Nigeria's govt borrowing jumps 75.6% to N40.38tn, fuels inflation and high rates
Fresh CBN data shows the Federal Government’s domestic credit jumped to N40.38 trillion in May 2026, up 75.6% from N22.99 trillion a year earlier and rising another N779.7 billion from April. Meanwhile, credit to businesses and households grew modestly to N81.04 trillion, keeping net domestic credit at N121.42 trillion.
This heavy government borrowing pushes more money into the economy as banks prefer low‑risk government securities over risky business loans. The extra money fuels demand for goods and services, pushing up prices — especially food, transport and fuel — even if headline inflation eases slightly. For the average Nigerian, the cost of staying fed and moving around stays high.
Banks’ preference for government paper also keeps interest rates elevated. The Monetary Policy Rate stays at 26.50%, making loans for homes, cars or business expansion expensive, while savings deposits still offer decent returns. High rates can slow growth, delay business expansion and limit job creation.
On the naira, borrowing in local currency reduces immediate pressure on the exchange rate, but if borrowing fuels inflation the naira’s purchasing power weakens, driving demand for dollars and weakening the parallel market rate.
Will you delay big purchases or renegotiate loan terms while rates stay high, or look for ways to boost your income to keep up with rising costs?