Tony Chuckwuyen 
…Currency in circulation rises to N4.14trn
Financial institutions’ net credit to the government rose by N11.33 trillion or 57.13 per cent, to N31.15 trillion as of August 2024, compared with N19.83 trillion in the previous month, data released by the Central Bank of Nigeria (CBN) has shown.
New Telegraph’s analysis of the latest “Money and Credit statistics,” obtained from the apex bank, shows that for the first eight months of this year, the figure for net credit to the government in August is the second highest after the N33. 93 trillion recorded for February.
Specifically, the data shows that loans to the government from financial institutions stood at N23.52 trillion in January; N33.93 trillion in February, N19.59 trillion in March; N19.98 trillion in April; N28.38 trillion in May, N28.05 trillion in June, N19.83 trillion in July and N31.15 trillion in August.
Financial experts note that the sharp increase in net credit to the government in August compared with the previous month is a significant development as it indicates a widening of the fiscal deficit.
Indeed, while the Federal Government projected a budget deficit of N9.18 trillion in the 2024 Appropriation Act, the International Monetary Fund (IMF) in its staff report on Nigeria, released in May, predicted that the country’s budget deficit would increase beyond the projected figure for 2024 due to implicit fuel and electricity subsidy payments and increased interest costs on debt.
The Fund stated: “Staff projects a higher fiscal deficit than anticipated in the 2024 budget, but broadly unchanged from 2023. The drivers are lower oil/ gas revenue projections, reflecting IMF oil price forecasts but incorporating recent production gains; higher implicit fuel and electricity subsidies; continued suspension of excise measures included in the MTEF; and higher interest costs.”
According to analysts, a sustained increase in net credit to the government negatively impacts the economy as it could lead to the crowding out of the private sector.
Meanwhile, further analysis of the CBN data shows that credit to the private sector declined marginally by 1.03 per cent to N74.73 trillion in August 2024, compared to N75.51 trillion in the previous month.
This means that net domestic credit(loans to the government plus loans to the private sector) rose to N105.88 trillion in August from N95.33 trillion in July.
In addition, the apex bank’s data indicates that the total amount of Currency-In-Circulation (CIC) in the country increased by N91.08 billion, or 2.25 per cent, to N4.14 trillion in August 2024, from N4.05 trillion in the previous month.
Similarly, the data shows that Currency Outside Banks (COB) also headed north in August 2024, rising by N202.72 billion or 5.53 per cent to N3.87 trillion compared to N3.67 trillion in July.
