₦airaland Forum

Fresh data from the Central Bank of Nigeria (CBN) released this week shows something striking.

Credit to the Federal Government jumped to N40.38 trillion in May 2026, up from N22.99 trillion in May 2025—a massive 75.6% increase in just one year.

Even in one month, from April to May, it rose by another N779.7 billion.

Meanwhile, credit to the private sector—businesses and households—only grew modestly to N81.04 trillion.

This tells a clear story: the government is borrowing aggressively. At the same time, banks remain very careful with lending to the real economy. So what does this mean for ordinary Nigerians? Let’s break it down and look at the impact on inflation, interest rates, and the naira.

Heavy government borrowing and inflation
When the government borrows this much from banks and the domestic market, it injects a lot of new money into the system. Banks buy government securities, such as Treasury Bills and Bonds, rather than making loans to businesses. The government then spends this money on salaries, projects, debt servicing, and subsidies.

Think of it like this: Imagine your family suddenly gets a big loan and starts spending heavily on food, fuel, and rent. Prices in your local market will rise as demand increases, while supply may not keep up. That is exactly what happens in the economy. This type of borrowing is often called “monetisation of the deficit.”

Even though the CBN is trying to keep monetary policy tight, heavy public sector borrowing can still push up the money supply. Net domestic credit rose to N121.42 trillion in May. More money in circulation, without a corresponding increase in goods and services, usually fuels inflation. We have seen this play out before. During periods of high government borrowing, food prices and transport costs rise faster.

For the average Nigerian buying garri, rice, or fuel, this means the cost of living stays painful even if headline inflation numbers improve slightly. The good news? Private sector credit is still larger in absolute terms, more than double government credit. But the slow growth in business lending means less investment in factories, farms, and shops that could produce more goods and help bring prices down over time.

Impact on Interest Rates
Banks love lending to the government because it is seen as almost risk-free and offers attractive yields. With the government sucking up so much credit, banks have less appetite (or need) to lend aggressively to private businesses, which carry more risk. To attract more deposits or manage liquidity, banks and the CBN may keep interest rates high.

As I write this, the Monetary Policy Rate (MPR) sits at 26.50%. The CBN has held a tight stance to fight inflation. High government borrowing creates upward pressure on interest rates. The Debt Management Office (DMO) has to offer higher yields on bonds to sell them. This pushes up borrowing costs across the board – from Treasury Bills to commercial loans. For you as an individual, Savings accounts and fixed deposits may still give decent returns. Still, if you want to buy a house or a car, or expand your business, loans will remain expensive.

For the economy, high rates for longer can slow growth. Businesses delay expansion, young entrepreneurs struggle to get capital, and job creation suffers. This is why many analysts talk about “crowding out”, meaning government borrowing crowding out private investment. Even with the aggressive borrowing, the CBN is likely to remain cautious with rate cuts. They want to avoid reigniting inflation. So expect interest rates to stay elevated through the rest of 2026 unless inflation falls sharply and sustainably.

What it means for the Naira
Heavy domestic borrowing can have both direct and indirect effects on the naira. On the positive side, when the government borrows in naira, it reduces the immediate need to print money or borrow externally in dollars. This can help reduce pressure on the exchange rate. On the negative side, if this borrowing fuels inflation, it weakens the naira’s purchasing power.

Higher inflation makes Nigerian goods more expensive compared to imports, worsening the balance of payments. Investors may also demand higher returns to hold naira assets, but persistent fiscal concerns can scare away foreign portfolio investors.

We have seen the naira stabilise somewhat in recent months, but renewed pressure from high government spending and borrowing could test that stability again. Lower oil revenues or delays in forex inflows would make things worse. In simple terms, if government borrowing leads to more naira in circulation and persistent inflation, people and businesses will keep demanding dollars for safety. This pushes the exchange rate higher at the parallel market, even if the official rate looks managed.

The big picture
This data on government borrowing highlights what economists call “fiscal dominance,” in which government borrowing needs drive monetary policy rather than the other way around. The CBN is fighting inflation with high rates and tight liquidity, but the government’s huge deficit, part of the 2026 budget, keeps adding fuel to the fire.

Slow private-sector credit growth is also worrying. Nigeria needs businesses to borrow, invest, produce, employ people, and pay taxes. When banks prefer government paper, the real economy suffers. That is the core challenge.

In terms of policy recommendations, the government needs to improve revenue collection and tax administration, increase oil remittances, and cut wasteful spending to reduce borrowing needs. This is a hard lift, especially as the CBN continues to prioritise price stability.

Commercial banks should be encouraged (or incentivised) to lend more to productive sectors like agriculture, manufacturing, and SMEs. This means risk-free rates have to fall.

In closing, Nigeria and Nigerians have to live within our means.

Kukutente23:
Could it be that Tinubu's nursing a malignant and highly infectious STD that he doesn't want Remi Mama Alakara isonu to know about
How can you be borrowing so aggressively locally and internationally and yet precious little is seen to be going on?
You can't even fund the budget!!
Tinubu should come clean. Oko oloyun might have a cure for what he's wasting dollars on

HacheNoire:
Because you have failed to see it!

With the whole infrastructural projects going on across the country, you still cannot see anything.

You better start appreciating His Excellency, President Asiwaju Bola Ahmed Tinubu (GCFR).

Do you know our TOTAL debt is not up to what the US pays as INTEREST on her total debt.

Our debt has not even surpassed our GDP which tells you those investment can boost our GDP and greatly reduce our debt in the long run. The US already has debt way ahead of GDP.

Kukutente23:
https://nairametrics.com/2026/06/27/fgs-borrowing-jumps-75-6-what-it-means-for-the-naira-and-interest-rates/#google_vignette

Kukutente23:
Could it be that Tinubu's nursing a malignant and highly infectious STD that he doesn't want Remi Mama Alakara isonu to know about
How can you be borrowing so aggressively locally and internationally and yet precious little is seen to be going on?
You can't even fund the budget!!
Tinubu should come clean. Oko oloyun might have a cure for what he's wasting dollars on

CharlesCNG:
This is what happens when someone runs out of argument and enters the gutter.

Instead of discussing fiscal policy, debt, budget execution or project delivery, you are talking about STD and “Oko Oloyun.” That is not economic analysis; that is motor-park gossip wearing political perfume.

Now to the serious point: you said “precious little is seen.” That is simply not true.

The borrowing and fiscal expansion are tied to budget deficits, capital projects, debt servicing, infrastructure, security, education, health and social interventions. You may criticise the size of borrowing, but do not pretend nothing is happening.

The 2026 budget framework presented by President Tinubu projected ₦58.18 trillion in expenditure, with ₦26.08 trillion for capital projects and ₦15.52 trillion for debt servicing. Reuters also reported that the budget prioritises security, infrastructure, education and health. So when you ask where the money is going, part of the answer is already in the budget structure: roads, security, education, health, debt obligations and national infrastructure.

On infrastructure, the Lagos-Calabar Coastal Highway is not a Facebook rumour. Nigeria secured a $747 million syndicated loan for the first phase, covering 47.47km, and Reuters reported that the 700km project is designed to improve connectivity between Lagos and Calabar. The Federal Ministry of Works also says the 750km corridor spans nine states and is expected to support tourism, jobs, regional integration, shoreline protection and economic activity.

There is also the Sokoto-Badagry highway corridor. Reuters reported that Tinubu requested a $516 million loan for the initial sections of the roughly 1,000km road linking Sokoto through Niger and Kwara to Badagry, with the stated aim of reducing travel and haulage costs, boosting trade, food security and national integration.

In education, NELFUND is not invisible. As of March 2026, Channels reported that the student loan scheme had disbursed ₦206.29 billion to 1,164,222 beneficiaries since launch. That is money going directly into human capital, not into anybody’s imaginary hospital bill.

On the broader economy, the reform story is also not empty. The World Bank projected Nigeria’s economy to grow by 4.2% in 2026 and noted that reforms helped improve external reserves, reduce the fiscal deficit to 3.1% of GDP in 2025, and lower the debt-to-GDP ratio for the first time in a decade. Reuters also reported that investor appetite was strong when Nigeria issued Eurobonds, with $10.65 billion in bids for a $2.35 billion issuance.

So yes, Nigerians are still under pressure. Nobody should pretend hardship has vanished. But to say “nothing is going on” is dishonest.

What is happening is that Tinubu is trying to repair a distorted economy: remove subsidy fraud, unify FX, raise revenue, fund infrastructure, support students, attract capital, and rebuild fiscal credibility. These reforms are painful because the old system was fake comfort built on debt, subsidy and exchange-rate illusion.

You can criticise borrowing. You can demand better budget discipline. You can question priorities. But if your argument begins with STD jokes and ends with “nothing is happening,” then you are not analysing government — you are advertising frustration.

Facts are stubborn things. Projects are ongoing. Reforms are showing early macro gains. The real debate is how to make those gains reach ordinary Nigerians faster.

Kukutente23:
I'm yet to see your input on the akara assignment Madam Remi gave out to you guys over the weekend.

But I hope you'll not be like the other jester who instead of making a case for akara and corn microeconomics prevaricated between diffusing the message by specifying an audience and glorifying the message by embedding it in a broader spectrum of age long interventions by Nigeria’s "Mamas"

It might also be that the mods find your intervention too boring to burden the first page with.
Since you're now into accountability, what was the $6bn Afreximbank loan for? What about the $5bn Abu Dhabi loan?

Nelfund is being funded with 1% deduction from FIRS revenue. I don't know why you're tying it to loans. Lagos-Calabar is supposed to be an EPC project. Same with Sokoto-Badagry Expressway. So seeing them as line items in your loan accounting is an anomaly.

A country whose gdp per capita has shrunk to $1500 from $5000 can't be rejoicing at a gdp rate of 4%. I thought Tinubu says he wants to achieve $1trn gdp by 2030. How does he get to that at 4% growth?

Tinubu is not repairing anything. That's just propaganda

He's rather destroying the economy at an alarming pace and Nigeria needs to be rescued from his shriveled hands

Kukutente23:
I'm yet to see your input on the akara assignment Madam Remi gave out to you guys over the weekend.

But I hope you'll not be like the other jester who instead of making a case for akara and corn microeconomics prevaricated between diffusing the message by specifying an audience and glorifying the message by embedding it in a broader spectrum of age long interventions by Nigeria’s "Mamas"

It might also be that the mods find your intervention too boring to burden the first page with.
Since you're now into accountability, what was the $6bn Afreximbank loan for? What about the $5bn Abu Dhabi loan?

Nelfund is being funded with 1% deduction from FIRS revenue. I don't know why you're tying it to loans. Lagos-Calabar is supposed to be an EPC project. Same with Sokoto-Badagry Expressway. So seeing them as line items in your loan accounting is an anomaly.

A country whose gdp per capita has shrunk to $1500 from $5000 can't be rejoicing at a gdp rate of 4%. I thought Tinubu says he wants to achieve $1trn gdp by 2030. How does he get to that at 4% growth?

Tinubu is not repairing anything. That's just propaganda

He's rather destroying the economy at an alarming pace and Nigeria needs to be rescued from his shriveled hands

CharlesCNG:
My brother, you made some fair technical corrections, but then spoiled them with the usual Obidient seasoning of exaggeration, insult and selective economics.

First, on NELFUND, you are right that the student loan scheme is not funded from the Afreximbank or Abu Dhabi loans. The 2024 Student Loan Act created NELFUND as a sustainable education-financing institution to provide loans for tuition, charges and upkeep. So yes, it should not be lumped casually into external-loan accounting. But that does not erase the fact that NELFUND is a Tinubu-era social investment reform. A good policy does not become invisible because it is not funded by the particular loan you want to discuss.

Second, on the Afreximbank facility, let us be accurate. The well-documented facility was the NNPCL-backed $3.3 billion crude-oil prepayment facility, not some vague “where is $6bn?” slogan. Reuters reported that NNPC secured the facility to support reforms and stabilise the FX market, while Afreximbank said the first $2.25bn was disbursed, with another $1.05bn expected, and later Reuters reported total disbursement had reached about $3.175bn. So if you want accountability, ask for the structure, repayment and transparency — don’t just throw “$6bn” into the air like campaign confetti.
Third, the **$5bn First Abu Dhabi Bank arrangement** is also not something to be defended blindly. The IMF itself warned that such TRS/derivative-style borrowing can be opaque and risky. Fair point. But the same Reuters report says the proceeds are intended to refinance expensive debt and fund infrastructure. So the serious argument is transparency and debt-risk management, not “Tinubu is destroying everything.”

Fourth, Lagos-Calabar and Sokoto-Badagry being EPC projects does not mean money is not involved. EPC is a contract delivery model, not Father Christmas. Someone still finances design, engineering, procurement, construction, guarantees, counterpart obligations and repayment. You can question the financing model, but pretending EPC means “no fiscal implication” is economics by moonlight.

Fifth, on GDP per capita, let us not play with numbers. Nigeria’s GDP per capita has fallen badly in dollar terms, yes, partly because of naira depreciation and weak productivity. But the claim that it fell from **$5,000** is not supported by World Bank data; World Bank data shows Nigeria’s recent GDP per capita much lower, with 2024 at about **$1,084**. So again, there is a real problem, but you do not need inflated figures to make it.

Sixth, you asked how 4% growth gets Nigeria to a $1 trillion economy. On real GDP growth alone, it does not. That target requires higher real growth, exchange-rate stability, investment expansion, productivity, exports, oil output recovery, tax reform, infrastructure and possibly statistical rebasing. So yes, $1 trillion by 2030 is extremely ambitious. But dismissing 4% growth as useless is unserious. You do not jump from crisis to miracle; you stabilise first, then accelerate.

And that is where your “Tinubu is not repairing anything” line collapses. The World Bank says subsidy removal and FX reforms are crucial to rebuilding fiscal space and restoring macroeconomic stability. It projected growth improving from 3.3% in 2023 to 3.7% in 2024 and 4.1% in 2025 if reforms are sustained. NBS also reported Q1 2026 GDP growth of **3.89%**, higher than **3.13%** in Q1 2025, with manufacturing, trade, construction and oil sector improvements.
Even Reuters reported that the 2026 budget allocated **₦26.08 trillion to capital projects**, focusing on security, infrastructure, education and health, while inflation had fallen from **24.23% in March to 14.45% in November**, and reserves had risen to about **$47bn**. Those are not signs of an economy magically fixed, but they are signs of stabilisation.

So let us be honest: Nigerians are suffering, and government must do more. Borrowing must be transparent. Waste must be cut. Debt must be managed. The benefits of reform must reach ordinary people faster.

But saying “nothing is being repaired” is not analysis. It is frustration pretending to be research.

Tinubu inherited a distorted economy built on subsidy fraud, FX illusion, weak revenue and debt pressure. He may be criticised for the pain of the surgery, but do not pretend there was no disease before the doctor entered the theatre.

The honest debate is not whether reform was necessary. It was. The real debate is speed, sequencing, cushioning, transparency and delivery.

That is where serious people should argue — not with akara jokes and economic hysteria.

Kukutente23:
You failed to tell us how much of the Afreximbank loan has been liquidated more so since it's been paid back with crude oil
Let's not forget $9bn loan from World Bank since 2023. Where's the loan?
There's also a $300m loan from Japan. Where did it enter?
What is the point of removing subsidy and devaluing the naira amidst high interest rates when you still can't fund the budget. Budgets are failing and rolling over in an unprecedented manner that they are no longer worth the paper they are written on.
Even Buhari wasn't this reckless!!

CharlesCNG:
My brother, accountability is good. But accountability must start with accurate figures, not throwing every loan headline into one political basket and shouting “reckless.”

On the Afreximbank facility, the documented transaction is the **NNPC-backed $3.3bn crude-oil prepayment loan**, not some mysterious “$6bn” ghost money. Reuters reported that Afreximbank disbursed **$925m** in June 2024, bringing total disbursement to about **$3.175bn**. The facility was tied to naira stabilisation and was structured as a crude-backed prepayment. If you want to ask how much has been liquidated, fair enough. That is a legitimate transparency question. But do not first inflate or blur the facility, then demand accountability from your own confusion.

On World Bank loans, again, let us be precise. Since 2023, Nigeria has received or secured World Bank support for specific reform and development programmes, not one warehouse where “$9bn” was dumped for Tinubu to share. For example, the World Bank approved **$2.25bn** in June 2024: **$1.5bn** to support economic stabilisation reforms and **$750m** for revenue mobilisation and fiscal sustainability. There was also the **$800m** facility for cash transfers to cushion subsidy-removal pain.

On the so-called Japan loan, the approved borrowing plan included **¥15bn**, about **$102m**, not $300m. Reuters reported that this formed part of the 2025 external borrowing plan, with funds earmarked for infrastructure, healthcare, education, security and housing. So again, if there is a $300m Japan figure, bring the exact facility, lender, approval date and purpose. Otherwise, it is just another number thrown into the air.

You also asked what the point of subsidy removal and naira adjustment is if government still borrows. That question sounds clever, but it misunderstands reform. Removing subsidy does not magically erase inherited deficits, debt service, infrastructure gaps, security costs, salary obligations and capital needs overnight. What it does is stop one major leak, improve fiscal space, reduce distortions and allow government to redirect resources. The World Bank’s position has consistently been that subsidy removal and FX reforms were necessary for macroeconomic stability, even though they created hardship in the short term.

On budget rollovers, you are partly right: Nigeria’s budget cycle has been messy. But again, Tinubu has acknowledged the problem and proposed a budget reset to end overlapping fiscal years and restore a January-to-December framework. Reuters reported that the reset was designed to end the inefficiencies caused by concurrent budgets and improve capital project execution. That is not denial; that is correction.

Now compare that with Buhari. Buhari left behind a deeply distorted economy: fuel subsidy bleeding public finances, Ways and Means abuse, FX backlog, weak revenue, high debt service and broken investor confidence. Tinubu’s reforms are painful because he removed the bandage from a rotten wound. You may criticise the pain management, but pretending the wound was created in 2023 is dishonest.

Even the 2026 budget shows where the money is meant to go: ₦58.18trn expenditure, ₦26.08trn for capital projects, and focus areas including security, infrastructure, education and health. The same report noted inflation falling sharply from March to November and reserves rising to about $47bn, the highest in seven years. That is not proof that everything is perfect, but it is evidence that the economy is not simply being “destroyed” in the cartoonish way you describe.

So yes, ask questions. Ask how much of the Afreximbank crude-backed facility has been repaid. Ask for disbursement schedules. Ask for project-level tracking. Ask for budget implementation reports.

But do not mix wrong figures, half-truths and inherited problems, then call it research.

The real debate is not whether Tinubu should be scrutinised. He should. The real debate is whether you are scrutinising with facts or merely decorating political anger with loan figures.

Kukutente23:
Get over the BS
You can't provide answers to any of the posers
You're only dancing round it.
While you may be correct about the loan amount from Afreximbank, it does not negate the fact that the crude backed payment plan which is actually illegal is unaccounted for
Same goes for the syndicated loans from WB
The dollar value of the Japanese loans is $308m. Explain how it has positively affected the economy.
We're not even talking of the Eurobonds that were oversubscribed.
What about T-bills and other monetary instruments? Where did all the funds go with massive devaluation and subsidy removal. How come capital performance for budgets in the last 3 cycles still hover around 30%?
Even Abacha wasn't this tardy with national income
Your god is a fiscal fraud and disaster

Kukutente23:
Get over the BS
You can't provide answers to any of the posers
You're only dancing round it.
While you may be correct about the loan amount from Afreximbank, it does not negate the fact that the crude backed payment plan which is actually illegal is unaccounted for
Same goes for the syndicated loans from WB
The dollar value of the Japanese loans is $308m. Explain how it has positively affected the economy.
We're not even talking of the Eurobonds that were oversubscribed.
What about T-bills and other monetary instruments? Where did all the funds go with massive devaluation and subsidy removal. How come capital performance for budgets in the last 3 cycles still hover around 30%?
Even Abacha wasn't this tardy with national income
Your god is a fiscal fraud and disaster

1vandragon:
O

A lot of the dingbat's vuvuzelas play around issues. They throw out figures and polices as if those are an end in themselves.

Ask them how the loans have made life better for the average Nigerian they can't.

Road projects are awarded to cronies without due process. Roads that are less than 10% completed are being presented as if they are 100% complete.

They keep shouting how crude oil has been mortgaged for loans, but are silent to say exactly how much crude is being used to repay loans.

They want Nigerians to embrace suffering and hardship, but splurge on themselves.

More Nigerians have been pushed into multidimensional poverty within 3 years than in the last 12 years combined. And someone says things are getting better. Better for who?

Any reform that does not better the lot of the common man cannot be a positive reform.

Any reform that the 'reformists' are not actively participating in and also feeling cannot be a good reform.

HacheNoire:
Because you have failed to see it!

With the whole infrastructural projects going on across the country, you still cannot see anything.

You better start appreciating His Excellency, President Asiwaju Bola Ahmed Tinubu (GCFR).

Do you know our TOTAL debt is not up to what the US pays as INTEREST on her total debt.

Our debt has not even surpassed our GDP which tells you those investment can boost our GDP and greatly reduce our debt in the long run. The US already has debt way ahead of GDP.

CharlesCNG:
The problem is that you cannot see what you have already decided not to see.

Nobody is saying Nigerians are not suffering. Nobody is saying poverty is not high. Even the World Bank says poverty remains high and that macro gains must translate faster to households. But the same World Bank also acknowledges that the reforms since 2023 have helped stabilise the economy. You cannot quote only the pain and pretend the stabilisation does not exist.

You say roads are less than 10% completed-absolutely not true.
Over 2,700km of roads are under development. That is not “nothing”; it is work in progress.

On poverty, yes, the figures are painful. The World Bank estimated poverty rose to about 63% in 2025. But serious people ask why: inflation shock, weak productivity, inherited structural failure, subsidy distortion, low revenue, insecurity and poor social protection delivery.
Partisan people simply shout “Tinubu destroyed everything.”

You also keep asking about crude-backed repayment. Fine. Ask for repayment schedule and transparency. But that does not cancel the fact that the Afreximbank facility was publicly documented as a $3.3bn NNPC crude-prepayment facility, with initial disbursement disclosed.

The honest position is simple: Nigerians are still hurting, but there are signs of stabilisation — inflation easing, reserves rising, investor confidence improving, roads ongoing, and fiscal reforms taking shape.

Your position is also simple: if it is Tinubu, it must be fraud.

But any candidate who can do better than Tinubu must show me exactly how he will do better, not just shout that Tinubu has failed.

What will he do differently?

Will he reverse subsidy removal? If yes, where will he get the money to fund it?

Will he re-peg the naira artificially? If yes, how will he stop another FX backlog?

Will he reduce borrowing? Good. What spending will he cut? Salaries? Capital projects? Security? Debt service?

Will he fight insecurity? Fine. What is his position on state police, intelligence reform, border control, technology, local recruitment and forest policing?

Will he grow the economy? Excellent. What is his plan for power, manufacturing, exports, agriculture, mining, tax reform and investor confidence?

That is the alternative I am looking for — not anger, not insults, not “anybody but Tinubu.”

For now, I see Tinubu attempting painful structural reforms: subsidy removal, FX reform, tax reform, local government autonomy, student loans, infrastructure push, and now state police. Are they perfect? No. Are Nigerians still suffering? Yes. Must government do more? Absolutely.

But I will not abandon a difficult reform path simply because someone offers sweeter slogans without a costed plan.

So bring me a candidate with better structure, better courage, better policy, better coalition and better implementation capacity. I will listen.

Until then, my position remains this: Nigeria needs alternatives, but the alternative must be viable — not emotional packaging with no engine.

Leboska:
tinubu the fantastically corrupt president & the only president in the world who open encourages corruption by entrusting leaders & appointing corrupt people like himself

chidi2003:
I hope, this man does collapse the economy completely soonest!

Kukutente23:
Could it be that Tinubu's nursing a malignant and highly infectious STD that he doesn't want Remi Mama Alakara isonu to know about
How can you be borrowing so aggressively locally and internationally and yet precious little is seen to be going on?
You can't even fund the budget!!
Tinubu should come clean. Oko oloyun might have a cure for what he's wasting dollars on