Rating agency, Augusto, predicts tough year for Nigeria

A credit rating agency, Agusto & Co, has predicted a tough year 2022 for Nigeria due to pressure on the country’s finances and the next general elections

In a report titled: “Economic outlook for 2022 our story line” published on its website on Monday, the agency said Nigeria’s failure to pursue macro-economic reforms over the last eight years had placed the country on a back foot and 2022 would be no different.

It noted that weak revenue, poor exchange rate and more borrowings would be some of the major themes during the year.

The report read: “It is unlikely that the Central Bank of Nigeria will allow significant currency depreciation in an election year and one in which oil and gas export revenue is likely to rise by about 15 percent.

“Therefore, we believe that the official NGN/United States dollar exchange rate will be about N430/$1 at the end of 2022.

READ ALSO: Expert says CBN hurting Naira with tough policies, predicts N620/$1 exchange rate

“A close to 10%-point difference between the Naira inflation and the USD inflation will continue to put pressure on the parallel market exchange rate.”

Augusto also predicted that the Naira would fall to N610/$1 at the end of 2022 if CBN fails to inject dollars into the parallel market.

On revenue, the agency insisted that the government’s borrowing would increase in the coming months due to a drop in revenue.

It added: “This will increase foreign borrowings to aboutS$44 billion and local borrowings to about N43 trillion. LCY borrowings will therefore be about 860 percent of the Federal Government’s revenue compared to a median of about 200 percent for the central governments of key economies in sub-Saharan Africa.

“Interest payments will be about N4.7 trillion, almost 100 percent of the Federal Government’s revenues using our most aggressive revenue estimates.”

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