Credit ratings agency Fitch stated on Thursday that the CBN continues to face a shortage of foreign exchange to clear the forex backlog.
The country’s high debt service to revenue ratio is also contributing to a challenging sovereign credit rating.
Gaimin Nonyane, Fitch’s Director of Middle East and Africa Sovereigns, expressed that the ongoing foreign exchange shortages in Nigeria would exert pressure on the naira. Currently, there exists a 30% disparity between the official and parallel exchange rates.
Nonyane and Toby Iles, Fitch’s Head of Middle East and Africa Sovereigns, cautioned that Nigeria’s interest payments to revenue ratio, surpassing 40%, poses a significant weakness for its credit rating four times higher than the median for B-rated sovereigns.
Iles pointed out that interest-to-revenue ratios across Africa have more than doubled since 2014, driven by heightened borrowing and increased costs due to global interest rate hikes.
