According to data from the Central Bank of Nigeria (CBN), the federal and state governments borrowed N20.1 trillion from commercial banks in July 2022, up 11% month-over-month (MoM) from N18.04 trillion in June.

Additionally, according to the report labeled “Money and Credit Statistics,” total credit to the domestic economy increased by 6.0% month over month to N59.9 trillion from N56.5 trillion in June.

In July, the private sector’s portion of the credit was N39.9 trillion, up around 3.6% from N38.5 trillion in June.

Financial sector analysts have predicted that the government will continue to borrow money in 2022 as a result of reduced oil outputs that will reduce oil revenue.

Analysts at FSDH Merchant Bank stated in their July 2022 macroeconomic review and outlook for Nigeria that “the pressure on government finance has become intense.”

“Debt servicing expenses surpassed income by 19% in the first four months of the year, while actual revenue fell 51% short of its goal.

Government revenue is predicted to underperform in the second half of 2022 if there is no meaningful reform to reduce fuel subsidies and combat oil theft, which will increase the demand for borrowing.

If the pattern continues, rising debt payments without a matching rise in revenue could lead to macroeconomic instability.

In order to improve oil output and, consequently, oil income, the federal and state governments must make immediate and coordinated measures to address the problems of pipeline vandalism and oil theft.

“It is anticipated that the total public debt will rise even more in 2022 due to underperforming revenue, which is primarily caused by low crude oil production.”