Nigeria's foreign external reserves last week hit $42 billion as international rating agency, Fitch put the country's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'BB-' and 'BB' respectively with a Stable Outlook.

The reserves had been rising consistently over the past few months in line with the Coordinating Minister of the Economy's aims at building the reserves to $50 billion before the end of the year (2012), so as to serve as cushion for the economy in case of any global economic recess.
The presidency and the legislative arm of government are currently at odds over what the oil benchmark should be with the National Assembly settling for $78 per barrel benchmark against the finance minister's benchmark of $75.
According to Fitch, "The combination of a tighter fiscal stance, the reduced petroleum subsidy and a tightening of the subsidy payment system and other foreign exchange transactions, have resulted in a month-by-month increase in foreign exchange reserves this year of a cumulative $9.1 billion.
"This goes some way towards replenishing the buffer to withstand future oil price shocks. However, reserves still represent only 4.5 months of current external payments, compared to almost eight in 2008. The inauguration of the Nigerian Sovereign Investment Authority could herald a stronger mechanism for saving above budget oil revenues. However, it is not clear when it will begin receiving regular inflows", the rating agency said.
Fitch further said the ratings of the country reflect progress on a number of fronts including a tighter fiscal stance, an improvement in electricity supply, increased agricultural output which has helped reduce imports, and an increase in international reserves.
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