- Nigeria's economy does not have a very good outlook to international observers and rating agencies
- In fact, Moody’s Investors Service, a famous global rating agency, has said that the country's financial position is currently unstable
- The agency revealed that there are chances that the federal government will resort to costly options to fund its rising debts
A famous international rating agency, Moody’s Investors Service, has said that Nigeria's economic position has declined from stable to negative.
In its report released on Wednesday, December 4, Moody said that based on narrow revenue base and continued slow economic growth, Nigeria's financial strength and world position are at high risks.
Moreover, the agency predicted that there is a possibility that the federal government will fall back on expensive measures to fund its rising debt.
Even more, it pointed out that due to the country's dependence on foreign investors to fund its foreign exchange reserves, there is a vulnerability of an adverse change in capital flows.
However, Moody said that the massive reduction in Nigerian banks’ Non-Performing Loans (NPLs) will decrease the risk of capital erosion from unexpected losses and will also reduce the need for loan loss provisions.
The agency said: "Although Nigerian banks’ asset risk and profitability will remain key rating challenges, we expect these challenges to gradually ease in 2020 as the economy improves further."
Meanwhile, Legit.ng reported that World Bank had predicted Nigeria was in danger of becoming a place for about 25% of the poorest persons in the world in 10 years if nothing drastic is done about its economy.
In order to prevent this, the bank advised the federal government to increase the generation of local revenue, eliminate unnecessarily stringent laws on trade and make sustainable economic policies.
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