Manny Ita –
Fitch Ratings has projected that Nigeria’s external reserves will decline to about $47 billion by the end of 2026, even as the country continues economic and monetary reforms aimed at stabilising its foreign exchange market.
In its latest outlook, Fitch affirmed Nigeria’s Long-Term Foreign Currency Issuer Default Rating (IDR) at ‘B’ with a Stable Outlook, citing the country’s large economy, improving monetary policy framework, and relatively liquid domestic debt market as supporting factors.
Despite recent gains in reserves, Fitch expects some pressure ahead due to rising external obligations and fiscal demands. The agency noted that gross reserves rose to about $49.4 billion in March 2026, up significantly from around $32 billion in mid-2024, reflecting improved FX inflows and policy adjustments.
However, it forecast a mild decline toward $47 billion by the end of 2026, driven by higher spending needs and external vulnerabilities. Even with this drop, Fitch said Nigeria’s reserve position remains relatively strong, with coverage estimated at about seven months of external payments, above the median for similarly rated countries.
The report also acknowledged reforms by the Central Bank of Nigeria that have helped stabilise the foreign exchange market and support naira performance, though it warned that fiscal pressures could still lead to moderate currency depreciation in the near term.
Fitch further projected that Nigeria’s budget deficit may widen to nearly 5% of GDP in 2026, while government revenue is expected to remain low compared to peer economies. Inflation is projected to average around 16%, down from previous highs but still elevated, and economic growth is expected to remain steady at about 4.1%, supported mainly by the oil sector.
While the agency recognized improvements in the banking sector following recapitalisation efforts, it noted that weak revenue mobilisation, inflation, security concerns, and governance challenges continue to weigh on Nigeria’s overall credit outlook.
Overall, Fitch maintained a cautious stance, highlighting that Nigeria’s reform progress is significant but still balanced by structural fiscal and external risks.
