Moody's: Nigeria's credit quality supported by relatively strong economy and low debt position, but lower oil prices to pressure public finances
Global Credit Research - 22 Dec 2014


Nigeria (Ba3 stable) benefits from a resilient economy and robust fiscal position, although the recent drop in oil prices will likely put pressure on public finances and could lead to the widening of fiscal deficits, says Moody's Investors Service in its annual Nigeria Credit Analysis, published today. The rating agency notes that despite its exposure to lower oil prices, Nigeria's real economic growth will likely reach 5% in 2015, supported by the development of the non-oil sector.

"Over the last ten years, Nigeria has grown in real terms by 8.3% annually, emerging in 2014 as the largest economy in Africa and displaying improving macroeconomic indicators, such as inflation and investment. Combined with an increasingly diversified economy -- led by the services sector -- we expect that the economy will continue to expand, and forecast that real GDP growth will reach 5.0% in 2015," says Aurelien Mali, Moody's senior analytical advisor -- Africa and author of the report.

Nigeria's economy turned out richer than previously thought after the rebasing of the economy from 1990 to 2010, with nominal GDP at $516 billion. The revised figure is nearly twice as high as the previous estimate of $273 billion, while its 2013 GDP per capita has been revised to $5,746, significantly higher than the original expectation of $1,671.
While oil revenues account for 60% to 70% of government revenues and have helped support the country during times of cyclical highs, the current lower oil prices will put pressure on the local currency, and may cause government budget deficits to widen as the low level of fiscal savings is unlikely to cover shortfalls resulting from lower oil revenues, says Moody's.

Nigeria's general government debt is very low, estimated at 13.2% of GDP in 2014 with debt as percentage of government revenues estimated to reach 121.8%, according to Moody's, although both figures will likely increase in 2015 due to larger deficits. The rating agency projects 2015 debt to GDP to rise to an estimated 14.6% and debt to revenues to 130%, both still low levels when compared with most Ba3-rated peers.

A risk lies in the fact that Nigeria's oil production will likely decline significantly from over the next decade absent increased investment in this sector, in particular, to develop Nigeria's large deepwater offshore oil deposits, says Moody's. For the moment, international oil companies have delayed investment amid uncertainty surrounding the Petroleum Investment Bill, which has been delayed in parliament for the last 6 years.

Moody's notes that in 2015 spending cuts and potential to increase non-oil revenue through taxes will help mitigate the effect of lower oil revenues to some extent at the federal level. Nigeria is also making progress in addressing structural challenges, with progress in electricity sector reform improving the country's economic prospects, as access to electricity is essential in building a manufacturing base that could help the country diversify away from oil.

Relative success in preserving macroeconomic stability, taking into account the current external shocks, could help further improve Nigeria's prospects, especially as inflation has been brought down to high single digits over the last two years, according to Moody's.

Barring any tail risk, Moody's projects that investments will increase over the coming years and will benefit overall economic growth. As the country further develops its infrastructure, multinationals will likely increasingly compete for megaprojects: For example, China Railway Construction Corporation has recently won the nearly $12 billion contract to build and equip the 1,400 km costal railway which will link Lagos to Calabar in the east of the country via the city of Benin.

But this is also dependent on the government's ability to improve Nigeria's weak institutions amid an environment facing political challenges, in particular due to tensions between ethnic and religious groups and the presence of Islamist militant group Boko Haram in the northeast.

Subscribers can access the report at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_175917



source: http://nairametrics.com/this-moodys-latest-rating-on-nigeria-should-annoy-buhari-and-apc/

YES THIS WILL ANNOY APC AND BUHARI BECAUSE THEY HATE NIGERIA.

Hmmmm

Very true!
APC only celebrate when there is a bad report on Nigeria.

Another exclusive from a TANoid news corporation. Just look at the write-up.

I wish someone could sue one of these guys for good.

Edit.

Finally, they shamefully edited the original post. Why didn't you leave it the way it was op?? I've always advised you people to take a split second to think your utterances through before you spill your guts out. T'will do you guys a lot of good.

OKDnigeria:
Very true!
APC only celebrate when there is a bad report on Nigeria.

and they will claim, that they loves the country. bunch of losers.

omenka:
Another exclusive from a TANoid news corporation. Just look at the write-up.

I wish someone could sue one of these guys for good.

are they Nigerians

maslong:


and they will clam, that they loves the country. bunches of losers.

Was Buhari also responsible for your inability to make at least a C6 in English Language at a sitting in your SSCE?!

donphilopus:


Was Buhari also responsible for your inability to make at least a C6 in English Language at a sitting in your SSCE?!

(claim)
l hope you don't make a mistake in your life , nonsense.

From the write-up, all the positive rating is based on, are the controversial rebased GDP figures, the benefits of which the corrupt and evil PDP has refused to allow to trickle down to ordinary Nigerians.

OKDnigeria:
Very true!
APC only celebrate when there is a bad report on Nigeria.

hissssss,because u want to eat report,even if they said d growth rate is 100%,wil that change d price of garri and oil.gej till 2015.

Kudos to our untiring Economic team



Do what is necessary to whether the storm as we march into diversification and the much anticipated Industrial Revolution come 2015 - 2019


Yes! we can

Heart attack for Apc

Nigeria must work for all of us.
Things will get far more better with APC/Buhari in charge as from 2015.

maslong:


and they will clam, that they loves the country. bunches of losers.

Haba! How many losers in how many bunches?

Ngwakwe:
Kudos to our untiring Economic team
Do what is necessary to whether the storm as we march into diversification and the much anticipated Industrial Revolution come 2015 - 2019
Yes! we can

Mind explaining what you mean by the "much anticipated Industrial Revolution"?
Or are you implying that the 18th century industrial revolution that swept accross Europe & the West is yet to berth in Nigeria?
Or is this just another PDP-induced incongruent gibberish that is best ignored?

good one

join the polls now for Nigeria best performing governor(all sectors of the economy inclusive)
Amaechi currently leads the pack

here is the link https://www.nairaland.com/2052757/amaechi-currently-leading-best-nigerian#29112729

Ohhh!! Now I see the resident nairaland PDP/Ethnic Bigot that pushed this to the top of the stack!! So petty.

#Pethetic.

Morkavictor:
Heart attack for Apc

EdCure:

Or is this just another PDP-induced incongruent gibberish that is best ignored?

Your imaginary claim as a commander in abstract knowledge is deceiving your subconsciousness.

I don't know you as tout and it will do you good if you avoid imitating them.

The choice is all yours.

For comparison:

Country.....................Rating...................Outlook
Nigeria......................Ba3.......................Stable
Ghana.......................B2........................Negative
Kenya.......................B1........................Stable
Congo.......................B3........................Stable
Brazil........................Baa2.....................Negative

Nigeria is rated higher than all the countries listed above with the exception of Brazil, though Brazil's outlook is given the negative outlook.

This is a good rating for Nigeria and GEJ and his economic team should be given some credit for this report.

Having said that, if our resources are better managed, our rating should be at least Aaa . The same economists who work for GEJ, stabilize the economy on the one hand and loot billions on the other.

When Buhari and his high integrity team of economists take over, I envision our ratings improving to Aaa. I hope GEJ does not take this moody report as a license to run to the big boys for additional $10billion loan. In fact, he should not dare to obtain a single kobo in loans until he and his team of rogues are booted out!

nduchucks:
For comparison:

Country.....................Rating...................Outlook
Nigeria......................Ba3.......................Stable
Ghana.......................B2........................Negative
Kenya.......................B1........................Stable
Congo.......................B3........................Stable
Brazil........................Baa2.....................Negative

Nigeria is rated higher than all the countries listed above with the exception of Brazil, though Brazil's outlook is given the negative rating.

This is a good rating for Nigeria and GEJ and his economic team should be given some credit for this report.

Having said that, if our resources are better managed, our rating should be at least Aaa . The same economists who work for GEJ, stabilize the economy on the one hand and loot billions on the other.

When Buhari and his high integrity team of economists take over, I envision our ratings improving to Aaa. I hope GEJ does not take this moody report as a license to run to the big boys for additional $10billion loan. In fact, he should not dare to obtain a single kobo in loans until he and his team of rogues are booted out!

I hope Buhari is still not planning to stabilize oil market and securing our economy with soldiers


You guys need to sit down and critically understand the need to restructure Nigeria


Anyway good luck to Buhari

We shall meet at the polls .

EdCure:

Mind explaining what you mean by the "much anticipated Industrial Revolution"?
Or are you implying that the 18th century industrial revolution that swept accross Europe & the West is yet to berth in Nigeria?
Or is this just another PDP-induced incongruent gibberish that is best ignored?

So Nigeria is fully industrialized to you

Don't underestimate the prowess of a former world bank chief piloting the afairs of a country's economy. . .nuff said

Did i just see in the report that ''Nigeria's real economic growth will reach 5% in 2015'' and, over the last 10 years Nigeria has grown in real terms at 8.3% annually? *Sms* Ok! we must have kicked out Dr ebele clueless out by then.

Caseless:
Did i just see in the report that ''Nigeria's real economic growth will reach 5% in 2015''? Ok! we must have kicked out Dr ebele clueless out by then.

Hmmm


I see Buhari tears filling a bucket.

WhiteTechnology:


Hmmm


I see Buhari tears filling a bucket.

i see gej' tears flooding the whole nation.
Gej sai prison!

Caseless:
i see gej' tears flooding the whole nation.
Gej sai prison!

We will support you guys if only you people imprison the oil too ooooo


We can survive on cocoa groundnut


Don't you think so

WhiteTechnology:



We will support you guys if only you people imprison the oil too ooooo


We can survive on cocoa groundnut


Don't you think so

i want the oil price to drop to $5 per barrel b4 then.

Caseless:
i want the oil price to drop to $5 per barrel b4 then.

Why not $0

WhiteTechnology:

So Nigeria is fully industrialized to you

Industrial revolution does not mean full industrialisation. It is merely the use of machine to replace human effort (labour) in the production process and in the work place. Just like the use of computers in banks and cranes in cunstructing buildings, machines for making clothes and shoes, etc.

I doubt if you have ever heard a thing like that before. Take some time off Nairaland, get yourself educated and be liberated from the smoldering bubble of pdp copy & paste idiocy.

Enough said!