LDR: CREDIT TO PRIVATE SECTOR ADDS N3.01TRN IN 5 MONTHS, ALL-TIME HIGH OF 60 YEARS

ings, Mr. Wole Adeyeye attributed the growth to 65 per cent LDR policy of the CBN, stressing that many banks complied with the directive on the minimum requirement.

He added that, “the intervention programs by the CBN in various sectors of the economy drove the increase as borrowers took advantage of the low interest rate.

The minimum LDR of 65per cent and intervention programs by the CBN in various sectors have contributed to the strong economic growth witnessed in the past quarters.”

Also speaking, the Chief Operating Officer, InvestData Limited, Mr. Ambrose Omordion noted that post-covid-19 business activities contributed to N38.1 trillion credit to private sector as of May 2022.

He expressed that the recent increase in CBN’s Monetary Policy Rate (MPR) might disrupt credit to private sector going forward, stressing that cost of production tends to witness increase and impact on local economy.

However, some analysts expressed mixed reactions in their projections for money supply growth for the remaining months of the year especially in the face of election year spending and recent hike in the MPR by the CBN.

They told THISDAY that increased credit to the government is responsible for the sharp growth in money supply, which they noted is also a major driving force behind the upward inflationary trend.

Vice president, Highcap securities Limited, Mr. David Adnori said, “In general, an increase in the money supply drives inflation rather than the other way around. In our typical case, money supply growth far outstrips economic growth, which is a typical condition for stoking inflation.

“In terms of inflation, the majority of the inflationary pressure we are experiencing is supply-side driven, as a result of issues like insecurity, poor infrastructure, insufficient logistics, and cost push factors from the external environment, such as the Russian-Ukraine conflict. As a result, I would ascribe a higher percentage (about 65-70per cent) of the money supply growth to inflation. I believe the balance is due to a higher credit growth to the economy, notably to the government.”