Credit extended to the government surged by 65.6 per cent year-on-year to N39.6 trillion in April 2026, highlighting increased domestic borrowing to finance the federal government’s widening fiscal deficit.

Latest data released by CBN in its Money and Credit Statistics report showed that government credit rose sharply from N23.9 trillion recorded in April 2025.

The report also indicated that the federal government increased borrowing from domestic investors by 7.4 per cent in the first quarter of 2026 to N8.1 trillion, compared with N7.5 trillion in the corresponding period of 2025.

The rise in government borrowing comes as the federal government seeks to finance a projected N29.2 trillion budget deficit under the 2026 Appropriation Act, with total expenditure estimated at N68.32 trillion against projected revenue of N36.87 trillion.

Despite the strong increase in public sector borrowing, credit to the private sector also recorded moderate growth during the review period. 

According to the apex bank, private sector credit rose by 3.25 per cent year-on-year to N80.6 trillion in April 2026 from N78.06 trillion in April 2025.

As a result, net domestic credit expanded by 17.8 per cent to N120.2 trillion from N102 trillion recorded in the corresponding period last year.

The data further showed that Nigeria’s broad money supply (M2) rose by 4.8 per cent year-on-year to N124.98 trillion in April 2026, compared with N119.2 trillion in April 2025, reflecting improved liquidity conditions within the financial system.

A breakdown of the money supply components revealed that currency outside banks declined by 12.2 per cent to N5.08 trillion from N5.7 trillion in April 2025, suggesting growing adoption of electronic payment channels and increased use of formal banking systems. 

Demand deposits, which represent funds held in current accounts, increased by 6.3 per cent to N38.7 trillion from N36.4 trillion during the review period.

Similarly, quasi-money — comprising savings deposits, fixed-term deposits, treasury bills and other near-money instruments — rose by 3.8 per cent to N81.2 trillion from N78.2 trillion recorded a year earlier.

Narrow money, which includes currency in circulation and demand deposits, also increased by 7.09 per cent to N43.8 trillion in April 2026 from N40.9 trillion in the same period of 2025.

Analysts said the sustained rise in government borrowing could increase pressure on interest rates and crowd out private sector access to credit if not matched by stronger revenue generation and fiscal reforms.