Nigeria's economy can expand by 2.5 percent next year,
rebounding from a recession entered in the second quarter, as long it can keep
oil output at 2.2 million barrels per day, a senior Moody's analyst said.
Africa's largest economy faces its worst crisis in 25
years, brought on by low oil prices which have slashed government revenue,
hammered its currency and caused chronic dollar shortages frustrating
businesses. Third quarter gross domestic production data is expected on Monday.
Aurelien
Mali, Moody's senior analytical adviser for Africa, told Reuters
late on Sunday that he expects a contraction from a year earlier, and said the
fourth quarter could be close to flat.
Mail said increases in oil output will help Africa's
top oil exporter generate more dollars. "With resumption of oil production and the dollars
that should come, we expect that Nigeria would be able to accelerate the
implementation of the budget," Mali said. "With an acceleration, we expect that (growth) could reach
2.5 percent next year."
The Minister of State for Petroleum, Dr. Emmanuel Kachikwu, said in
September that production was recovering and had reached around 2 million
barrels after months of attacks, mainly by the Niger Delta Avengers, on oil
installations cut output by over 600,000 bpd.
Nigeria produces oil through sharing contracts and
joint ventures with foreign and local firms. But it has often failed to fund
its own contributions. Last week, it reached a deal to pay $5.1 billion in
unpaid bills to oil majors. Oil producer Shoreline Natural Resources has said
Nigeria will need at least $14 billion a year in new investment to maintain
production at 2.2 million bpd, a level at which the national budget is based
on.
Moody's analyst downgraded Nigeria to B1 with a stable
outlook in April from Ba3. Mali said government's inability to ensure an
increase in oil production in the medium term could exert negative pressure on
its balance sheet and trigger another rating action.
However, he said that a currency depreciation in June
had compensated for government revenues because the country took action before
it had a much bigger gap in its income. “Though the currency weakness has not led to foreign
inflows”, Mali said. Oil accounts for around 10 percent of Nigeria's GDP.
Mali said reforms aimed at increasing the share of non-oil taxes as a percent
of government revenues would be positive for ratings. (Reuters)
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