Nigeria’s Economic Stability at Risk: CBN Warns of Excess Liquidity and 2027 Election Threats

Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has raised concerns over the potential impact of excess cash in the financial system and the 2027 election cycle on Nigeria’s economic stability. Speaking at the National Economic Council Conference 2026, Cardoso urged careful management of liquidity and ongoing reforms that have strengthened the economy in recent years.

Recalling the challenges inherited when he took office, Cardoso highlighted the effects of previous monetary policies and a dysfunctional foreign exchange (FX) market. “The cost of loose monetary policy accessibility… persistent inflation, and a huge parallel market premium caused a severe loss of investor confidence,” he said. He added that direct CBN interventions, totaling 10.93 trillion Naira, provided short-term relief but created long-term distortions, emphasizing the need for sustainable policy solutions.

Cardoso outlined the three pillars that restored stability: decisive monetary policy, market-driven transparency reforms, and enhanced fiscal coordination. Aggressive interest rate adjustments, clearing the FX backlog, and adherence to statutory deficit limits helped stabilize inflation at 15.15% while supporting GDP growth of 3.98% and boosting foreign reserves to $49 billion as of February 2026. He described the Naira as now “competitive and predictable,” restoring confidence in both local and international markets.

Looking ahead, Cardoso emphasized the importance of maintaining these reforms while managing risks associated with elections. “Liquidity overhang remains in the system. The election cycle typically sees a lot of money pumped into the economy, which could destabilize the bold reforms that have brought stability,” he warned. He stressed that monetary policy alone cannot sustain growth without fiscal discipline, supply-side reforms, and sub-national government cooperation.

Despite the challenges, Cardoso remained cautiously optimistic about Nigeria’s economic future. By 2030, the CBN targets single-digit inflation, growing FX reserves driven by non-oil exports, increased foreign investment, and a more financially inclusive economy. He concluded, “The future is bright, but we are not out of the woods. Strategic policy, coordination, and focus remain critical to unlocking Nigeria’s potential.”

source: The Sun