- The Central Bank of Nigeria said credit to government declined to N24.52 trillion in January 2025
- A year-on-year comparison showed an increase from the N23.52 trillion recorded in January 2024
- The decline can be attributed to fiscal adjustments, tightening monetary policies, and increased revenue generation
The Central Bank of Nigeria (CBN) says credit extended to the government dropped to N24.52 trillion in January 2025.
The amount, according to the latest data from the CBN’s Money and Credit Statistics, represents a drop from the N39.62 trillion recorded in November 2024 and N39.4 trillion in October 2024.
The data showed that as of September 2024, government credit stood at N39.7 trillion, while it was N31.2 trillion in August 2024.
In July 2024, credit extended to the government was recorded as N19.8 trillion and in June 2024, it stood at N23.9 trillion.
The trend of decline over the months indicates ongoing fiscal measures aimed at curbing excess borrowing and maintaining economic stability.
Comparison of credit to government year-on-year
An analysis of the data showed that on a year-on-year basis, credit to the government in January 2025 (N24.52 trillion) is higher than the N23.52 trillion recorded in January 2024.
The year-on-year difference in credit to government shows a slight increase in government borrowing in the last year.
Given the fluctuations in the borrowing trend throughout 2024, the government’s borrowing patterns may have been influenced by economic reforms and the interventions of the CBN.
Reasons for the decline
Economic analysts attribute the decline in credit to the government to such factors as stricter monetary policy of the CBN, fiscal discipline, and increased revenue generation by the government.
Recall that the CBN has been implementing measures to reduce excess liquidity, which may have led to reduced government borrowing.
The CBN’s tight monetary stance, which included six consecutive interest rate hikes and stricter regulation of the foreign exchange market, does not provide incentives to borrow.
Another factor may be that the government may have adopted a more conservative approach to borrowing to manage debt levels, including the first ever Eurobond sale to address the country’s deficit spending.
Also, with increased efforts to boost internally generated revenue (IGR) and attract foreign investments, the government may have reduced reliance on credit financing.
Recall that key government revenue generating agencies and other government-owned agencies posted increases in revenue generation levels, which also influenced the increase in the 2025 budget from an initial N49.7 trillion to N54.2 trillion by President Bola Tinubu.
FG plans to borrow N31 trillion as national debt stock climbs to N165 trillion
Meanwhile, TheRadar earlier reported that the Federal Government was set to borrow an additional N31.24 trillion to fund expenditures within the next three years.
The new borrowing will increase Nigeria’s debt stock from N134.3 trillion as of June 2024 to N165.54 trillion by 2027.
