Fitch Ratings expects Nigeria’s gross foreign exchange reserves to decline marginally to $47 billion by the end of 2026, down from the $49.4 billion recorded at the end of March 2026. The projection reflects higher government spending pressures and external risks, the agency said in its latest sovereign rating commentary.
Despite the modest drawdown, Fitch affirmed Nigeria’s Long-Term Foreign Currency Issuer Default Rating at ‘B’ with a stable outlook. The decision underscores the country’s large economy, relatively developed and liquid domestic debt market, substantial oil and gas reserves, and ongoing improvements in monetary and exchange-rate policies.
Stronger external buffers support rating stability
Reserves are forecast to cover seven months of current external payments, well above the ‘B’ category median of 4.3 months. This comfortable cushion highlights strengthened external liquidity and reduced near-term financing risks for Africa’s largest economy, even as net reserves are projected to reach around $35 billion by end-2025.
The affirmation comes after gross reserves more than recovered from a low of $32 billion in mid-April 2024, aided by FX market liberalisation and normalisation efforts that have cleared backlogs and boosted investor confidence.
For global investors, the stable outlook signals that Fitch sees the gains from 2023 reforms enduring into 2027, provided policy continuity holds. Nigerian eurobonds and local-currency instruments have already priced in much of the FX improvement; this rating action removes immediate downgrade pressure and keeps sovereign debt firmly in speculative-grade territory.
The slight reserve erosion nonetheless flags persistent vulnerabilities. Oil revenues remain dominant and exposed to global price volatility, while elevated spending on infrastructure, fuel subsidies, and the widening 2026 budget deficit test fiscal and current-account balances. A sharper external shock could accelerate the projected $2.4 billion decline.
Overall, the rating balances caution on near-term trends with recognition of structural progress in external buffers and policy framework. It offers a measured vote of confidence for international capital markets closely watching one of Africa’s most dynamic credit stories.
