Moody’s Investors Service has downgraded Nigeria’s rating further as the global credit ratings agency expects the government’s fiscal and debt position to worsen as the government grapples with far-reaching fiscal strain.
As the nation’s capacity to weather the storm remains eroded by deep-seated institutional vulnerabilities and social challenges, the agency now rates the country a level lower at Caa1, sinking Nigeria deeper into its non-investment grade from the country’s previous and worrisome rating of B3.
Last October, the ratings agency downgraded Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings to B3 from B2 and placed them on review for downgrade.
This time around, the country has fallen four places from 154 out of 180 countries and territories in the latest ranking of the 2022 Corruption Perceptions Index released by Transparency International on Tuesday.
The nation fell by four places on the latest Corruption Perception Index, CPI, ranking released by Transparency International, TI, on Tuesday.
Although in the 2022 ranking, Nigeria scored 24 out of 100 points, it fell from 150th to 154th out of 180 countries assessed in the 2022 ranking.
According to the Civil Society Legislative Advocacy Centre, which aggregated data from eight different, the latest ranking on the level of corruption in the public sector, indicates that the CPI index for the country has remained consistently low in the last 10 years, while the lack of transparency in Nigeria’s security sector has weakened the country.
The CPI is TI’s tool for measuring the levels of corruption in the systems of various countries around the world.
A country can score maximum 100 points, and the least is zero. Zero signifies the worst-performing government, and 100 is the best-ranked.
The latest ranking may indicate that President Muhammadu Buhari’s fight against corruption has yet to yield enough results.
Many consider the Buhari administration’s pardon granted to two jailed former governors – Joshua Dariye of Plateau State and Jolly Nyame of Taraba State – in 2022 as a significant setback in the country’s anti-corruption efforts.
As the two former governors were pardoned in April 2022, the Supreme Court affirmed their convictions and sentencing, and they had yet to serve half the length of their jail time.
Also, corruption has continued to permeate the public and private sectors despite the government’s efforts to deter the menace.
Transparency International Chair, Delia Rubio, said governments worldwide have failed to progress against corruption.
Rubio called for all governments to work for all people, not just an elite few.
“Corruption has made our world a more dangerous place. As governments have collectively failed to progress against it, they fuel the current rise in violence and conflict – and endanger people everywhere. The only way out is for states to do the hard work, rooting out corruption at all levels to ensure governments work for all people, not just an elite few”, Rubio stated.
The ranking which comes less than a month before Nigeria’s general election is not intended to make Nigeria look bad or unresponsive to the corruption challenge, according to the Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), AUWAL Rafsanjani.
The group further asked the electoral body, the Independent National Electoral Commission (INEC) to play its role in ensuring the smooth conduct of the elections in a fair and free manner and according to the Electoral Act.
However, Moody’s had a stable outlook on the country, a statement issued on Friday said. But the latest rating also reflects the Nigerian government’s long-term foreign-currency and local-currency issuer ratings as well as its foreign currency senior unsecured debt ratings. The firm equally cut the country’s foreign currency senior unsecured MTN program rating to (P)Caa1 from (P)B3.
Obligations that are rated Caa are considered to be of poor standing and are subject to very high credit risk.
The latest sovereign rating echoes the one by Fitch in November, which similarly lowered Nigeria’s rating by one level at B-, placing it six notches above default and on par with Angola and Ecuador.
“Ultimately, the risk that a negative feedback loop sets in over the next couple of years between higher government borrowing needs and rising interest rates has intensified, exacerbating the policy trade-off between servicing debt and financing other key spending items,” Moody’s said.
“The 2023 budget plans on an even larger fiscal deficit than in 2022, while the government’s funding options remain narrow and reliant on central bank financing,” it added.
The government’s inability to access funding outside its shores is seen widening the gap created by subdued oil production and capital outflows. That ultimately will weaken Nigeria’s external profile with the passage of time, Moody’s said.
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The agency estimates Nigeria’s immediate default risk to be low, assuming no abrupt occurrence like another shock or policy shift that could strengthen the default risk.
It envisages that the government’s interest payment obligation will take approximately 50 per cent of revenue over the medium term compared to an estimated share of 35 per cent last year just as it expects government debt-to-GDP to soar to around 45 per cent from 34 per cent in 2022 and 19 per cent in 2019.
“The oil production outlook as well as the securitization of past advances from the Central Bank of Nigeria (CBN) both remain uncertain. In particular, the securitization would bring a degree of fiscal relief but its lawfulness is being contested in Parliament and its passage uncertain,” it said.
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