(Bloomberg) -- Nigeria’s credit outlook was raised to positive by Moody’s Investors Service as the nation takes steps to improve its fiscal position and shore up foreign reserves. 

The African country’s outlook was moved to positive from stable, according to a Friday statement. Moody’s cited actions taken by the government, including devaluation of the naira and removal of the largest part of the oil subsidy. 

“The positive outlook reflects the possible reversal of the deterioration in Nigeria’s fiscal and external position as a result of the authorities’ reform efforts,” wrote analysts Lucie Villa and Matt Robinson. 

It affirmed Nigeria’s rating at Caa1, seven levels into junk due to “still weak” fiscal and external positions. The reforms may not be enough to improve its credit profile, Moody’s said.

Nigerian central bank chief Olayemi Cardoso last month pledged to curb inflation and steady the nation’s battered currency, declaring that policymakers will clear forward foreign-exchange contracts that have weighed on the naira. 

A heavy backlog of demand for the US currency has contributed to a 40% slump in the naira’s value against the greenback since President Bola Tinubu’s eased foreign-exchange controls in June.

Since becoming the nation’s leader on May 29, Tinubu has scrapped the payment of an expensive fuel subsidy an attempt to transform an ailing economy to woo investment and achieve 6%-plus growth in coming years. The last time Nigeria achieved that growth rate was in 2014.

The painful reforms have contributed to surging inflation, which reached an 18-year high in October, but have not yet done much to lift growth. Gross domestic product expanded 2.54% in the three months through September from a year earlier, compared with growth of 2.51% in the previous quarter. 

Nigeria is expected to spend at least six times more on servicing its debt next year than on building new schools or hospitals in the country. More than 40% of the population lives in extreme poverty.

Before the release of the Moody’s report, Ibukunoluwa Omoyeni, an economist at Vetiva Research, said the rating company could look favorably on the minor recoveries in oil production, refining projects, and reforms in the foreign-exchange market, but frown at low levels of net reserves.

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