Nigeria’s Ratio of Interest Payments to Revenue at Above 40%, Fitch Warns


 Nigeria’s ratio of interest payments to revenue at above 40% – four times the median for B-rated sovereigns – was a key weakness for its credit rating, Nonyane and Toby Iles, Fitch’s head of Middle East and Africa sovereigns.
Naija247news recalled Fitch Ratings has affirmed Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B-‘ with a Stable Outlook.
The rating is supported by a large economy, developed debt market, and substantial oil and gas reserves. However, weak governance, low non-oil revenue, high hydrocarbon dependence, security challenges, inflation, low net FX reserves, and exchange-rate weaknesses constrain the rating.
The government’s steps to reduce fuel subsidies and reform the exchange rate framework have been faster than expected, but recent backtracking raises doubts. FX shortages, a weaker net FX reserve position, and challenging exchange rate liberalization persist.
The budget deficit is expected to narrow, but macroeconomic challenges, including high inflation, are projected to persist. Nigeria’s ESG Relevance Score reflects governance issues, with a low World Bank Governance Indicators ranking.
Fitch currently rates Nigeria at B- with a stable outlook.
Across Africa, Iles said interest-to-revenue ratios had more than doubled since 2014 due to increased borrowing coupled with global interest rate hikes that boosted costs.
“We expect that ratio to continue to rise given the pass through of rates,” Iles said of African sovereigns.
Godwin Okafor
Godwin Okafor
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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