FG Borrowing Surges 75.6%: What It Means for Inflation, Rates and the Naira

Fresh data from the Central Bank of Nigeria show government credit jumped to ₦40.38 trillion in May 2026, up 75.6% from a year earlier. Private-sector lending has grown only modestly in comparison. Heavy public borrowing crowds out bank loans for businesses and households. More money in circulation without more goods usually drives up prices. Consumers buying garri, rice or fuel will feel the pinch even if headline inflation dips slightly. Banks favour government securities over commercial loans because they are low-risk and high-yield. This pushes the Monetary Policy Rate higher. At 26.50%, borrowing for mortgages, cars or expansion remains costly. Private-sector growth stalls as a result. The naira may benefit short term from local currency borrowing, but persistent inflation erodes its value. More naira chasing fewer goods can spur demand for dollars and push up exchange rates in the parallel market. I even wonder if the president is hiding personal issues while billions are borrowed with little to show. He should clarify how these funds are being used.

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