New Telegraph

‘FG’s planned borrowing’ll boost credit to private sector’

The massive borrowings that the Federal Government plans to embark on this year will likely lead to a further increase in credit to the private sector, analysts at Cowry Asset Management Limited have predicted.
They stated this in the firm’s latest “Cowry Weekly Financial Markets Review and Outlook,” obtained by New Telegraph yesterday, which, among other issues, focused on the Central Bank of Nigeria’s (CBN) recently released depository corporations’ survey report.

The CBN survey showed that Net Domestic Credit (NDC) increased by 2.96 per cent to N39.10 trillion in April compared with the previous months. Further breakdown of the NDC showed a 7.15 per cent increase in credit to the government to N10.43 trillion and a 1.51 per cent rise in credit to the private sector to N28.67 trillion. According to the analysts, “we expect credit to private sector and government to rise further in the coming months amid CBN palliative measures and the planned huge borrowing by FG. These, in addition to the current planting season and the planned increase in electricity tariff in July, would put pressure on food and non-food prices going forward.” In April, the Debt Management Office (DMO) had announced that it would issue Federal Government securities in the domestic market to raise the N850billion, which the government had requested to borrow to part finance the deficit in the 2020 budget. The government had initially wanted to raise the amount externally but had to write to the National Assembly for approval to convert it to domestic borrowing due to the Coronavirus crisi, which forced the country’s authorities to reappraise their borrowing plans.

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