Moody’s has upgraded Nigeria’s sovereign credit rating from Caa1 to B3, reflecting increased confidence in the country’s economic direction.

The agency attributed the upgrade to significant improvements in Nigeria’s external and fiscal positions, driven largely by recent reforms in foreign exchange management, which have strengthened the balance of payments.

Moody’s also pointed to structural adjustments—such as subsidy reforms and efforts to boost non-oil revenue—as key steps toward long-term fiscal sustainability.

“The recent overhaul of Nigeria’s foreign exchange management framework has markedly improved the balance of payments and bolstered the CBN’s (Central Bank of Nigeria) foreign exchange reserves,” Moody’s stated.

Alongside the rating upgrade, Moody’s has adjusted Nigeria’s economic outlook from positive to stable.

The agency expects further improvements in Nigeria’s external accounts and fiscal health, though it cautions that progress may be slower—especially if global oil prices decline.

“The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely,” Moody’s noted.

A key factor in Moody’s decision is Nigeria’s progress in addressing inflationary risks. Although earlier policy shifts triggered inflationary pressures, recent economic measures have helped stabilize both borrowing costs and the pace of price increases.

In April, Fitch Ratings revised Nigeria’s outlook from Negative to Stable, signaling growing confidence in the Tinubu administration’s commitment to comprehensive policy reforms.

Although Nigeria’s long-term foreign currency rating remains at ‘B’, Fitch noted that reforms introduced since mid-2023—such as exchange rate liberalisation, tighter monetary policy, fuel subsidy removal, and an end to deficit monetisation—are beginning to yield positive results.

These measures have strengthened macroeconomic credibility, reduced structural distortions, and improved the country’s resilience to external shocks.

“We are seeing clear signs of increased commitment to market-based reforms under President Tinubu’s administration,” Fitch stated. “While challenges remain, Nigeria’s trajectory has shifted toward stability and greater investor confidence.”