The Federal Government’s (FG) borrowing rate from the Central Bank of Nigeria (CBN) increased by 93.21 percent between January 2022 and the same month in 2023.
The data obtained from the apex bank, total government credit increased from N24.66 trillion in December 2022 to N28.43 trillion at 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, Aliyu Sanusi, a member of the Monetary Policy Committee (MPC), stated that tightening rates became necessary at the January meeting to contain the effects of 2023 election-related spending and the liquidity associated with the proposed government borrowing in 2023.
He also mentioned that net claims on the government increased by 78.15 percent (y-t-d) in December 2022, which was driven by FGN borrowing from the central bank (93.21%), commercial banks (44.26%), and non-interest banks (79.13 percent).
“This suggests that monetary and fiscal factors have continued to play an important role in the current inflationary processes,” Sanusi noted.