Credit to the Nigerian government experienced a substantial month-on-month increase of N8.4 trillion, rising by 42 percent to 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.
Additionally, credit to the private sector grew by 1.9 percent, reaching N74.3 trillion in May from N72.93 trillion in April. Consequently, the net domestic credit rose by 10.5 percent to N102.7 trillion in May, compared to N92.9 trillion in April.
The Debt Management Office (DMO) recently reported that Nigeria’s total public debt surged to N121.67 trillion in Q1 2024, an increase of N24.33 trillion from N97.34 trillion in Q4 2023.
Analysts at Cowry Asset Management Limited predict that this upward trend will continue, indicating no immediate relief for Nigeria’s escalating debt levels and service costs.
They attribute this to high financing costs consuming a larger portion of the Federal Government’s revenues, compounded by a weak local currency and tight interest rate environment due to the Central Bank’s monetary policies.
Cowry Research projects that the Nigerian government will continue its activities in the domestic capital market throughout 2024, with an expected N3 trillion to be raised from subsequent Federal Government of Nigeria (FGN) Bond issuances.
This forms part of the government’s strategy to meet its funding target outlined in the 2024 budget, which includes N6.06 trillion in domestic borrowing and N1.77 trillion in foreign borrowings, bringing the total to N28.77 trillion.
Source: Vanguard