S&P upgrades Nigerian outlook to positive due to reforms

Nigeria's economic outlook has been upgraded from stable to positive by Standard & Poor's ratings agency, the firm announced Thursday, citing reform efforts in Africa's largest oil producer. "The Nigerian government under President Goodluck Jonathan has been undertaking several important reform initiatives and is tightening its fiscal and monetary stance," the agency said. "The authorities have restructured and strengthened the banking sector, and we expect economic growth to remain strong. We are revising our outlook to positive from stable ..." It also reaffirmed its B+/B long- and short-term issuer credit ratings for Nigeria, the continent's most populous nation. Nigeria has been pursuing economic reforms including a controversial measure to cut fuel subsidies, which the government says has amounted to more than $8 billion this year. Economists and government officials view the move as essential to allow for more spending on the country's woefully inadequate infrastructure and to ease pressure on its foreign reserves. Nigerians however view the subsidy, designed in part to hold petrol prices at 65 naira per litre ($0.40, 0.30 euros), as their only benefit from the nation's oil wealth. Nigeria's central bank head Lamido Sanusi has also led sweeping bank reforms seen as having pulled the sector out of crisis. Finance Minister Ngozi Okonjo-Iweala is a highly respected former World Bank managing director. However, the country has also seen worsening violence blamed on Islamists and warnings from the Christian population that they will defend themselves against further attacks. Standard & Poor's noted concerns over the situation. Nigeria relies tremendously on the oil industry for revenue, and the ratings agency pointed out that crude exports accounted for 72 percent of current account receipts in 2010.