Nigeria’s renewed vitality sector reforms to maintain present account surplus – Fitch 

Fitch Rankings has acknowledged that Nigeria’s ongoing vitality sector reforms, together with efforts to scale up renewable vitality, are anticipated to assist maintain a present account surplus over the medium time period.

This outlook was shared in its newest sovereign ranking launch, through which Fitch upgraded Nigeria’s long-term foreign-currency Issuer Default Score (IDR) to ‘B’ from ‘B-’, with a Steady Outlook.

It famous, “We anticipate a continued discount in exterior vulnerabilities by way of additional easing of home FC provide constraints, whereas renewed vitality sector reforms ought to assist maintain present account surpluses.”

In line with the ranking company, the nation’s exterior place is anticipated to stay optimistic, regardless of world headwinds, helped by enhancing oil output and gradual progress in diversifying exports.

Fitch additionally famous that Nigeria’s dedication to reforms within the vitality area, together with the continued overhaul of its oil and fuel sector and elevated funding in renewables, contributes to its optimistic exterior outlook. These developments, alongside elevated change fee flexibility and the elimination of gas subsidies, are anticipated to assist improved macroeconomic fundamentals and exterior resilience.

Fitch’s optimistic outlook contrasts JP Morgan’s warning 

The Fitch outlook stands in distinction to JP Morgan’s current evaluation, which highlighted rising dangers from world commerce dynamics. JP Morgan had earlier warned that the current tariffs imposed by the US, coupled with falling worldwide oil costs, may reverse Nigeria’s present account surplus.

The US funding financial institution acknowledged {that a} sustained drop in oil costs under Nigeria’s fiscal breakeven of $60 per barrel may drive the present account into deficit and push the naira past N1,700 per greenback.

“Whereas Nigeria could effectively keep away from a recession itself, the substantial decline in oil costs under its break-even of $60/bbl, if sustained for just a few months, would push Nigeria’s present account steadiness into deficit,” JP Morgan acknowledged in its newest report on frontier markets.

Though Fitch took a extra average view of Nigeria’s exterior challenges, it additionally famous, “We mission the present account surplus, estimated at 6.6% of GDP in 2024, to common 3.3% of GDP in 2025-2026.”

Dangers nonetheless current 

Whereas Fitch acknowledged progress, it additionally cautioned that draw back dangers stay. These embody doable pressures from declining oil costs, capital circulation reversals, and delays in structural reforms. A weaker exterior surroundings or failure to implement reforms may weigh on the present account and put stress on worldwide reserves.

Nonetheless, the scores company maintained that Nigeria’s improved macro coverage combine, progress on FX liberalisation, and vitality sector reforms supply a supportive backdrop for exterior and monetary efficiency within the medium time period.

With Fitch’s improve and its recognition of vitality reforms, Nigeria’s prospects for sustaining exterior stability could stay beneficial—supplied that reform momentum continues and world market circumstances stay comparatively steady.