According to the Money and Credit Statistics for June 2022 released by the Central Bank of Nigeria, the banking sector credit to the government rose by 35 percent in the first half of 2022 (H1 ’22).
CBN said that credit to the government rose to N17.9 trillion at the end of June 2022 from N13.3 trillion at the end of December 2021.
The data also indicated that the growth rate in banking sector credit to the government was faster than private sector credit, though the absolute volume of private sector credit remains higher.
At N39.3 trillion in the H1’22 credit to the private sector grew by 11 percent from N35.2 trillion as at December 2021.
Meanwhile, net credit to the economy rose to N57.2 trillion at the end of June 2022 from N44.2 trillion at the end of December 2021, representing 29 per cent growth in H1’22.
However, there are great concerns on the rising government debt when compared to its revenue, projecting a higher debt service to revenue ratio this year.
In its H1’22 Macro-economic outlook, analysts at CardinalStone research said: “In the face of expensive subsidy payments, low revenue mobilization has inadvertently resulted in rapid growth in public debt.
“Despite these growing debt concerns, Nigeria’s debt-to-Gross Domestic Product (GDP) is still considered sustainable.Precisely, it is below the 70 percent MAC-DSA3 benchmark and close to the 40 per cent-58 per cent identified as safe and growth-supporting for lower-middle -income countries with weak revenue mobilisation.”