Wednesday, March 21, 2018 /08:48 AM /FBNQuest
last week affirmed its B long-term sovereign credit rating for Nigeria. It
therefore remains in line with Moody’s, which downgraded the credit last year,
and one notch below Fitch’s B+ (with a negative outlook).
agency has sensibly opted for a “steady-as-she-goes” scenario: fiscal
consolidation remains slow, annual growth is no more than 3.0% through to 2021
and Nigeria maintains its healthy external balance sheet marked by modest
accumulation of both reserves and debt.
Ratings agencies have to tread carefully,
although a little less than multilateral organizations. We share its view that
decision-making is heavily concentrated in the presidency.
It has revised its estimate of the fiscal
deficit of general government (ie the three tiers) in 2017 to 5.8% of GDP, from
3.5% just six months ago, on the basis of a weak preliminary outturn.
This was the low point since S&P sees
steady improvement ahead, with a deficit equivalent to 2.3% in 2021. A little
revenue growth is combined with modest compression of spending to deliver the
Its projections have the interest payments
of general government within a range of 20% to 25% of revenues in 2018-21. The
ratio is worst for the FGN component, for which it sees the cost at close to
50%. This last measure is widely cited.
For the second and third tiers of
government, S&P comments that the state and local governments will be
running deficits around a combined 1% of GDP (about N1.1trn) through to 2019.
The timing of this seeming turning point could be election-related although we
suspect that the deficits have rather longer to run.
The projections have gross external
financing needs above 100% of current account receipts and usable reserves
throughout the forecast period. The assumption is that the FGN will draw on
multilateral credit lines and tap the international capital markets to meet its
additional needs. Both are relatively secure sources of financing under
S&P’s “steady-as-she-goes” scenario.
It notes that the CBN has increased its
external buffers to close to seven months’ import cover, based on its measures
of usable reserves and current account payments. If we limit those payments to
goods and services (and not income debits), the cover was more than ten months
S&P has also affirmed its B short-term
rating for Nigeria.
- Nigeria Ratings Affirmed At ''B and B''; Outlook Stable
- At $65, Oil is Up 22.4% in 12 Months, Can It Fall Again?? – LBS EBS
– March 2018
- Nigeria FY’17 Trade Report – It’s beginning to look a lot like Yr.
- Q4’17 GDP:
Seasonal Rebound in the Non-oil Sector Strengthens Economic Recovery
Merchandise Trade Declined Marginally QoQ but Increased YoY for Q4 2017
and Storage: The Best Performer in Q4 2017
Rate to Drop in February 2018 on Base Effect - FSDH
- Total Value
of Capital Imported into Nigeria in Q4 2017 Estimated at $5,382.89m - NBS
- PMI Reading
No 59: Stable and Positive
PMI Stands at 56.3% in February 2018 from 57.3% in January 2018
- Q4 2017 GDP
Growth: Further Above the Turning Point
- Nigeria’s GDP Grows in Real Terms by 1.92% in Q4 and 0.83% for Full
Economic Report and Update for January 2018
Economic Outlook: Top 10 Themes for 2018
- ARM H1 2018
- Fitch Rates Nigeria's Upcoming USD Notes ''B (EXP)''
- Fitch Affirms Nigeria at 'B+'; Outlook Negative