Tony Chukwunyem 
Financial institutions’ total loans to the government fell by 13.12 per cent, or N3.56 trillion, to N23.55 trillion in April this year from N27.11 trillion in February, latest data released by the Central Bank of Nigeria (CBN) shows.
New Telegraph’s analysis of updated “money and credit statistics,” recently released by the apex bank, indicates that net credit to the government dropped from N27.11 trillion in February 2025 to N25.86 trillion and N23.55 trillion at the end of March and April respectively.
Analysts note that prior to its heading south, net credit to the government had generally maintained an upward trend, thereby raising concerns about a likely widening of the FG’s fiscal deficit as well as a crowding out of the private sector.
Indeed, analysts at FBNQuest Research, citing the widening fiscal deficit, had predicted in a report that domestic borrowing by the government would continue to crowd out the private sector.
According to the MediumTerm Expenditure Framework (MTEF) for the period 2022-2026, the Federal Government has projected a fiscal deficit of N13.08 trillion in 2025, an increase from the estimated N9.18 trillion for 2024 and one of the largest on record.
The (MTEF) attributes this increase to factors such as the new minimum wage, pension obligations and rising debt service costs.
However, there are indications that the efforts of the current management team of the Central Bank of Nigeria (CBN), led by Olayemi Cardoso, to curb net credit to the government, are beginning to yield results.
For instance, the apex bank’s audited financial statements for 2024 released last month, showed that it recorded a significant decline of N4.145 trillion in net loans and receivables in 2024, driven primarily by a reduction in its overdraft exposure to the Federal Government and changes across other loan catecategories.
Specifically, the audited financial statements indicated that net loans and receivables at the bank level dropped from N16.122 trillion in 2023 to N11.977 trillion in 2024.
Also, at the CBN Group level, the figure declined from N15.091 trillion to N10.959 trillion, reflecting a N4.132 trillion drop. Interestingly, the most substantial adjustment came from the overdraft extended to the Federal Government under the Ways and Means provision.
The Ways and Means provision in Nigeria refers to the CBN’s practice of extending temporary advances to the Federal Government to cover shortterm funding gaps.
According to Section 38 of the CBN Act, 2007, this facility allows the government to borrow up to 5 per cent of its previous year’s actual revenue.
However, this limit was exceeded under the previous administration, leading to concerns about fiscal discipline and monetary policy implications.
In response to concerns over the flouting of the regulations on the use of the Ways and Means facility, the National Assembly approved the securitisation of N22.7 trillion of these advances in 2023.
This move resulted in the short-term overdrafts being converted into long-term debt instruments, thus boosting the CBN’s efforts to mitigate inflationary pressures and restore monetary stability.
In addition, the Federal Government repaid about N7.3 trillion of this obligation. Thus, the facility, which stood at N7.948 trillion in 2023, was scaled down to N3.268 trillion in 2024, a significant reduction of N4.679 trillion or 58.89 percent.
