FG’s borrowings drive up money supply 51% to N108.96 trn
Nigeria’s Broad Money Supply (M2) increased by 51 per cent Year-on-Year, YoY, to N108.96 trillion in November 2024 from N72.03 trillion in the corresponding period of 2023.
Broad Money Supply (M2) represents cash and demand deposits as well as savings deposits, money market deposits, and time deposits.
The increase in M2 reflects the high government domestic borrowing from the private sector which was reflected in the data.
According to the Central Bank of Nigeria, CBN, Money and Credit Statistics data released yesterday, the M2 recorded a six-month increase since April 2024. Still, it reversed the trend in October 2024 declining month-on-month by 1.5 per cent to N107.7 trillion from N109.4 trillion in September 2024 and up again by 1.2 per cent to N108.96 trillion in November.
The report also showed that the YoY money supply increase followed positive component changes.
Quasi-money, including savings deposits, time deposits, and other near-money assets, also rose marginally.
The data showed that Quasi Money grew by 1.96 per cent YoY to N72.7 from N71.3 trillion in November 2023.
Similarly, Demand Deposits increased by 34.4 percent YoY to N31.6 trillion in November 2024 from N23.2 trillion in November 2023.
Currency outside banks increased by 50.9 percent YoY to N4.65 trillion in November 2024 from N3.08 trillion in November 2023.
Narrow money ( M1), also grew massively by 38 percent YoY to N36.3 trillion in November 2024 from N26.3 trillion in November 2023.
According to the CBN, credit to the government increased by 54 percent YoY to N39.6 trillion in November 2024 from N25.7 trillion in November 2023.
On the other hand, credit to the private sector rose YoY by 27 percent to N75.96 trillion in November 2024 from N59.7 trillion in November 2023.
This resulted in a 91 percent YoY rise in net domestic credit of N115.6 trillion in November 2024 from N60.5 trillion in the corresponding period of 2023.
In their Financial Year 2024 and 2025 outlook report, analysts at Afrinvest West Africa Limited, observed that the Federal Government, FG, is estimated to have borrowed N41.5 trillion from domestic and external sources (including the Naira equivalent of the recent Eurobond.
They said: “Budgeted revenue for the year is on course to underperform by no less than 25 percent, given the actual performance as of eight months.
“Disappointing crude oil output (at about 1.40mbpd vs 1.78mbpd budgeted) topped the risks to revenue performance, offsetting gains from non-oil tax revenue which outperformed the budget by 60.1 percent at N3.8 trillion.
“Debt servicing (43.7 percent) accounted for the largest share of the outlays, followed by non-debt recurrent expenditure with 28.9 percent share.
“The FG is estimated to have borrowed N41.5 trillion from domestic and external sources (including the Naira equivalent of the recent Eurobond). With this, FG’s total debt profile should gross N128 trillion, while the cumulative national debt profile is estimated at N138 trillion.
“Against this backdrop, we estimate that the actual deficit in 2024 would exceed the budgeted N9.2tn by 72.8 percent in the minimum should the total expenditure plan of N 35.1 trillion be fully accommodated.”
