Fitch, a credit rating agency, says it expects that Nigeria’s import figures will return to its previous record now that increased oil prices have resulted in high foreign reserve figures.
In a statement released on Thursday to affirm Nigeria’s long-term foreign-currency issuer default rating at ‘B+’ with a negative outlook, the agency said the negative outlook reflects the uncertainty about the sustainability of economic growth momentum.
“Increasing oil receipts and import compression have buoyed Nigeria’s trade surplus and brought the current account surplus to an estimated 2.2% of GDP in 2017,” the statement read
“Fitch expects that imports will begin to return to historical levels, especially as government capital expenditure increases and the current account surplus will narrow in 2018.”
In June 2015, the Central Bank of Nigeria said it would no longer provide foreign exchange for the importation of 41 items including toothpicks, rice and cosmetics.
This, it said, would ensure efficient utilization of foreign exchange, encourage local production and reduce dependence on imported items.
“Greater FX availability provided a lift to the non-oil export sectors, particularly agriculture. Fitch expects that these trends will continue, but notes that tight monetary conditions will continue to weigh on Nigeria’s growth outlook.
“The FX market remains segmented and the continued use of exchange controls inhibit greater foreign-currency liquidity and capital inflows.
“In Fitch’s view, there is unlikely to be any further substantial change by the CBN to the existing FX rate regime before the 2019 elections.”