Fresh data released by the Central Bank of Nigeria has shown that credit to the Federal Government increased significantly over the 12 months ending May 2026, reflecting sustained public sector borrowing despite prevailing tight monetary conditions.
According to the apex bank’s latest monetary and credit statistics released on Wednesday, total credit to the Federal Government rose to N40.38tn in May 2026 from N22.99tn recorded in the corresponding period of 2025.
The increase represents an additional N17.39tn in borrowing exposure, translating to a year-on-year rise of approximately 75.6 per cent.
Monthly increase continues
On a month-on-month basis, government borrowing also maintained an upward trajectory, increasing by N779.70bn from N39.60tn recorded in April 2026.
Banking sector data showed that commercial and merchant banks continued allocating substantial liquidity to government instruments, including Federal Government bonds and treasury bills, rather than expanding credit into broader economic sectors.
The development reflects continued reliance on domestic debt financing as fiscal authorities seek alternatives to direct Central Bank funding.
Private sector lending records slower growth
In contrast, credit growth to the private sector remained moderate during the review period.
Data showed that lending to businesses and households rose slightly to N81.04tn in May 2026 from N80.59tn in April.
Although private sector credit remained larger overall, standing at roughly twice government credit levels, analysts noted that lending expansion remained cautious.
Economic concerns emerge
Economic analysts observed that the trend reflects increasing dependence on public sector borrowing to finance fiscal obligations.
Experts warned that sustained preference for government debt instruments by financial institutions could limit available credit for productive sectors of the economy.
According to analysts, continued concentration of lending on public debt may reduce access to affordable financing for businesses and manufacturers, potentially slowing investment and economic growth.
The Central Bank has yet to release a detailed breakdown of private sector credit allocation for the period under review.
However, the broader trend suggests a banking sector increasingly prioritising lower-risk government obligations over lending to the real economy.
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