•Expects S & P’s rating to be more positive
By Yinka Kolawole, with agency report
The Federal Government, yesterday, disagreed with the Moody’s Investors Service, a global sovereign investment rating agency, over the later’s downgrade of Nigeria’s credit ratings insisting that the government was already addressing the agency’s concerns.
Speaking with journalists in Abuja yesterday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated: “Moody’s downgrade came as a surprise to us because we had presented all the work that we have been doing to stablise the economy.
“But these are external rating agencies that don’t have the full understanding of what is happening in our domestic environment.”
Recall that the international rating agency, last week, downgraded Nigeria’s credit rating to Caa1 from B3, noting that the government’s fiscal and debt position was expected to keep deteriorating.
Following the downgrade, the Federal Government bonds fell heavily on Monday with the nation’s sovereign-risk premium jumping highest in three months.
However, commenting on the rating parameters, Ahmed said, “The reasons they gave were very practical ones. They said part of the reasons for the downgrade was that even though oil production has been restored, that there is still a high risk that there could be a relapse to the production levels.
“Secondly, they also said they are concerned that our debt service to revenue ratio is high.
“Even though their assessment is that we have been able to pay our debt and even in the medium term, they have confirmed that we have the capacity to pay our debt.
“But they are worried that it is still eating too much of our revenue and they flagged that as a high risk.
“The third major reason they gave is that our management of foreign exchange is still quite problematic in the sense that industries operating in their country are not able to get the FX requirements to meet their business needs.
“These are practical things and we had explained to them what we are working on to address each of these major challenges.”
But she also said the S&P’s rating, due today, is expected to be more positive.
“S&P’s assessment is not the same as Moody’s. They have come out with a much better assessment,” she said.
According to Moody’s “The review for downgrade focused on Nigeria’s fiscal and external position and the capacity of the government to address the ongoing deterioration – other than by alleviating the burden of its debt through any form of default, including debt exchanges or buy-backs.”
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