Moody's revises Nigeria's outlook to positive, affirms B3 rating as reserves hit $53bn
By Aboki Forex —
Moody's has changed Nigeria's sovereign outlook to positive from stable, citing stronger foreign exchange reserves and better-than-expected economic growth. The agency still affirmed the country's long-term foreign-currency rating at B3.
Reuters reported the rating action on Friday. Moody's said Nigeria's external position has strengthened, with higher reserves and an improved current account balance giving greater protection against potential shocks. That improvement, it added, is underpinned by higher crude oil prices linked to the Middle East conflict and increased exports of refined petroleum products.
What Moody's expects
Moody's expects Nigeria's current account surplus to remain sizeable even if oil prices fall materially. The improved position gives the country more capacity to absorb external shocks, the agency said. The positive outlook signals Nigeria's credit profile could improve if gains in external resilience and economic performance are sustained.
That confidence in Nigeria's external position comes as official reserves have climbed to levels not seen in over 17 years. Nigeria's foreign exchange reserves rose above $53 billion for the first time in more than 17 years, reaching $53.11 billion as of August 24, 2026. External reserves have grown by $7.09 billion since the beginning of 2026 and have now surpassed the Central Bank of Nigeria's projected reserve level of approximately $51.04 billion for the whole of 2026.
Moody's nevertheless affirmed the B3 rating, reflecting continued fiscal pressures from the country's limited revenue-generating capacity and weak debt affordability.
Recent rating actions and reform signals
Moody's outlook change is the latest in a series of assessments from major international rating agencies. S&P Global Ratings upgraded Nigeria's sovereign rating to B from B- in May, citing sustained structural reforms and improving creditworthiness. Fitch Ratings affirmed Nigeria at B with a stable outlook in April, after previously upgrading the outlook from negative. Fitch highlighted improvements stemming from the government's economic policy direction since mid-2023.
Separately, the World Bank has maintained its 4.4 per cent growth forecast for Nigeria in 2027. The International Monetary Fund has called on Nigeria and other major African economies to deepen reforms across fiscal policy, monetary and financial sectors, and governance to strengthen macroeconomic stability and support more inclusive growth.
Nigeria's numbers and what they mean
Nigeria's economy recorded real GDP growth of 3.89% year-on-year in the first quarter, according to the National Bureau of Statistics. The Nigerian Economic Summit Group has projected that escalating geopolitical tensions in the Middle East could deliver an oil revenue windfall to Nigeria, potentially reaching as high as N30.2 trillion if the Iran-Israel conflict becomes prolonged.
Yet analysts have also warned that the ongoing Iran-Israel-US conflict has exposed significant weaknesses in Nigeria's ability to anticipate, absorb, and respond to external shocks. They say the country's crisis-response toolkits are no longer adequate for today's increasingly interconnected global risks.
For the naira, the positive outlook is a signal that Nigeria's external buffers are improving. Sustained reserve growth and a stronger current account position could support currency stability over time, but weak revenue generation and high debt servicing costs remain constraints the government must still tackle.