Nigeria money supply hit its highest level on record, at about N49.3 trillion. This indicates a 9.9% gain from December 20, 2021, when the country recorded N44.4 trillion.
This is based on statistics acquired by Nairametrics from the Central Bank of Nigeria (CBN) on the country’s money supply.
Nonetheless, considering the many interest rate hikes intended to combat inflation and lower the amount of money in circulation, this increase in the money supply is concerning.
A country’s money supply is a crucial factor in whether or not inflation develops, and Nigeria’s money supply is at an all-time high. The amount of money in circulation has grown over time, owing largely to the CBN’s low-interest policy implemented to stimulate economic growth.
Trillions of naira in CBN intervention funds, as well as CBN bailouts of federal and state governments through its Ways and Means powers, have boosted the money supply and created a strong inflationary environment. According to the data, the Ways and Means balance was N16.1 trillion in August 2021 but has since risen to N22.068 trillion in August 2022. This is a 36% increase year on year.
A cursory examination of the data also reveals that the private and public sectors received sector credit worth N40.1 trillion and N21 trillion, respectively. As of August 2022, Nigeria had the highest-ever net domestic credit to the economy, at N61.1 trillion.
The data also shows that Nigeria’s economy expanded by an average of 1.3% from 2016 to 2021. In contrast, during the same period, the Money Supply increased from N23.6 trillion to N43 trillion.
Despite several interest rate hikes announced by the central banks, the money supply has continued to grow. This prompted the central bank to take more aggressive measures to limit the money supply and inflation.
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