S&P Global Ratings has upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to ‘B’ from ‘B-’, marking the country’s first sovereign rating increase by the agency since 2012
The ratings agency also affirmed Nigeria’s short-term sovereign ratings at ‘B’ and raised its national scale ratings to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’. The outlook is stable.
In its May 15 report, S&P cited improvements in Nigeria’s macroeconomic profile, stronger external balances and continued reform momentum since 2023.
The agency said higher oil production, stronger crude prices, increased domestic refining capacity and the liberalisation of the foreign exchange market had supported economic growth and improved foreign currency liquidity.
S&P noted that exchange rate reforms introduced in 2023 helped clear FX backlogs, improved investor confidence and created a more market-driven currency system.
The agency projected Nigeria’s debt-to-revenue ratio would decline to 338 per cent in 2026 from about 500 per cent in 2023, supported by tax reforms and measures to increase petroleum revenue transfers to the Federation Account.
It added that the government’s decision not to reintroduce petrol subsidies would help avoid larger budget deficits and renewed pressure on foreign exchange reserves.
However, S&P warned that rising fuel prices, elevated inflation and spending pressures ahead of the 2027 general elections could pressure fiscal performance.
The agency projected that the general government deficit would widen to more than four per cent of GDP on average in 2026 and 2027, partly due to increased capital expenditure.
S&P also said Nigeria’s external position had strengthened due to higher crude oil output and increased refining capacity, including the ramp-up of the Dangote Refinery.
It projected oil production at about 1.66 million barrels per day in 2026 and said the current account surplus could rise to 5.8 per cent of GDP from 4.8 per cent in 2025.
Foreign exchange reserves rose to about $50 billion by March 2026 from $33 billion in 2023, supported by stronger current account surpluses, lower imports and improved FX liquidity, the report said.
Despite the upgrade, S&P said Nigeria’s ratings remained constrained by high inflation, weak socioeconomic conditions, a narrow tax base and low formal employment levels.
The agency estimated inflation would average 17.7 per cent in 2026 before easing below 10 per cent by 2028.
It also said poverty had risen to about 50 per cent of the population, while food insecurity affected around 31 million people.
S&P said the stable outlook reflects a balance between Nigeria’s improving external position and reform momentum on one hand, and persistent structural and social challenges on the other.
The agency added that Nigeria’s ratings could be upgraded further over the next 12 to 24 months if fiscal outcomes improve significantly or if reforms materially reduce external imbalances and debt-servicing pressures.
However, it warned that the ratings could be lowered if key reforms are reversed, fiscal policy becomes more expansionary, or debt-servicing requirements rise sharply.
