Federal and state bank loans rise 11% MoM
By Jeph Ajobaju, Chief Copy Editor
Federal and state borrowing from banks rose 11 per cent month-on-month (MoM) from N18.04 trillion in June to N20.1 trillion in July, according to figures supplied by the Central Bank of Nigeria (CBN).
The latest CBN ‘Money and Credit Statistics’ show total credit to the economy rose 6.0 per cent MoM to N59.9 trillion from N56.5 trillion in June.
Private sector share of the credit in July was N39.9 trillion, about 3.6 per cent 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.
“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,” FSDH Merchant Bank analysts said in their July 2022 macroeconomic review and outlook for Nigeria.”
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Rising debt costs
“Rising debt costs, without a corresponding increase in revenue could trigger macroeconomic instability, if the trend continues,” the analysts warned, per Vanguard.
“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.”
Nigeria’s debt grows to N41.6tr
Nigeria’s debt grew to N41.6 trillion in the first quarter ended March (Q1 2022), an increase of N2.05 trillion versus N39.56 trillion in Q4 2021. The debt rose to $100.1 billion, as gleaned from the latest Debt Management Office (DMO) report.
Total public debt included new domestic borrowing by the federal government to partly finance the 2022 budget deficit.
It also included $1.25 billion Eurobond issued in March 2022 and loans taken from multilateral and bilateral lenders.
And there were increases in the debt of states and the Federal Capital Territory (FCT).
 from N18.04 trillion in June to N20.1 trillion in July){kind=link}