281
By Daniel Adaji
Federal Government borrowing from the Central Bank of Nigeria (CBN) rose by ₦9.43 trillion in the fourth quarter of 2025.
CBN data for the period analysed by pointblanknews.com on Monday show that credit to government climbed from ₦24.79 trillion in October 2025 to ₦34.22 trillion by December 2025, marking one of the steepest quarterly increases in recent years.
The surge occurred amid a broader expansion in domestic liquidity. Net domestic credit rose from ₦99.19 trillion in October to ₦110.06 trillion in December, while net domestic assets expanded from ₦84.23 trillion to ₦92.90 trillion within the same period. These movements point to aggressive credit creation within the economy, largely driven by government borrowing.
Money supply also trended upward throughout the quarter. Broad money (M3) increased from ₦119.04 trillion in October to ₦124.41 trillion in December. Similarly, M2 rose from ₦119.03 trillion to ₦124.40 trillion, reflecting increased liquidity across the financial system. Quasi-money, which includes savings and time deposits, stood at ₦79.68 trillion in October before rising to ₦82.26 trillion by December, while narrow money grew from ₦39.35 trillion to ₦42.14 trillion.
Currency outside the banking system continued its upward march, rising from ₦4.65 trillion in October to ₦5.41 trillion in December. Demand deposits also increased from ₦34.70 trillion to ₦36.73 trillion over the quarter, signalling heightened transaction activity and a preference for liquid funds.
On the external side, net foreign assets improved from ₦34.80 trillion in October to ₦31.51 trillion in December, though the November spike to ₦37.38 trillion highlights volatility in Nigeria’s external buffers during the period.
What this means
The sharp rise in FG borrowing from the CBN suggests persistent fiscal strain, with government increasingly leaning on central bank financing to bridge revenue gaps. While such borrowing can provide short-term relief, economists warn it carries inflationary risks, especially when accompanied by rapid money supply growth.
The increase in currency outside banks and demand deposits reflects heightened cash usage, potentially linked to economic uncertainty and policy adjustments expected in 2026. At the same time, expanding net domestic credit indicates that government borrowing may be crowding out private sector access to credit, a concern for long-term growth.
Overall, the Q4 2025 figures paint a picture of an economy awash with liquidity but under pressure from rising public sector financing needs, setting the stage for tough monetary and fiscal trade-offs in the months ahead.