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Falling oil prices, unrest threaten the country's credit rating

11 February 2015, 06:54

Washington — Standard & Poor's Ratings Services warned Tuesday that it might downgrade the country's credit rating, citing tumbling oil prices and political unrest.

The rating agency said there's at least a 50 percent chance it will reduce Nigeria's long-term credit rating — already a speculative BB-.

Plunging oil prices have damaged the econom. The country relies on oil and natural gas for 70 percent of its tax revenue and 90 percent of its exports. When S&P last looked at Nigeria's creditworthiness in September 2014, it forecast an average oil price of $105 a barrel this year; now it expects oil prices to average $55 a barrel.

Also Read: 'Nigeria to be among 20 best economies by 2020'

Lower prices will drag the economic growth to 5 percent this year from 6.3 percent in 2014. Previously expected to run a trade surplus through 2017, Nigeria is now forecast to run a trade deficit instead. Government debt will grow as a percentage of the economy, S&P forecasts.

The Islamic extremist group Boko Haram is seizing territory in northeastern Nigeria. A presidential election scheduled for February was postponed until early spring because of security concerns.

"Political tensions remain high as the general elections approach," S&P said.

S&P is scheduled to deliver its next report on Nigeria on March 20.

- AP


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