Fitch Upgrades Nigeria’s Credit Rating to ‘B’, Cites Progress on Economic Reforms and FX Market Stability
Fitch Ratings has upgraded Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘B-’ to ‘B’, with a Stable Outlook, signalling growing confidence in the country’s commitment to economic reforms and improving macroeconomic stability.
According to Fitch, the upgrade reflects “increased confidence in the government’s broad commitment to policy reforms” initiated since June 2023. These reforms include the liberalisation of the foreign exchange (FX) market, tightening of monetary policy, steps to end deficit monetisation, and the removal of costly fuel subsidies — all of which have, in Fitch’s assessment, enhanced policy coherence and credibility.
“These measures have reduced economic distortions and near-term risks to macroeconomic stability,” the rating agency stated, adding that they also improve the economy’s resilience in the face of both domestic and external challenges.
The Stable Outlook reflects Fitch’s expectation that the ongoing macroeconomic policy stance will continue to support FX market efficiency and gradually bring down inflation — though inflation is still expected to remain far above levels observed among rating peers.
FX market reforms, particularly the Central Bank of Nigeria’s (CBN) introduction of an electronic FX matching platform and new FX code, have helped boost liquidity and narrow the wide spread between official and parallel market exchange rates. Notably, net FX inflows through the CBN and autonomous sources surged by 89% in the fourth quarter of 2024, compared to just 8% in the same period in 2023.
Fitch projects modest short-term depreciation of the Naira but expects that formalisation of FX transactions will continue to lend support to the currency.
On monetary policy, the CBN has raised its benchmark policy rate to 27.5% — up by 875 basis points since February 2024 — and has also employed tools like open market operations to improve policy transmission. These efforts aim to address years of financial repression and anchor inflation expectations.
Despite recent progress, inflation remains high. Nigeria’s inflation rate stood at 23.2% year-on-year in February 2025 and is projected to average 22% in 2025 and 20% in 2026 — substantially higher than the ‘B’ rating median of 4.3%. Nonetheless, Fitch does not expect any premature loosening of monetary policy that could reverse recent gains.
The rating agency believes that sustained reforms in the FX and energy sectors, alongside disciplined macroeconomic management, will be key to maintaining current account surpluses and easing Nigeria’s external vulnerabilities going forward.
