The Central Bank of Nigeria, CBN, has revealed that Federal and state governments’ borrowings from commercial banks increased Month-on-Month, MoM, by 11 percent to N20.1 trillion in July 2022, from N18.04 trillion in June.
This was contained in a data released by the apex bank titled, ‘Money and Credit Statistics’ which also showed that the total credit to the domestic economy rose MoM by 6.0 per cent to N59.9 trillion during the month from N56.5 trillion in June.
The private sector share of the credit in July was N39.9 trillion about 3.6 percent up from N38.5 trillion in June.
Analysts in the financial sector have projected continuous borrowings by the government in 2022 due to low oil outputs resulting in decline in oil revenue.
In their July 2022 macroeconomic review and outlook for Nigeria, analysts at FSDH Merchant Bank said: “The pressure on government finance has become intense.
“Actual revenue in the first four months of the year was 51 per cent short of its target while debt servicing costs exceeded revenue by 19 per cent.
“With no significant reform to curtail fuel subsidy and address oil theft, government revenue is expected to underperform in the second half of 2022, further raising the need to borrow.
“Rising debt costs, without a corresponding increase in revenue could trigger macroeconomic instability, if the trend continues.
“Going forward, there is a need for urgent and consolidated efforts by the federal and state governments to address the challenges of oil theft and pipeline vandalism, which are crucial in improving oil output and by extension, oil revenues.
“With an underperforming revenue particularly driven by low crude oil production, total public debt is expected to increase further in 2022.”