The Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has issued a stark warning that the combination of persistent excess liquidity and rising spending pressures ahead of the 2027 general elections could undermine the country’s recently achieved macroeconomic gains.
Speaking at the National Economic Council (NEC) Conference 2026 held at the Presidential Villa in Abuja, Cardoso highlighted the fragile nature of Nigeria’s ongoing economic recovery and stressed the urgent need for continued fiscal discipline and coordinated policy action.
Cardoso described the inherited economic challenges as severe: prolonged loose monetary policy had fuelled inflation peaking at 34.6%, a foreign exchange market burdened with over $7 billion in backlogs, and an official–parallel market gap of 16%. These distortions had eroded investor confidence and weakened the naira significantly.
To address these issues, the CBN implemented a three-pillar reform strategy:
1. Return to orthodox monetary policy — including an 875-basis-point hike in the Monetary Policy Rate to anchor inflation and eliminate quasi-fiscal interventions.
2. Establishment of a market-driven FX regime— unifying exchange rates, enhancing transparency, and clearing FX backlogs.
3. Strengthened fiscal coordination— adhering to statutory deficit-financing limits and slashing Ways and Means advances to the federal government from 2.65% of GDP in 2023 to 0.69% in 2024.
Cardoso noted early positive results from these measures: real GDP growth reached 3.98%, the current account posted a $3.42 billion surplus in Q3 2025, and external reserves climbed to approximately $49 billion by early February 2026.
However, he cautioned that the recovery remains vulnerable. Excess liquidity continues to pose risks, and election-related fiscal pressures could trigger renewed volatility if not carefully managed. Cardoso emphasised that monetary policy alone cannot secure lasting stability — fiscal discipline, supply-side reforms, and strong inter-agency coordination are essential to address food supply shocks, high energy costs, and other structural challenges.
Looking ahead, the CBN has set ambitious long-term goals: achieving single-digit inflation, building foreign exchange reserves through non-oil exports and remittances, and creating a more globally competitive financial system by 2030.
Cardoso reiterated the central bank’s unwavering commitment to its reform agenda but stressed that vigilance is critical. “The economy is on the right path, but it requires disciplined management to stay there,” he said.
As Nigeria prepares for an election year, Cardoso’s remarks serve as a clear call to action: maintaining macroeconomic stability will demand sustained effort from all arms of government and the private sector. With reserves strengthening and reforms taking root, the coming months will test whether the country can protect its gains or risk a return to instability.
