•Inflation rate slides to 8%

By Obinna Chima and James Emejo

Fitch Ratings has affirmed Nigeria's long-term foreign and local currency IDRs and senior unsecured bond ratings at 'BB-' and 'BB' respectively.

The global rating agency also stated that the country’s outlook remains stable.
A statement from Fitch yesterday also affirmed Nigeria's short-term foreign currency IDR at 'B' and the country’s ceiling at 'BB-'.

Fitch’s rating on Nigeria came just as it put the world’s largest economy, the US, on notice for a possible downgrade as lawmakers on Capitol Hill reached a compromise with the White House yesterday to resolve the country’s debt ceiling crisis.

Fitch still has the US rated AAA, the highest possible grade, but the country is now on “rating watch negative,” meaning that there is increased possibility of a downgrade in the near future.

According to Fitch, although Nigeria’s Gross Domestic Product (GDP) growth slowed to 6.4 per cent in the first half of 2013, the country’s economic indicators showed resilience in the face of exogenous shocks from the severe flood in 2012 which hit agricultural output; security problems especially in the north earlier this year; and increased oil theft and vandalism; and the consequent repair shutdown which caused oil output to contract for the second year in a row.

Nigeria’s non-oil sector slowed, but still grew by 7.9 per cent in 2012 and 7.6 per cent in the first half of 2013.

Fitch predicted that: “Non-oil growth should pick up in H213 (second half of 2013) as normal weather has resumed and the authorities have responded to security problems.

“Reforms to the electricity and agriculture sectors could start to boost potential growth. Inflation has been in single digits all year, the lowest in five years and the longest stretch of single digit inflation since 2008. Policy rates are unchanged.”
It also stated that the Central Bank of Nigeria (CBN) had the aim of achieving single-digit inflation and maintaining exchange rate stability, adding that public finance had remained comfortable.

“Fitch estimates a general government deficit of around 1.8 per cent of GDP this year and next. Both oil and non-oil revenues are under-budget and the Excess Crude Account (ECA) has been tapped to compensate. Capital spending also remains under budget.

“The draft 2014 budget plans ambitious fiscal consolidation, with lower oil production and benchmark oil prices and lower spending than the 2013 budget.
“However, Fitch expects that oil production will likely fall short again, and the final budget that emerges from the National Assembly (NA) is likely to be more expansionary,” the global rating agency declared.

Nevertheless, Fitch expected that general government debt would remain stable at just over 20 per cent of GDP, barely half that of the country's peers.

Continuing, Fitch said: "Nigeria's sovereign and overall external balance sheets, current account surplus, debt service ratio and external liquidity are all stronger than 'BB' category medians.

“Foreign reserves rose steadily in early 2013 but have been falling since May due to reduced oil output, prompting ECA draw-down, and global market turbulence, which has reduced foreign appetite for Nigerian paper (though net inflows have continued).

“However, the Petroleum Industry Bill (PIB) remains stalled in the National Assembly. Strong vested interests will make structural reform a continual struggle, especially with elections in 2015.

“Nigeria's ratings remain constrained by weak governance, low per capita income and vulnerability to oil price volatility. The government is responding to the Boko Haram insurgency mainly with security measures.”

Commenting on Fitch’s rating, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said: “This confirms that Nigeria's economy is resilient just like the Nigerian people are resilient.

“What's important about the rating is that while acknowledging all the challenges the economy faces, it points to and applauds the strengths such as progress in the power sector, increased focus on agriculture, strong investment in local manufacturing and other areas."

As an affirmation of Fitch’s assessment of Nigeria’s macroeconomic indicators, the National Bureau of Statistics (NBS) yesterday announced that the country’s composite Consumer Price Index (CPI), which measures the rate of inflation, dropped further to 8.0 per cent in September compared to 8.2 per cent in the previous month.

NBS attributed the 0.2 per cent drop in inflation to largely slower rate of increase in food prices as the recent harvest season continued to constrain rising food prices.
NBS, in its latest CPI data, which was released by the Statistician-General of the Federation, Mr. Yemi Kale, stated that prices trended lower in most food classes except for dairy products including milk, eggs and cheese and oils and fats classes, when compared to figures recorded in August.

It stated that the year-on-year rate for the headline index continued to trend downwards from the 9.0 per cent recorded in January.

It noted however that the “core sub-index has trended upwards for the third consecutive month (after trending lower in the first half of the year). The rate of increase was however tempered by moderations in the housing, water, electricity, gas and other fuels division as well as the furnishings, household equipment and household maintenance division.”

It added: “In September, the headline index increased by 0.75 per cent month-on-month, an increase of 0.5 percentage points from 0.25 per cent recorded in August. This was the first uptick in the CPI on a monthly basis in four months.”

Meanwhile, urban inflation increased by 8.0 per cent to 147.9 points in the period under review, compared to previous levels in September last year.

Notwithstanding, the urban index for the month was also 0.4 percentage points lower than the 8.4 per cent recorded in August, while the corresponding Rural National CPI recorded an 8.0 per cent year-on-year change in September, lowering marginally from the 8.1 per cent in August.

“Reforms to the electricity and agriculture sectors could start to boost potential growth. Inflation has been in single digits all year, the lowest in five years and the longest stretch of single digit inflation since 2008. Policy rates are unchanged.”



It takes a true leader working silently without noise to reform the power and agricultural sector of this great country

Continuing, Fitch said: "Nigeria's sovereign and overall external balance sheets, current account surplus, debt service ratio and external liquidity are all stronger than 'BB' category medians.



And some see no good, hear no good and speak no good of GEJ want me to vote APC come 2015?....foul!..foul!!...foul!!!..............................Fo...uuuuuoooooooooooooool!!!

GEJ is working...enemies of naija like Tinubu,FFK are crying

zegbeye: “Reforms to the electricity and agriculture sectors could start to boost potential growth. Inflation has been in single digits all year, the lowest in five years and the longest stretch of single digit inflation since 2008. Policy rates are unchanged.”



It takes a true leader working silently without noise to reform the power and agricultural sector of this great country

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