Washington, U.S. | — Standard & Poor’s Ratings Services warned Tuesday that it might downgrade Nigeria’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 Nigeria’s economy, Africa’s biggest.
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. Lower prices will drag Nigeria’s 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.