Credit ratings agency Moody’s upgraded Nigeria’s rating to “B3” from “Caa1” on Friday.

The agency cited significant improvements in the country’s external and fiscal positions, according to a Reuters report.

According to Moody’s, inflationary risks in Nigeria, driven by policy shifts, have diminished. Inflation and domestic borrowing costs are showing nascent signs of easing, bolstering confidence in the stability of these policy changes.

The agency revised Nigeria’s outlook to “stable” from “positive”, as it expects recent progress on external and fiscal fronts to continue, though at a slower pace, if oil prices fall.

“The recent overhaul of Nigeria’s foreign exchange management framework … has markedly improved the balance of payments and bolstered the CBN’s (Central Bank of Nigeria) foreign exchange reserves,” Moody’s said in a statement.

“The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely,” Moody’s added.

The development follows the World Bank’s announcement that Nigeria’s economy experienced its fastest growth in about a decade in 2024.

The bank tied the growth to a strong fourth quarter and an improved fiscal position. However, it warned that persistently high inflation remains a challenge.