November 17, 2025/CSL Update

S&P Global Ratings has revised Nigeria’s outlook to Positive from Stable, while affirming the country’s “B-/B” long and short term foreign and local currency sovereign credit ratings. The upward revision reflects the increased confidence in Nigeria’s reform agenda, with S&P noting that the country has recorded meaningful improvements in external, economic, and monetary indicators since mid-2023, following the election of President Bola Tinubu. On fiscal policy, S&P expects the Tinubu administration to continue pushing forward with ambitious structural and revenue-mobilisation reforms, although the pace of implementation is likely to slow as the country approaches the 2027 general elections.

We share this view and previously discussed (see CSL H2 2025 Outlook Report: “Between stabilisation and strain”, 8 July) that the tax reform bills, set for implementation next year, is likely to be the last major reform initiative undertaken by the current government before election-related political pressures heighten.

We reiterate our position that authorities are likely to avoid policies that could impose short-term hardship, as this may make the ruling party unpopular in the buildup to the elections. S&P also cautioned that fiscal vulnerabilities could rise due to potential slippages linked to election-year spending. However, the rating agency does not expect a drastic departure from the current fiscal deficit trajectory, suggesting that while pressures may build, they are unlikely to derail fiscal stability over the medium term.

The current account is also expected to remain in a surplus over the next few years. Although the balance is expected to soften to around 4.2% of GDP in 2026, driven by a rebound in imports and a bearish outlook for crude oil prices. We align with the view on the current account, however, our estimates point to a slightly sharper moderation (see CSL Macro Report: “Exchange Rate: What our clients want to know”, 29 October). Nonetheless, we note that the sustained positive current account balance bodes well for the trajectory of the external reserves, which has risen to around US$43.5 billion, the highest level in over five
years.

The rating agency also signalled that Nigeria’s sovereign rating could be upgraded within the next 12 months if economic performance continues to outperform expectations alongside further progress on fiscal and external sector reforms. Conversely, S&P warned that the outlook of the nation could be revised lower if the implementation of key reforms stalls and the capacity of Nigeria to meet its external commercial obligations weakens.

Click here to download full report: ​​​​​​​​CSL Nigeria Daily – 17 November 2025 – Economy.pdf​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​