The Governor of the Central Bank of Nigeria, Mr Olayemi Cardoso. Photo: CBN
Members of the Central Bank of Nigeria’s Monetary Policy Committee have warned that increased government spending ahead of the 2027 general elections could fuel inflation, weaken fiscal discipline and complicate efforts to maintain monetary stability.
The warnings came as Nigeria’s broad money supply rose to N146.60tn in September 2026, up N28.82tn from a year earlier, while credit to the government climbed by 63.09 per cent to N39.40tn.
The concerns were contained in personal statements issued by MPC members following the committee’s 307th meeting held on 21 and 22 September, 2026.
The members cautioned that election-related expenditure, alongside pressure from fuel, food and production costs, could slow the country’s progress in bringing inflation under control.
Deputy Governor of the CBN’s Corporate Services Directorate, Dr Muhammad Abdullahi, warned that election-related fiscal expansion could transmit inflationary pressure through transportation, energy and production costs.
“I recognise that election-related fiscal expansion and other incipient price pressures may propagate through transport, energy and production cost channels, amplifying economy-wide cost-push inflation,” he said.
Abdullahi called for closer coordination between fiscal and monetary authorities to prevent government measures from injecting additional liquidity into the economy and undermining price stability.
Another MPC member and Senior Fellow at the Brookings Institution, Dr Aloysius Ordu, urged the government to maintain fiscal discipline as political activities intensify.
“And as the election cycle approaches, stronger safeguards against fiscal slippage and pro-cyclical spending will be important,” Ordu said.
He noted that improved oil receipts were strengthening government finances but warned that converting foreign exchange earnings into domestic liquidity could complicate efforts to contain inflation.
Similarly, MPC member, Bandele Amoo, identified political activities and budget implementation as potential sources of renewed spending pressure.
“As global uncertainty remains elevated, domestic political activities may introduce new spending pressures, and supply-side vulnerabilities continue to pose risks to the inflation outlook,” Amoo said.
He expressed optimism that better coordination between the CBN and the Federal Ministry of Finance would help manage spending pressures, stressing that monetary policy decisions should remain guided by economic evidence and medium-term price stability.
However, not all committee members expected election spending to significantly disrupt monetary conditions.
Professor Murtala Sagagi acknowledged that election-related spending had historically put pressure on demand and prices but said existing monetary policy tools could help contain the risks.
He cited the CBN’s liquidity management instruments, its Cash Reserve Requirement and a memorandum of understanding on fiscal-monetary coordination between the CBN and the Federal Ministry of Finance.
CBN Governor, Olayemi Cardoso, said the bank had analysed previous election cycles and developed scenarios to prepare for possible liquidity pressures.
“We are ready,” Cardoso said at a press briefing after the committee’s September meeting.
He said the bank would monitor currency in circulation, banking system liquidity, monetary aggregates and foreign exchange demand.
“We will proactively deploy any tools and instruments to mop up any excess liquidity,” the governor said, adding that the CBN would not allow itself to be caught unprepared.