Standard & Poor’s boost Nigeria’s credit score
The ratings agency Standard & Poor's boosted Nigeria's credit score on Wednesday, citing savings from a costly fuel subsidy scheme and improved spending forecasts in sub-Saharan Africa's second-biggest economy.
S&P raised its long-term sovereign credit ratings on Nigeria to "BB-" from "B+," a statement said.
The decision brought Nigeria closer to the point where its sovereign debt would be considered investment grade, a key criteria for global fund managers.
"The upgrade reflects our view that owing to fuel subsidy cuts, conservative budget oil price assumptions, improving fiscal management, and high prices, Nigeria's fiscal assets in its excess crude account (ECA) have risen to $8.4 billion (from $2.0 billion at end-2010), which provides a reasonable fiscal buffer," S&P said.
President Goodluck Jonathan tried to scrap a corruption-riddled fuel subsidy scheme in January but the move sparked massive protests and a general strike as pump prices doubled overnight.
Jonathan was forced to partially reinstate the programme, with a litre of petrol now fixed at $0.60 in Africa's largest oil producer.
The president has also set out a 2013 budget which pegs spending to a modest benchmark oil price of $75 dollars per barrel, with all revenue earned above that price to be deposited in the excess crude account, which is intended for savings.
Jonathan is facing political pressure to boost the benchmark price but veered to the lower figure, a move aimed at increasing savings and cutting back on waste in a country still seen as one of the world's most corrupt.
His respected finance minister, former World Bank managing director Ngozi Okonjo-Iweala, has stood firm against calls to increase the benchmark price.
Nigeria has recorded production levels in a range of 2.0 – 2.5 million barrels per day in recent months.
The country's output had been seriously hampered by an insurgency the Niger Delta region, but the violence has diminished since a 2009 amnesty.
"The stable outlook assumes that the government will continue to pursue its reforms, thereby helping to support strong economic growth, and that there will be no worsening of political tensions and no significant return of insurgency in the Niger Delta," S&P said.