Moody’s Ratings has changed Nigeria’s sovereign credit outlook from stable to positive, while affirming the country’s long-term foreign- and local-currency issuer ratings at B3.
The rating agency said the revised outlook reflects improvements in Nigeria’s external position, stronger-than-expected economic growth, and rising foreign exchange reserves.
Moody’s announced the change in a rating action published on Friday.
The agency said Nigeria’s external position had strengthened significantly over the past year, supported by large current account surpluses, increased FX reserves, improved foreign exchange market functioning, and more effective monetary policy transmission.
Nigeria’s current account surplus is projected to reach 6.1% of GDP in 2026, before narrowing to 4.1% in 2027.
Foreign exchange reserves, excluding gold, Special Drawing Rights and Nigeria’s IMF position, have risen to about $31.2 billion, according to Moody’s. The reserves now cover roughly six months of imports.
The rating agency said sustained current account surpluses and reserve accumulation could materially reduce Nigeria’s exposure to external shocks.
Economic growth beats expectations
Nigeria’s economy also performed better than Moody’s had previously anticipated.
Real GDP growth reached 4% in 2025, compared with the agency’s earlier expectation that medium-term growth would remain closer to 3%.
Moody’s expects economic growth to remain around 4% over the next few years, supported by continued strength in the non-oil economy and gradually higher oil production.
Inflation has also moderated. Headline inflation fell to 15.4% in July 2026, from 25.3% a year earlier.
Moody’s attributed part of the decline to the fading effects of price adjustments following exchange-rate liberalisation and fuel subsidy removal, alongside the Central Bank of Nigeria’s restrictive monetary policy stance.
Despite the improved outlook, Moody’s maintained Nigeria’s B3 rating, citing persistent fiscal pressures.
The agency said Nigeria’s revenue-generating capacity remains limited, while weak debt affordability continues to constrain the country’s credit profile.
General government revenue stood at about 10% of GDP in 2025, which Moody’s said was among the lowest levels globally.
The agency said further improvements in government revenue could strengthen Nigeria’s case for a future ratings upgrade.
What could lead to an upgrade?
Moody’s said Nigeria could eventually receive a ratings upgrade if it sustains the recent improvements in its external position, strengthens resilience to external shocks and reduces its economic vulnerabilities.
Additional revenue measures that improve confidence in sustained growth in government revenue could also support an upgrade.
However, Moody’s warned that the outlook could return to stable if Nigeria’s external buffers deteriorate, external imbalances re-emerge or economic growth weakens materially.
The latest move follows Moody’s June 2025 decision to upgrade Nigeria’s long-term issuer ratings to B3 from Caa1 and change the outlook to stable from positive.
It also comes after S&P Global Rating upgraded Nigeria’s long-term foreign- and local-currency sovereign ratings to B from B- in May 2026, citing structural reforms, higher oil production and refining capacity, and an improved balance of payments.
