Economy: Moody’s views PDP, APC as two sides of a coin

International Credit Rating Agency, Moody’s says there may be no major difference between the policy actions taken by the current administration to tackle the impact of falling oil prices and those available to the incoming government come May 29.

It also noted that it does not expect a significant change in the nation’s economy, because “the economic ideologies of the APC and the PDP are not radically different and so no steep changes in policy are expected.”

The Economist Intelligence Unit (EIU) also stated; “We do not expect a large difference … as there was no great divide during the campaign on this topic,” says Matt Robinson Vice President at Moody’s.

Moody’s however stated in a recent research note,  that the recent successful presidential election, and  peaceful transition of power is credit positive, despite persisting economic challenges.

“Nigeria just concluded its most contested elections since the country first organised democratic elections in 1999.

“This relatively peaceful transition is credit positive — it will likely put Nigeria on a more politically stable trajectory.”

According to Moody’s, the peaceful rise to power of the president-elect Muhammadu Buhari, underscored the “strengthening of Nigeria’s democratic foundation.”

The ratings agency expects Buhari’s much campaigned anti-corruption drive to yield economic dividends for Africa’s largest oil producer, badly hit by falling oil prices since June last year.

Notwithstanding the external and fiscal headwinds, Moody’s sees economic respite in Nigeria’s “very strong” balance sheet and “very low” level of overall debt, estimated at 14% of GDP at end-2014.

“This offers substantial headroom for further financing, as the new administration assesses its policy options.”

The agency draws on Buhari’s credentials as one-time military ruler, expecting domestic security to “likely improve” under his administration.

“An improved security environment would support economic growth and development.”

According to Moody’s, the fact that Buhari was elected by a margin of 2.57 million votes, corresponding to 53 per cent of the popular vote, underscores the popular mandate for his campaign promises.

However, the EIU warns of the daunting prospect of dismantling a “patronage network” established over the 16-year continuous rule of the PDP.

Moody’s remains the only of three rating agencies to maintain a positive outlook on the Nigerian economy at “Ba3” stable rating.

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