Lagos, Dec. 9, 2022 – The Lagos Chamber of Commerce and Industry (LCCI) has joined other Nigerian institutions in advising the federal government to be wary of recent downgrades by the three leading global default rating agencies..
Earlier this week, the Minister of Finance, Zainab Ahmed, had expressed displeasure over the recent downgrades by the global agencies, enjoining these agencies to be more circumspect in their consideration of Nigeria
She said the downgrades could further worsen Nigeria’s status among the committee of nations, but added that Nigeria’s situation was not peculiar.
Dr Chinyere Almona, LCCI Director-General, said in a statement in Lagos that the country might be heading towards deeper debt crises, going by the government’s revenue and expenditure framework for 2023.
She called on the government to explicitly address the issues flagged by multiple global risk rating agencies and announce measures to de-escalate the risks arising from them.
Fitch downgraded Nigeria’s long-term foreign currency debt Issuer Default Rating from ‘B’ to ‘B-, a few notches above junk status, following Moody’s lead in downgrading Nigeria’s risk outlook, and Standard and Poor’s placement of Nigeria’s Eurobonds on its watch list.
According to LCCI, the rating agencies pinned Nigeria’s deteriorating risk profile down to “its weakening external and government finances, especially the facts that declining government revenues are now falling short of rising interest payments on government debt, inadequate availability of foreign exchange, and heightened exchange rate uncertainty, all in the face of strong global oil prices.
“The N20.5tn budget proposed to the National Assembly by the president for 2023 includes a deficit of N10.78tn, which is more than 50 per cent of the entire budget.
“The president has proposed that more borrowings will fund N10.5tn out of this deficit.
It will be insensitive to go ahead with the proposed borrowing after Nigeria’s debt sustainability has been red-flagged by multiple global default risk rating agencies,” she said. (GBN)
