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S&P: ‘Nigeria Faces Difficult Economic Conditions in 2O16’

rated Weakness in 3 Key Indices
Standard & Poors says Nigeria and other countries in sub-Saharan Africa will face difficult economic conditions in 2O16, according to its Global Sovereign Rating Trends for 2O16.
“Economic conditions for most rated SSA sovereigns will remain difficult in 2016,” S&P says in the Assessment Report. “The main challenges stem from the region’s continued heavy reliance on oil and other commodity exports, as well as lower appetite from global investors for emerging and frontier market debt issuance, owing to likely on-going interest rate rises in the U.S. affecting relative returns.
Low oil (and other commodity) prices, alongside continued weak commodity demand in China and continued sub-par growth in Europe, will continue to pose challenges for SSA in 2016. We expect the oil exporters–including Nigeria, Angola, Gabon, Congo (Brazzaville), and Ghana–will continue to be most affected by these issues.
However, other hard commodity exporters such as Zambia, South Africa, Botswana, and Mozambique will also face challenges.”
On Nigeria, the report stated: “The oil price slump will continue to strain Africa’s largest economy and largest oil exporter, Nigeria. The country relies on oil for about two-thirds of its fiscal revenues and over 90% of exports. The low oil price will affect fiscal revenues and the balance of payments position.
The new government, led by President Mohammadu Buhari, will seek to tackle the slump by stimulating growth via planned counter-cyclical spending, while simultaneously seeking to limit currency devaluation via strict exchange controls.”
 
Nigeria Rating Assessment Snapshot
·         Institutional assessment: Weakness
·         Economic assessment: Weakness
·         External assessment: Neutral
·         Fiscal assessment, budget performance: Weakness
·         Fiscal assessment, debt: Strength
·         Monetary assessment: Neutral
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