LAGOS, Oct 10 – Fitch Ratings has revised Nigeria’s sovereign credit outlook to Positive from Stable, while affirming its long-term issuer default ratings at ‘B’, citing stronger foreign exchange reserves, greater exchange-rate flexibility and continued economic reforms. The decision was announced on October 9, 2026.
The outlook revision signals that Nigeria could receive a rating upgrade if improvements in its economic and policy framework are sustained. However, the country’s current credit rating remains unchanged, with fiscal pressures, high debt-servicing costs and structurally weak government revenue continuing to constrain its credit profile.
Foreign Reserves and External Balances Strengthen
Nigeria’s gross foreign exchange reserves reached $54.9 billion as of September 25, 2026, up from $32 billion in mid-April 2024. Fitch attributed the increase to stronger portfolio inflows, export earnings, remittances and greater formalisation of foreign exchange transactions.
The agency projects Nigeria’s current account surplus will reach 6.4% of GDP in 2026, with foreign reserves expected to cover 6.3 months of current external payments by year-end.
Net foreign exchange reserves also improved, rising from approximately $4 billion at the end of 2023 to $34.8 billion at the end of 2025, following a reduction in the Central Bank of Nigeria’s foreign exchange liabilities.
Separately, CBN Governor Olayemi Cardoso said gross reserves had reached approximately $55 billion, while net reserves stood at $46 billion. Net reserves account for near-term foreign exchange liabilities, including swaps and forward contracts, providing a different measure of the funds available to meet external obligations.
The improvement in reserves comes alongside higher oil production and increased domestic refining capacity. Nigeria’s crude oil output, excluding condensates, averaged 1.52 million barrels per day in the second quarter of 2026. The expansion of Dangote Petroleum Refinery and rehabilitation of other refineries have also reduced reliance on imported refined petroleum products, easing some demand for foreign exchange.
Growth Improves, but Inflation Remains Elevated
Fitch forecasts Nigeria’s economy will grow by 4.3% in 2026, compared with 4% in 2025, with annual growth expected to remain above 4% in both 2027 and 2028.
Average inflation is projected to moderate to 15.4% in 2026, less than half its 2024 level. However, that forecast remains substantially above the 5.6% median for countries carrying the same ‘B’ rating.
Fitch described the CBN’s September monetary policy adjustment as calibrated easing. It cautioned that maintaining the 45% cash reserve requirement would continue to absorb naira liquidity and constrain credit expansion.
The agency also identified elevated food and fuel prices, further petrol price increases and security challenges as risks to household purchasing power and economic growth.
Debt Servicing Remains a Major Constraint
Despite the stronger external position, Nigeria’s public finances remain under pressure from high interest payments and limited government revenue.
Fitch expects the fiscal deficit to widen to 3.6% of GDP in 2026, from 3.1% in 2025, partly because of higher government spending.
Tax reforms are projected to increase non-oil revenue to 7.5% of GDP, equivalent to approximately 66% of government revenue. However, the agency cautioned that implementation challenges could limit the expected gains.
Debt-servicing costs remain a significant constraint. Fitch projects that the general government interest-to-revenue ratio will average 27% between 2026 and 2028, compared with a median of 14% for countries rated ‘B’. For Nigeria’s federal government, the ratio is expected to remain above 50%.
The agency has also raised concerns about the transparency, liquidity and creditor-recovery risks associated with Nigeria’s use of total return swaps and repurchase agreements. Those concerns included a proposed $5 billion total return swap facility with First Abu Dhabi Bank.
Conditions for a Future Upgrade
Fitch said sustained disinflation, further reserve accumulation, continued economic reforms and stronger non-oil revenue mobilisation could support a future improvement in Nigeria’s credit rating.
Conversely, weakening policy credibility, renewed foreign exchange pressures, reduced access to external financing or a sustained deterioration in the fiscal position could lead to negative rating action.
The outlook revision therefore represents an improvement in Fitch’s assessment of Nigeria’s credit trajectory, rather than an upgrade of its existing rating. The country remains rated ‘B’, and any future upgrade will depend on whether stronger external buffers and reform progress are accompanied by more durable improvements in public finances.
For investors, the key issue is whether rising reserves and improved macroeconomic stability can translate into stronger revenue generation, lower debt-servicing pressure and a more sustainable capacity to meet government obligations.
