Credit ratings company, Fitch, has said that state governments in Nigeria do not execute 40 per cent of the capital expenditure in their various budgets.
This was disclosed in its latest Nigerian States Framework Report posted on the website of the global ratings firm, which highlighted how debt servicing affects state governments’ ability to execute CAPEX.
In its latest credit ratings report on Nigeria, the country’s Long-Term Foreign-Currency Issuer Default Rating was affirmed at ‘B-‘ with a positive outlook.
It also projected that non-performing loans of Nigerian banks will increase in 2024 on the back of high interest rates and inflation in the country.
According to the latest framework report, all Nigerian states rated by Fitch are on Positive Outlook, reflecting that of the sovereign (B-/Positive) and the Federal Government of Nigeria’s policies that affect states’ operating revenue, debt stock, and debt service.
However, “The free-floating naira exchange rate has consistently increased external debt service, eroding the share of FAAC available for autonomous spending, as external debt is serviced through direct deductions from transfers.”
