The broad money supply (M2) took upward trend in the month of April, growing by 2.16 per cent. This is against 1.26 per cent recorded in March 2018, annualised to 6.48 per cent and was in contrast to the provisional growth benchmark of 10.48 per cent for 2018.
The recent developments in money market showed that the performance of M2 was mainly driven by the growth in Net Domestic Credit (NDC) of 6.24 per cent , annualised to 18.72 per cent, owing largely to net credit to government, which grew by 46.13 per cent, against the provisional benchmark of 54.97 per cent. Credit to the private sector, however, contracted by 0.16 per cent in April 2018, in contrast to the provisional annual benchmark of 5.64 per cent.
Net Foreign Assets (NFA) grew by 7.38 per cent in April 2018, compared with the provisional benchmark of 18.15 per cent. Narrow money (M1), however, contracted by 3.31 per cent against the provisional benchmark of 8.04 per cent.
In another development, the recent depository corporations survey, released by the Central Bank Of Nigeria (CBN) showed a 0.90 per cent m-o-m increase in Broad Money to N24.52 trillion in April 2018. The survey also show a 1.84 per cent m-o-m increase in Net Foreign Assets (NFA) to N15.91 trillion more than offset a 0.80 per cent m-o-m decrease in Net Domestic Assets (NDA) to N8.61 trillion. Growth in NFA according to survey report was partly attributed to increase in oil dollar revenue ,amid higher crude oil prices boosting the external reserves m-o-m by 1.22 per cent to $47.17 billion and further strengthened Nigeria’s position as a net lender to the rest of the world.
On domestic asset creation, the report said the decrease in NDA resulted from a 7.27 per cent m-o-m increase in Other Liabilities (net) to N18.87 trillion in the month under review accompanied by a 4.61 per cent increase in Net Domestic Credit (NDC) to N27.48 trillion. Further breakdown of NDC showed a 0.85 per cent m-o-m decrease in Credit to the Private sector to N22.25 trillion , share of credit to private sector of NDC decreased to 80.99 per cent from 85.44 per cent, accompanied by a 36.60 per cent increase in Credit to the Government to N5.22 trillion of which its share of NDC increased to 19.01 per cent from 14.56 per cent.
On the liabilities side, 0.90 per cent m-o-m increase in Broad Money Supply followed a 3.43 per cent m-o-m increase in Quasi Money, near maturing short term financial instruments to N13.85 trillion while Narrow Money fell to N10.67 trillion of which Demand Deposits fell by 1.87 per cent to N9.07 trillion in April 2018. Meanwhile, Reserve Money (Base Money) decreased m-o-m by 3.20 per cent to N6.53 trillion as bank reserves also fell m-o-m by 2.95 per cent to N4.23 trillion and Currency in circulation increased m-o-m by 17.31 per cent to N1.96 trillion.
The Monetary Policy Committee at the meeting highlighted the risks to the moderated inflation rate to include: huge liquidity injections that could arise from the implementation of the proposed N9.12 trillion 2018 FGN budget, expenditure towards the 2019 elections, monthly FAAC injections as well as approval & implementation of the proposed new national minimum wage, possibly financed by a supplementary budget.
