Sanctions could force Niger into default – Moody’s
Economic and financial sanctions imposed on Niger by its regional and Western partners following last week’s military coup could result in the country defaulting on its debt, ratings agency Moody’s has warned.
The Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU) imposed restrictions on the government of Niger last week, including the suspension of all commercial and financial transactions, and the freezing of Niger’s assets in ECOWAS central banks and commercial lenders. All financial assistance from regional development banks was also suspended.
International donors, including the EU and France, suspended financial support and security cooperation. The US and the African Union threatened to follow suit if constitutional order is not restored soon.
The restrictions prompted Moody’s to downgrade Niger’s long-term foreign and local currency issuer ratings on Wednesday from B3 (judged to have speculative elements and a significant credit risk) to Caa2 (rated as poor quality and very high credit risk) and place them under review for further downgrade.
In a press release announcing the downgrade, Moody’s warned that if maintained, the sanctions “will likely prevent Niger from making upcoming principal or interest payments to creditors outside the country which would constitute a default under Moody’s definition.”
About 80% of Niger’s outstanding local currency debt is held by other West African countries.
Niger, a landlocked country in West Africa, is one of the world’s poorest nations, receiving close to $2 billion a year in development aid.
Niger also has a critical stock of natural resources, including uranium, coal, gold, iron ore, petroleum, molybdenum, and salt. It is the world’s seventh-biggest producer of uranium.
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