Moody’s Ratings has officially upgraded Nigeria to a positive credit outlook, after the agency noted that the external position of the country has improved considerably and the economic growth was stronger than expected. Recently, the global credit rating agency affirmed Nigeria’s long-term ratings on both foreign and local currency at B3 despite the positive outlook rating revision.

The positive rating outlook stemmed from the agency’s assessment that Nigeria has a better ability to withstand external shocks in the event its current economic progress continues, the agency said in its latest rating action. Some of the reasons for this encouraging outlook are the sizeable current account surpluses, better functioning of the foreign exchange market, and more effective transmission of monetary policy by the Central Bank of Nigeria.

Nigeria’s gross foreign exchange reserves (excluding the IMF position, SDRs and gold) have been estimated to have increased to about $31.2 billion. This is a reserve build-up that makes up for approximately six months’ worth of imports, thereby lessening the external economic vulnerability of the country.

In 2025, real GDP has grown to the level of four percent instead of the previously forecasted three percent growth for the upcoming medium-term period. The good upward trend of growth is expected to endure in the coming years at the level of around four percent.

Furthermore, the rate of inflation fell down sharply from 25.3 percent in the previous year to 15.4 percent in July 2026. This decline represents the macroeconomic evolution found by the National Bureau of Statistics and is attributed to the weakening effects of currency liberalisation, removal of fuel subsidies, and the strict monetary policy of the central bank.

The positive development did not shift Moody’s rating from B3, however, on Nigeria’s structural fiscal issues. The agency pointed to the country’s “extremely low capacity to generate revenue” and “low debt affordability,” which is under close watch by the Debt Management Office at home. In the year 2025, the level of general government revenue was about 10 per cent of GDP, which is one of the lowest ratios in the world.

This is in line with a previous revision to the outlook in June 2025, which saw the long-term issuer ratings of Nigeria upgraded from Caa1 to B3, with the outlook shift from positive to stable.

Going forward, the rating agency said that Nigeria would have the chance for another sovereign rating upgrade if it can continue the external enhancements, and adopt further actions that increase confidence in government revenues. But the outlook could easily be moved back to stable if economic growth were to come in badly, external imbalances return or external financial buffers were to be reduced, Moody’s said.