Moody's expects oil price-related impact on Nigeria's economic recovery to be modest

Nigeria oilMoody's in a report said that the impact of Nigeria's economic recovery on the back of climbing oil prices would be modest and that it would continue to face fiscal pressure

"An increase in oil production and higher oil prices support Nigeria's slow economic recovery and the 2.8 per cent growth we expect in 2018," said Aurélien Mali, a Moody's vice-president, senior credit officer and co-author of the report.

"Public finances are likely to improve modestly alongside this growth, but efforts to improve non-oil revenue remain elusive. Over the longer term, the government's diversification efforts should improve the resiliency of the economy and public finances to oil price volatility," Mali said.

Oil prices in 2018 have been climbing thanks to production cuts from OPEC and countries such as Russia.

Over the past few days, the price of oil has been boosted by US President Donald Trump's withdrawal from the Iran nuclear deal and the possibility of sanctions being imposed on Iran.

Brent crude futures have hit multi-year highs, climbing to over US$77 per barrel.

The credit rating agency however says that Nigeria's economic recovery is cyclical and that the government will need to take further reforms to boost the economy.

It expects the country's economy to grow at about 3 per cent in real terms over the next few years.

Moody's maintains a B2 rating on Nigeria's sovereign debt with a "stable" outlook.

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