Fitch Ratings downgraded the sovereign rating outlook of Nigeria to negative from stable citing heightened political uncertainty in the context of a tightly contested presidential election.

The rating agency on Monday maintained the long-term foreign currency rating at ‘BB-‘ and the local currency rating at ‘BB’.

The rating agency said political uncertainty heightened due to a tightly contested presidential election and potential transition issues. Further, fiscal and external buffers eroded significantly as the economy enters a period of lower oil prices and are well below the levels of the 2008/09 oil price shock.

Moreover, high dependence on oil revenues will cause the external position to deteriorate despite a rapid policy response, it said. The current account is forecast to fall into deficit in 2015 for the first time since 1998.

Fitch said economic performance is likely to weaken, although non-oil growth will remain robust. Real non-oil growth is set to to ease to 5.5 percent in 2015 from 7.4 percent in 2014.

The main factors that could lead to a rating downgrade are a serious and prolonged breakdown in public order, erosion of fiscal and external buffers and an inadequate policy response that seriously undermines confidence and reversal of key structural reforms, Fitch said.

The material has been provided by InstaForex Company –