NIGERIA: CENTRAL BANK EXCESSIVE “DEVELOPMENT” LENDING PUSHES UP INFLATION

   Mon, 21 November 2022

Nigeria’s soaring inflation and fiscal drain are not primarily caused by external pressures, but rather by the central bank’s excessive lending to direct government programmes and its unorthodox funding of the highly inefficient fuel subsidy, which are statutory violations that keep Nigeria’s public debt ratio superficially low. Despite their debilitating economic impact, such policies will be continued at least in the four-month outlook, while after the 2023 elections the probability of exchange rate reform and a steep currency devaluation will become more likely. That said, central bank “development” lending schemes are expected to continue well into 2024.