From N14.1 trillion in January 2022 to N16.6 trillion in April 2022, the government’s credit increased by N2.5 trillion, or 17.7%.
Credit to the government increased steadily over the course of the four-month period, from N14.1 trillion in January 2022 to N14.7 trillion in February and N16.3 trillion in March before reaching N16.6 trillion in April 2022, according to the most recent Central Bank of Nigeria (CBN) Money and Credit data for April 2022.
According to the data, public sector credit accounted for 30.9 percent of the banks’ total credit assets throughout the period, which demonstrated that it dominated the distribution of their assets.
The CBN reports that during that time, private sector credit increased by N1.93 trillion, or 5.5%, from N35.2 trillion in January 2022 to N37.13 trillion in April 2022.
In the meantime, from N49.2 trillion in January 2022 to N53.7 trillion in April 2022, the overall credit allocation increased by N4.5 trillion, or 9.14%.
Adenikinju Festus, a member of the Monetary Policy Committee, stated in CBN Communique No. 141 that the increase in public debt is a barrier to future income and economic expansion.
“I am also concerned about the growing government’s share of total credit to the domestic economy,” he said. When annualized in February, the government deserves a lot of credit.
Future income and economic growth are constrained by the increase in governmental debt. I think we need to let the government know how expensive it is to finance deficits and keep encouraging it to look into other ways to pay for infrastructure projects.
Analysts at FSDH Merchant Bank predicted a significant increase in the government debt stock this year in their Macroeconomic review and outlook for April 2022, stating: “A lower revenue projection and a higher expenditure outlay are expected to result in a budget deficit of N7.4 trillion in 2022.” The higher gasoline subsidy provision, which was raised from N0.44 trillion to N4 trillion, is partially to blame for the revenue decline.
This implies that Nigeria would not profit from the rise in crude oil prices because of the high cost of imports and subsidies, which will put pressure on the country’s budget and exchange rate.
As a result, we anticipate that both government borrowing and Nigeria’s overall debt stock would increase in 2022.
