by the Central Bank of Nigeria have helped support market normalization and improved naira stability in recent months.

However, the report warned that external pressures and fiscal demands could weigh on reserves going forward. Fitch explained that gross reserves rose to about $49.4 billion in March 2026, up significantly from $32 billion in April 2024, but are expected to gradually ease due to rising spending pressures and external risks. It projected reserves would still provide about seven months of import cover, above the ‘B’ category average of 4.3 months.

Despite the short-term strength, Fitch highlighted growing macroeconomic challenges, including an expected budget deficit of nearly 5% of GDP in 2026 and inflation averaging around 16%, even though it is lower than previous years. Real GDP growth is expected to remain steady at about 4.1%, supported mainly by expansion in the oil sector, while governance and revenue mobilisation remain weak points.

Overall, Fitch maintained a cautious outlook on Nigeria’s economic trajectory, stressing that while reforms are improving financial stability, persistent inflation, fiscal pressure, and external vulnerabilities could still drive modest currency depreciation and slow reserve accumulation in the medium term.

source: nairametrics