(Bloomberg) -- Nigeria’s efforts to carry out urgent fiscal reforms will face “social and institutional constraints” even after a new president is elected next month, Moody’s Investors Service said in a report. 

The comments came as the ratings service late Friday downgraded Nigeria’s long-term foreign debt rating to Caa1 from B3 with a stable outlook. 

The downgrade of Africa’s largest economy was tied to the expectation that the government’s fiscal and debt position will continue to deteriorate, Moody’s said. 

“Depressed and uncertain oil production, capital outflows amid flight to quality and the government’s constrained access to external funding will likely continue to weigh on Nigeria’s external position in 2023,” Moody’s said. 

While the emergence of a new president after elections on Feb. 25 could provide a new catalyst for economic reforms, “implementation will likely remain lengthy amid marked social and institutional constraints,” Moody’s said. 

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“Fiscal pressure from falling oil production, the increasingly costly oil subsidy as well as rising interest rates will likely persist over the next couple of years,” it said.  

Nigeria’s election has sparked unprecedented interest, especially form young people hoping for a change from the economic woes of the last seven years, which have been marked by slow growth, soaring unemployment, heightened insecurity and an exodus of the educated elite. 

Even so, “weak institutional capacity” and entrenched vested interests are likely to hinder the next president from quickly addressing the challenges of the country of some 216 million people. 

Nigeria’s new government will also struggle to balancing paying interest on debt with other social priorities like education and health care, according to Moody’s. 

Interest payments are expected to rise to half of general government revenue over the medium term from about 35% in 2022, while debt as a proportion of gross domestic product will rise to 45%, from 34% in 2022 and 19% in 2019, according to Moody’s assessment. 

“Funding conditions are likely to remain tight,” Moody’s Investors Service said.  

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