The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has warned that excess liquidity remains a major risk to Nigeria’s macroeconomic stability, saying the economy is not yet out of danger despite recent gains from ongoing reforms.
Gatekeepers News reports that Cardoso gave the warning on Monday while addressing the National Economic Council (NEC) meeting in Abuja.
He said the large volume of money still circulating within the financial system must be carefully managed to prevent a resurgence of inflation.
“There is still a lot of liquidity within the system, and we’re going to manage this very carefully. We are not out of the woods yet,” he said.
Election Spending, Global Tensions Add Pressure
The CBN governor said election-cycle spending had injected significant liquidity into the economy and must be closely monitored to avoid undermining recent reforms that have helped stabilise prices and restore investor confidence.
“The election cycle, a typical election cycle, a lot of money has been pumped into the system. This has to be watched to ensure that it does not destabilise and challenge the very bold reforms which have brought about stability to the economy,” he said.
Cardoso also identified global trade tensions as an external risk capable of worsening domestic pressures.
‘Monetary Policy Alone Is Not Enough’
He cautioned that monetary policy by itself cannot sustainably deliver low and stable inflation, particularly in an economy grappling with food supply shocks, high energy and logistics costs, infrastructure gaps and widespread informality.
“Monetary policy is a necessary but insufficient tool,” he said.
According to him, lasting stability would require fiscal discipline, improved revenue mobilisation, efficient public spending, and stronger coordination between fiscal and monetary authorities.
He also noted that state governments play a critical role in managing liquidity and inflation, stressing that subnational governments control about half of federation revenues and significantly influence macroeconomic outcomes.
CBN to Protect Naira, Build Reserves with Non-Oil Exports
Cardoso said the CBN would do “whatever it takes” to protect the value of the naira while strengthening Nigeria’s external reserves.
He said price stability and a resilient external sector remain central to Nigeria’s growth strategy.
According to him, Nigeria’s net foreign reserves have risen to $49 billion, from about $3 billion in May 2023.
He said the CBN’s transition to inflation targeting, alongside prudent reserve management and the ongoing recapitalisation of banks, would strengthen macroeconomic stability and support the government’s goal of building a $1 trillion economy.
“We will do whatever it is to ensure that we safeguard the value of the naira,” Cardoso said.
He added that the apex bank would maintain a disciplined interest rate path, deepen domestic financial markets, strengthen financial stability, and promote financial inclusion as part of its growth strategy.
2030 Targets
Looking ahead to 2030, Cardoso said the CBN aims to achieve single-digit inflation and grow foreign exchange reserves through non-oil exports, foreign direct investment, and diaspora remittances.
He described remittances as increasingly important to Nigeria’s external sector, noting that the CBN has engaged Nigerians in the diaspora to make it easier to send money home.
“Remittances have made a big difference, and they come from every state represented here,” he said.
He urged state governments to align with national stability goals by investing in infrastructure, supporting human capital development, managing debt sustainably, and partnering with the financial system to expand access to credit and deepen economic activity.We’d
