How int’l agency ratings may affect Nigeria’s plan to borrow

Nigeria’s hope of successfully borrowing from major credit outfits, will depend on the its ratings by international agencies, so says officials of one of the institutions that the country is relying on for its pending $30 billion loan facilities.

Countries are expected to be rated at least B1, if not A to be favoured for loan facilities by most credit institutions.

To that effect, government officials have started mopping up all information and data that have some positive postings on Nigeria’s economic projections since the recession, an investigation by Ripples Nigeria has shown.

The directive for this was, in the first week of December, 2016 handed to relevant ministries, departments and agencies to furnish the DMO with all needed information on their programmes aimed at improving on the rating of the country.

Some of the areas of focus include Nigeria’s performance in international trade, pension scheme management, improvement of the sovereign wealth funds and beefing up the country’s foreign exchange reserves.

Said an aide to the Finance Minister, Kemi Adeosun: “There is no going back on the insistence of the ministry, that the Federal Funds Allocation Committee must ensure that there will no longer be dipping of hands into any funds from the excess crude accounts.

“We have received some good ratings from most of the agencies in the past months, despite the recession, because of government consistency in maintaining some level of discipline in managing its limited resources, which has seen the country save more than $2 billion from import restriction on luxury goods into the country.”

In their November 30, 2016 three rating agencies published their latest assessments of Nigeria’s economic growth as being fair, even though it dropped some figures from what the rating was in the same period in 2015.

For instance, in their report, Standard & Poor’s credit rating posted Nigeria as having B with stable outlook, though it rated the country with B1 in the previous year.

Read also: 2017 budget panacea to Nigeria’s economic woes, Buhari assures

Also, another agency, Moody Credit Rating returned the same finding.

But Fitch’s credit rating put Nigeria as having reported at B+ stable outlook in 2014 and 2015, but retained B in 2016.

All the agencies, according to Trading Economics’ publication, had based their ratings of Nigeria on some factors that are capable of either influencing or discouraging investors as well as the impact on the country’s borrowing costs in the past years.

It noted that the rising interest rates and instability in inflationary trend in the last two years are also considered as having constituted some negative sign posts for foreign investment in Nigeria.

But government officials claim that the country’s ratings by the international agencies have projected the country positively before the intentional financial institution that it is negotiating loan facilities with.

Speculations had been rife that the Buhari-led administration had approached the International Monetary Fund (IMF) for a loan facility but this has since been denied by the Minister for Budget and Planning, UdomUdoma.

By Emma Eke…

 

 

 

RipplesNigeria… without borders, without fears

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now