The Federal Government’s borrowing from the domestic financial system increased by N17.39tn over a 12-month period, reaching N40.38tn in May 2026, according to the latest monetary and credit statistics released by the Central Bank of Nigeria (CBN).
The figures show that credit to the government climbed from N22.99tn recorded in May 2025, representing a 75.6 per cent year-on-year increase as authorities continued to rely on domestic debt financing amid tight monetary conditions.
On a month-on-month basis, government borrowing also expanded by N779.7bn, rising from N39.60tn in April 2026 to N40.38tn in May.
The latest data indicate that commercial and merchant banks continued to channel significant funds into government securities, including treasury bills and Federal Government bonds, which are widely regarded as low-risk investment instruments.
The trend reflects the government’s increasing reliance on domestic debt issuance to fund fiscal operations, marking a shift away from direct financing by the apex bank.
In contrast, lending to the private sector recorded only modest growth during the period. Credit to businesses and households rose to N81.04tn in May from N80.59tn in April, suggesting a cautious lending environment despite liquidity within the banking sector.
Although private sector credit remained higher than government borrowing, economists warned that sustained preference for government securities by financial institutions could reduce access to financing for productive sectors of the economy.
Financial experts said continued expansion in public sector borrowing could crowd out private investment if banks increasingly favour higher-yield government instruments over loans to businesses and manufacturers.
The CBN has yet to publish a detailed sectoral breakdown of private sector lending for the period under review. However, analysts noted that the latest figures underscore the growing role of government borrowing in shaping credit allocation within the banking industry.
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