The recent rejection of Moody’s Sovereign rating degrade from B1 to B2 with stable outlook by the federal government, has elicited reactions from industry experts who saw reality in the rating.
It would be recalled that shortly after the new rating by Moody’s which came since the 2016 assessment by the global firm, government on Wednesday faulted the downgrading of Nigeria from B1 stable to B2 stable by Moody’s Sovereign Rating.
But experts said Moody’s latest Sovereign Rating of the economy is in order, considering available indices and current performance of the economy.
According to Dr. Ken Igboanugo, “Moody’s ratings are driven by real data assessment, level of new foreign investment inflow and activities of local firms in an economy within a given time frame”.
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“We need not to be deceived by mere manipulation of development data, but to look at the realities on ground to judge Moody’s view.
“It is a known fact that since the emergence of this government, real sector investment has been very slow and in some quarters non-existent.
According to him, Moody’s assessments look at the level of return on investment, performance of real sector of the economy and not just rise and fall of oil prices.
Continuing, he said “Every analyst is aware of the fact that inflow of investors in the last two year had been in the region of portfolio activities which cannot be used to rate the performance of an economy because portfolio investors are not real investors; they are just money makers.
The apex government had in a statement issued in Abuja by the Debt Management Office (DMO) on behalf of the Ministry of Finance and the Central Bank of Nigeria, said the premise for Moody’s rating was faulty, adding that since Nigeria’s last rating in 2016, the nation had made quantum leaps in several economic frontiers.
According to the government, “The attention of the Federal Ministry of Finance, Central Bank of Nigeria and the Debt Management Office has been drawn to Wednesday’s announcement of the decision by Moody’s to downgrade Nigeria from a B1 stable to a B2 stable rating.
“This is equivalent to Nigeria’s existing B/stable outlook rating from S&P and slightly lower than Nigeria’s B+/negative outlook rating from Fitch. While we respect the right of Moody’s to make this decision, we strongly disagree with the premise and must address some of the conclusions upon which the decision rests.”
Key argument of the government is that since Nigeria was last rated by Moody’s as B1 stable in December 2016, the country had successfully emerged from a protracted recession and recorded important improvements across a broad range of indices.
Federal government further claimed that the return to economic growth of 0.55 per cent in the second quarter, and returning business confidence, as evidenced by a PMI index of 55.0; stable foreign exchange window for importers and exporters, with improving liquidity and convergence of the parallel and official rates; and significantly improved foreign exchange reserves, now totalling $34bn are clear indices of performing economy.