‘Moody’s does not understand Nigeria’s economy’, Finance minister faults rating

The Federal Government has criticised the international rating agency, Moody’s, stating that the agency doesn’t have an understanding of Nigeria’s economy.

Ripples Nigeria had reported that Moody’s downgraded Nigeria’s credit rating from B1 to Caa1 during the week. The rating company also did the same for nine Nigerian banks.

Moody’s listed Guaranty Trust Bank (GTBank), Sterling Bank Plc, Fidelity Bank Plc, Union Bank of Nigeria Plc, United Bank for Africa Plc, First Bank of Nigeria Limited, Zenith Bank Plc, First City Monument Bank Limited, and Access Bank Plc.

The downgraded could impact investors’ confidence in Nigeria and the commercial banks if they approach the securities market to raise funds through bonds and other debt instruments.

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According to the Minister of Finance, Zainab Ahmed, on Thursday, in Abuja, she said “It came as a surprise to us because we have presented all of the works that we’ve been doing to stabilise the economy.

“But these are external rating agencies that don’t have the full understanding of what is happening in our domestic environment.”

“The reasons they gave also are very practical ones. They said even though oil production has been restored that, there is still a chance, a higher risk that there could be a relapse to the production levels.

“Second, they also said that they are concerned that our debt service to revenue ratio is high. And even though their assessment is that we’ve been able to pay off our debts in the medium term, they have confirmed that we have the capacity to pay our debt, but that it is eating too much of our revenue and they flagged that as a high risk.”

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