The Central Bank of Nigeria (CBN) revealed that credit to the Federal Government surged by N11.33 trillion (57.11%) in August, rising from N19.83 trillion in July to N31.15 trillion. This growing reliance on CBN facilities underscores the government’s need to finance capital projects and service debt. Economic experts, however, warn that the increased borrowing could further strain the economy and drive inflationary pressures.
While government borrowing has skyrocketed, credit to the private sector fell by N777.13 billion (1.03%) in the same period, continuing an inconsistent trend throughout the year. The CBN recently raised the monetary policy rate to 27.25% and increased cash reserve ratios for banks, aiming to curb inflation but risking tighter liquidity in the private sector.
Nigeria’s total public debt also rose to N121.67 trillion by June 2024, reflecting concerns over fiscal management and the potential long-term impact on economic growth.
