S&P upgrades Nigeria’s credit rating to ‘B’, cites Tinubu’s reforms

S&P Global Ratings has upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to “B” from “B-”, citing improvements in the country’s macroeconomic position, external reserves, and ongoing economic reforms.

 

The global ratings agency announced the upgrade on Friday while affirming Nigeria’s short-term ratings at “B” with a stable outlook.

 

According to S&P, reforms introduced by President Bola Tinubu’s administration, particularly the liberalisation of the foreign exchange market and efforts to improve fiscal performance, contributed to the improved rating.

 

The agency said higher oil production and prices, increased domestic refining capacity, and the expansion of local petroleum refining had also strengthened Nigeria’s balance of payments and growth prospects.

 

“On May 15, 2026, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B’ from ‘B-’ and affirmed our ‘B’ short-term ratings,” the agency stated.

 

S&P noted that Nigeria’s improved creditworthiness followed “three years of sustained structural reforms,” especially exchange rate liberalisation, which it said improved access to foreign exchange and boosted investor confidence.

 

The agency also cited reforms targeted at broadening the tax base and increasing petroleum revenue remittances to the Federal Government.

 

It projected that Nigeria’s debt-to-revenue ratio would decline to 338 per cent in 2026 from about 500 per cent in 2023.

 

S&P further stated that the Federal Government’s refusal to reintroduce fuel subsidies had helped prevent wider fiscal deficits and preserved foreign exchange liquidity.

 

However, the agency warned that rising global fuel prices and ongoing geopolitical tensions in the Middle East could sustain inflationary pressures ahead of the 2027 elections.

 

It projected inflation to average 17.7 per cent in 2026 before declining to below 10 per cent by 2028.

 

The ratings agency also highlighted the role of the Dangote Refinery in reducing Nigeria’s dependence on imported petroleum products and improving the country’s current account position.

 

According to S&P, Nigeria’s current account surplus is expected to rise to 5.8 per cent of GDP in 2026 from 4.8 per cent in 2025.

 

Despite the positive outlook, the agency noted that structural challenges including low tax revenue, poverty, unemployment, insecurity, and inflation remain significant concerns.

 

“We expect President Bola Tinubu’s administration will continue to advance economic and fiscal reforms,” the report added.

 

Reacting to the development, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, described the upgrade as a sign of growing international confidence in Nigeria’s economic reforms.

 

In a post on X on Saturday, Edun said the latest rating followed similar upgrades by Fitch Ratings and Moody’s in 2025.

 

“These independent assessments collectively affirm that the difficult but necessary reforms undertaken under the leadership of President Bola Ahmed Tinubu are yielding measurable results,” he said.

 

The minister reiterated the government’s opposition to the return of fuel subsidies, describing them as fiscally harmful and economically distortive.

 

He acknowledged that inflation, unemployment, food insecurity, and inclusive growth remain major challenges requiring urgent attention.

 

Edun also expressed optimism that the improved ratings would help attract more foreign investment and enable Nigeria secure financing on better terms.