FG Borrowing Rises to ₦40.38 Trillion in One Year, CBN Data Shows
The Federal Government’s borrowing from the domestic financial system has risen sharply over the past year, with new data from the Central Bank of Nigeria (CBN) showing that total credit to the government increased from ₦22.99 trillion in May 2025 to ₦40.38 trillion in May 2026.The figures represent a ₦17.39 trillion increase within 12 months, translating to a 75.6 percent year-on-year rise in government borrowing. The latest statistics highlight the Federal Government’s continued reliance on domestic financing to support budget implementation and meet its fiscal obligations amid ongoing economic challenges.
According to the CBN’s Money and Credit Statistics, government borrowing also recorded a month-on-month increase, rising from ₦39.60 trillion in April 2026 to ₦40.38 trillion in May 2026. This indicates that public sector borrowing continued to expand despite the country’s tight monetary policy environment.
Analysts say commercial and merchant banks have continued to channel significant amounts of liquidity into Federal Government securities, including treasury bills and bonds, which are widely regarded as relatively low-risk investment instruments. This trend has enabled the government to finance part of its fiscal operations through increased domestic borrowing.
While government borrowing has accelerated, lending to the private sector has grown at a much slower pace. CBN data showed that credit to businesses and households increased only modestly during the same period, prompting concerns among economists that sustained government borrowing could reduce the amount of credit available to private enterprises.Economic experts warn that when banks allocate a larger share of their funds to government securities, businesses—particularly manufacturers and small and medium-sized enterprises—may find it more difficult or expensive to obtain loans for expansion and investment. This situation, commonly referred to as “crowding out,” could affect productivity, job creation and overall economic growth if it persists.The increase in domestic borrowing comes as the Federal Government continues to finance budget deficits and implement various infrastructure and development projects. Officials have maintained that borrowing remains an important tool for funding national priorities, provided the loans are managed responsibly and invested in projects capable of generating long-term economic benefits.Financial analysts have stressed the importance of maintaining a balance between government financing needs and support for private sector growth. They argue that while borrowing can help bridge funding gaps, excessive dependence on domestic credit could increase debt servicing costs and place additional pressure on the country’s financial system over time.
As Nigeria continues to pursue economic reforms, attention is expected to remain on the government’s borrowing strategy and its impact on fiscal sustainability. Many stakeholders believe that strengthening revenue generation, improving tax collection and promoting private sector investment will be crucial in reducing long-term dependence on borrowing while supporting sustainable economic growth.
