Banks’ credit to govt increases by 17.7% to N16.6trn

Credit facilities to the government by banks increased by 17.7 per cent or N2.5 trillion to N16.6 trillion as at April 2022 from N14.1 trillion as at January, 2022.

This is according to the latest Central Bank of Nigeria (CBN) Money and Credit data for April 2022.

The data showed that credit to the government rose steadily in the four month period, rising from N14.1 trillion in January 2022 to N14.7 trillion in February, and to N16.3 trillion in March before advancing to N16.6 trillion in April 2022.

A further look at the numbers showed that the banks’ public sector credit dominated their assets distribution, representing 30.9 percent of the N53.7 trillion total credit assets of the banks during the period.

Credit to the private sector rose during the period by N1.93 trillion or 5.5 per cent to N37.13 trillion in April 2022 from N35.2 trillion in January 2022.

Meanwhile, the total credit allocation rose by N4.5 trillion or 9.14 per cent to N53.7 trillion in April 2022 from N49.2 trillion in January 2022.

In the CBN Communique No. 141 of the Monetary Policy Committee, CBN, a statement from a member of the Committee, Adenikinju Festus, noted that the rise in public debt is a constraint on future income and economic growth.

He stated: “I am also concerned about the rising share of the government in total credit to the domestic economy. Credit to the government in February when annualized is far above the provisional benchmark for 2022.

“The rise in public debt is a constraint on future income and economic growth. I believe that we must signal to the government the costs of deficit financing and continue to prod the government to explore alternative financing mechanisms for infrastructural spending.”