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FG Borrowing From CBN Hits N28.43tn Amid Fears Of GDP Depletion




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President Muhammadu Buhari

The Central Bank of Nigeria (CBN) has revealed that the Federal Government’s (FG) borrowing rate from the bank rose by 93.21 per cent between January 2022 and the corresponding month in 2023.

Statistical data obtained from the apex bank revealed that the total government credit, which ended December 2022 at N24.66tn, rose to N28.43tn as of the end of February 2023.

The CBN also noted in its ‘Money and credit statistics’ report that the credit rose from N14.9tn as of the end of January 2022 to N26.65tn in the corresponding period of 2023.

In the report, a member of the Monetary Policy Committee (MPC), Aliyu Sanusi, submitted at the January meeting that tightening of the rates became necessary so as to contain the effects of 2023 election-related spending and the liquidity associated with the proposed government borrowing in 2023.

He also noted that the key drivers of the NDA were net claims on government which grew by 78.15 per cent (y-t-d) in December 2022, which in turn was driven by FGN’s borrowing from the central bank (93.21 per cent), commercial banks (44.26 per cent) and non-interest banks (79.13 per cent).

“This suggests that monetary and fiscal factors have continued to play an important role in the current inflationary processes,” Sanusi noted.

Nigeria’s GDP Depletion Looms

On his part, another member of the MPC, Adeola Adenikinju, said observed that the World Bank had forecast that Nigeria’s real Gross Domestic Product (GDP) growth may likely decline to 2.9 per cent in 2023.

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“The slow growth is because of the effects of flooding, the tight fiscal space and rise in borrowing costs, security challenges and moderation in oil prices,” Adenikinju noted.