Moody’s Investors Service has upgraded Nigeria’s credit rating from “Caa1” to “B3”, citing meaningful strides in the country’s external and fiscal stability. The international credit rating agency acknowledged that recent economic policy reforms, especially around foreign exchange management, have significantly strengthened Nigeria’s balance of payments and boosted foreign reserves managed by the Central Bank of Nigeria (CBN).
The upgrade follows the World Bank’s earlier report that Nigeria recorded its fastest economic growth in nearly a decade in 2024, with a particularly strong performance in the fourth quarter. This growth has been attributed to improved fiscal discipline and reforms that have created a more stable macroeconomic environment. However, both the World Bank and Moody’s cautioned that persistent inflation continues to pose a risk to economic stability.
Moody’s highlighted that changes in Nigeria’s foreign exchange policy have contributed to easing inflationary pressures. These reforms have also reduced domestic borrowing costs, reflecting increased confidence in the country’s monetary and fiscal direction. Although inflation remains elevated, it appears to be on a gradual downward trend due to these policy interventions.
In a balanced assessment, Moody’s revised Nigeria’s outlook from “positive” to “stable,” implying that while the improvements are expected to hold, the pace of progress may slow—particularly if global oil prices decline. As oil is a major source of revenue for Nigeria, fluctuations in oil markets remain a critical factor in the country’s economic performance.
The stable outlook suggests that while Nigeria is not entirely out of economic vulnerability, its trajectory is now more predictable and sustainable. Continued policy consistency and further structural reforms could pave the way for more credit upgrades in the future, provided inflation remains under control and external conditions remain favorable.