Moody’s Ratings, a US-based rating agency, has revised Nigeria’s credit outlook from stable to positive, citing stronger economic growth and significant improvements in the country’s external position.
The global credit rating agency, however, affirmed Nigeria’s long-term foreign and local currency issuer ratings at B3.
Moody’s announced the outlook change in a rating action published on its website on Friday.
It said the positive outlook reflected improvements in Nigeria’s external position and stronger-than-expected economic performance, which could enhance the country’s capacity to withstand external shocks if sustained.
“The change in outlook to positive from stable reflects improvements in Nigeria’s external position and stronger-than-expected economic growth, which, if sustained, would enhance the country’s capacity to absorb external shocks, strengthen economic resilience and, over time, support a gradual increase in government revenue,” the agency said.
According to Moody’s, the improvement in Nigeria’s external position was driven by sizeable current account surpluses, rising foreign exchange reserves, improved functioning of the foreign exchange market and more effective transmission of monetary policy.
The agency projected Nigeria’s current account surplus to widen to about 6.1 per cent of Gross Domestic Product in 2026 before moderating to 4.1 per cent in 2027.
It also reported that Nigeria’s gross foreign exchange reserves, excluding gold, Special Drawing Rights and the International Monetary Fund position, had risen to about $31.2 billion, enough to cover approximately six months of imports.
“Taken together, the large current account surpluses and the reserve accumulation, if maintained, would materially reduce Nigeria’s external vulnerability,” Moody’s said.
On economic growth, the agency said real GDP expanded by four per cent in 2025, exceeding its earlier expectation of medium-term growth of about three per cent.
It expects growth to remain around four per cent in the coming years, supported by continued expansion in the non-oil sector and gradually increasing oil production.
Moody’s also noted a significant decline in headline inflation, which fell to 15.4 per cent in July 2026 from 25.3 per cent a year earlier.
It attributed the moderation partly to the fading impact of price adjustments that followed the liberalisation of the foreign exchange market and removal of fuel subsidies, alongside the Central Bank of Nigeria’s restrictive monetary policy stance.
Despite the improved outlook, Moody’s retained the B3 rating, citing persistent fiscal challenges, particularly Nigeria’s limited revenue-generation capacity and weak debt affordability.
The agency noted that general government revenue stood at about 10 per cent of GDP in 2025, describing the level as one of the lowest globally.
It added that higher oil production was expected to support economic growth in 2026 and 2027.
The latest action follows Moody’s upgrade of Nigeria’s long-term issuer ratings from Caa1 to B3 in June 2025, when the agency changed the outlook from positive to stable.
Moody’s said Nigeria could eventually receive a further rating upgrade if it sustains the recent improvements in its external position, strengthens its ability to withstand external shocks and reduces its vulnerability to external pressures.
It added that additional revenue measures that boost confidence in sustained growth in government revenue could also support an upgrade.
However, the agency warned that the outlook could be revised back to stable if Nigeria’s external buffers weaken, external imbalances re-emerge or economic growth slows significantly.