Nigeria’s ongoing fiscal and foreign exchange reforms have earned renewed international recognition after ratings agency S&P Global upgraded the country’s sovereign credit profile, citing stronger external reserves, improved FX liquidity and rising investor confidence.
S&P raised Nigeria’s long-term foreign and local currency ratings from ‘B-’ to ‘B’, while maintaining a stable outlook, in a decision that underscores what analysts describe as early gains from sweeping macroeconomic reforms.
The upgrade reflects what the agency called “sustained structural reforms” over the past three years, particularly in the foreign exchange market and public finance management.
According to S&P, Nigeria’s economic position has strengthened due to higher oil output, improved domestic refining capacity and the liberalisation of the foreign exchange regime introduced in 2023.
The agency also pointed to increased foreign exchange liquidity, stronger fiscal revenues and a rebound in external reserves as key drivers of the improved outlook.
External reserves rose to about $50 billion in March 2026, up from roughly $33 billion in 2023, while average monthly FX turnover increased to $8.6 billion in 2025, with nearly $10 billion recorded in April 2026.
Nigeria’s economic recovery has been closely tied to policy measures implemented under the leadership of Central Bank of Nigeria Governor, who has overseen aggressive monetary tightening and FX market reforms since taking office in October 2023.
S&P said reforms in the FX market had significantly improved investor sentiment and enhanced macroeconomic stability by shifting Nigeria toward a more market-driven exchange rate system.
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The agency noted that improved access to foreign currency had supported growth in the non-oil sector and reduced distortions that previously discouraged investment.
Fiscal reforms have also played a role in strengthening Nigeria’s credit profile.
S&P highlighted Executive Order 9, signed in February 2026, which requires the Nigerian National Petroleum Company Limited to remit a larger share of oil revenues directly into the Federation Account, improving transparency and government revenue flows.
The agency projected that government revenue could rise to 12.4 percent of GDP in 2026, up from 7.3 percent in 2023, while debt servicing pressures are expected to gradually ease.
Nigeria’s external position has also benefited from improved oil production and higher global prices, alongside reduced import demand following the removal of fuel subsidies and increased domestic refining capacity.
S&P forecast oil output to average 1.66 million barrels per day in 2026, while projecting a current account surplus of 5.8 percent of GDP.
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Inflation is expected to ease to 17.7 percent in 2026 from 23 percent in 2025, while real GDP growth is projected at 3.7 percent next year.
The upgrade comes as Nigeria continues to implement a series of reforms aimed at stabilising an economy that has long struggled with currency volatility, fiscal deficits and foreign exchange shortages.
Before the reforms, Nigeria faced significant FX distortions, including a backlog of more than $7 billion in unmet foreign exchange obligations and multiple exchange rate windows that encouraged arbitrage and discouraged investment.
At the time, external reserves had fallen to about $33.22 billion by December 2023, while inflation surged to around 27 percent, eroding purchasing power and increasing the cost of living.
To address these challenges, the Central Bank adopted a tight monetary policy stance, raising the Monetary Policy Rate by 875 basis points to 27.5 percent in 2024 in an effort to curb inflation and restore stability.
The central bank also unified exchange rates and introduced an electronic FX matching system to improve transparency, reduce speculation and enhance price discovery in the market.
Other global rating agencies, including Fitch Ratings, have also acknowledged Nigeria’s reform progress, citing improvements in policy coherence, exchange rate liberalisation and monetary tightening.
Fitch noted that recent reforms had reduced economic distortions and improved macroeconomic resilience, despite ongoing structural challenges.
The Nigerian authorities have also introduced the Nigeria Foreign Exchange Code to further strengthen transparency and accountability in the FX market.
Analysts say the combination of tighter monetary policy, FX liberalisation and fiscal reforms marks one of the most significant economic adjustments in Nigeria in decades.
However, they caution that sustaining the gains will depend on continued discipline in public finances, stable oil production and consistent policy implementation in the coming years.
