Credit to Government Declined by 38.1% to N24.54trn in January

Nume Ekeghe

Credit to the Nigerian government declined sharply by 38.1 per cent in January 2025 to N24.52 trillion from N39.62 trillion in November 2024, reflecting a significant contraction in net government borrowing.

On a year-on-year basis, however, data from the Central Bank of Nigeria (CBN), showed that credit to the government recorded a modest increase of 4.3 per cent from N23.52 trillion in January 2024, highlighting the dynamic shifts in fiscal policy and funding strategies.

The latest decline according to market watchers, follows months of fluctuating government credit levels. In October 2024, credit to the government stood at N39.39 trillion, slightly lower than the N39.47 trillion recorded in September. This relative stability in borrowing suggested a steady financing approach in the latter part of 2024. However, in August, government credit dropped to N31.15 trillion, marking a significant decline from the N33.93 trillion recorded in February 2024.

July 2024 recorded one of the lowest credit levels at N19.83 trillion, before witnessing an increase in August as government borrowing picked up again. In June, credit stood at N23.93 trillion, reflecting a moderate rise compared to the N19.97 trillion in April. March had also recorded a low of N19.59 trillion before climbing to N33.93 trillion in February, making it one of the highest levels of credit to the government within the year.

Despite the sharp decline in January, the annual increase in credit to the government indicates that borrowing remains a critical tool for fiscal management. The rise from N23.52 trillion in January 2024 to N24.52 trillion in January 2025 suggests that while short-term contractions may occur, the overall trajectory of government borrowing is still upward.

Market observers anticipate further fluctuations in government credit levels in the coming months as the government continues to navigate economic pressures.

“Rising global interest rates, exchange rate volatility, and revenue collection challenges could influence borrowing decisions. As policymakers seek to balance expenditure demands with available resources, the interplay between monetary policy, fiscal discipline, and credit allocation will remain a focal point for economic stakeholders,” financial analysts submitted.