Economic analysts raised concerns about the long-term sustainability of borrowing to finance Nigeria’s economy.
They said it could further strain the economy and contribute to inflationary pressures.
The Central Bank of Nigeria disclosed that credit to the Federal Government increased by N11.33tn or 57.11 per cent to N31.15tn in August from N19.83tn in July.
The latest Money and Credit Statistics from the CBN revealed a trend of fluctuating borrowing by the three tiers of government from commercial lenders over the past months.
In June, the credit figure stood at N23.93tn, up from N19.98tn in April, but lower than the N28.38tn reported in May.
The first quarter of the year also showed varying levels of borrowing, with credit reaching N23.52tn in January, peaking at N33.93tn in February, and then dropping to N19.59tn in March.
The steady borrowing trend highlights the Federal Government’s growing reliance on CBN facilities to fund capital projects, debt servicing, and other fiscal obligations.
The report also revealed a dip of N777.13bn or 1.03 per cent in credit to the private sector, which stood at N74.73tn in August, down from N75.51tn in July.
In January, private sector credit was N76.48tn but rose to N80.86tn in February.
However, credit dropped to N71.21tn in March.
In the following months, it showed modest growth, rising to N72.92tn in April, N74.31tn in May, and settling at N73.19tn by June.
In terms of currency in circulation, the total rose to N4.14tn in August from N4.05tn in July, reflecting an increase of N91.08bn or 2.25 per cent.
The combined total for government and private sector credit, along with money in circulation, amounted to N110.03tn in August, up from the previous month’s total, underscoring the ongoing fiscal and monetary dynamics in the Nigerian economy, with government borrowing dominating credit activities, crowding out the private sector.
Afrinvest research explained that the CBN was in a difficult position, trying to balance inflation control with growth stimulation.
The Monetary Policy Committee of the CBN recently raised the monetary policy rate by 50 basis points to 27.25 per cent on Tuesday, the fifth consecutive rate hike this year.
Source: Punch
