Credit to the government increased by N8.4 trillion, or 42%, month-on-month, reaching N28.4 trillion in May, up from N19.98 trillion in April, according to the Central Bank of Nigeria’s (CBN) Money and Credit Statistics for the period.
The CBN also reported that credit to the private sector grew by 1.9% month-on-month, totaling N74.3 trillion in May, up from N72.93 trillion in April. As a result, net domestic credit rose by 10.5% month-on-month, climbing to N102.7 trillion in May from N92.9 trillion in April.
Additionally, the Debt Management Office (DMO) reported that Nigeria’s total public debt increased to N121.67 trillion in Q1’24, up from N97.34 trillion in Q4’23, marking a rise of N24.33 trillion.
Analysts at Cowry Asset Management Limited predict this trend will continue. They noted: “Cowry Research anticipates ongoing challenges with Nigeria’s debt levels and servicing costs. Financing costs are expected to take up a larger share of the Federal Government’s revenues, given the weak local currency and the tight interest rate environment resulting from the Central Bank’s monetary tightening measures.
“With the government’s activities in the domestic capital market in 2024, it is expected that approximately N3 trillion will be raised from upcoming FGN Bond issuances. This is part of the effort to meet the funding target of N6.06 trillion in domestic borrowing and N1.77 trillion in foreign borrowings outlined in the N28.77 trillion 2024 budget.”
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