The Central Bank of Nigeria (CBN) says it is prepared to mop up excess liquidity that may arise from increased spending ahead of the 2027 general elections.
Olayemi Cardoso, CBN governor, disclosed this on Tuesday while briefing journalists on the decisions of the bank’s 307th Monetary Policy Committee (MPC) meeting in Abuja.
Mr Cardoso said the apex bank had analysed different scenarios around election-related spending and would deploy appropriate monetary policy tools if excess liquidity emerged in the financial system.
“We are ready. We’ve done a lot of analysis in understanding how this market transforms itself during an election period. We have sensitised different scenarios, looked at different models and debated things to great lengths,” he said.
The governor said the CBN would base its response on developments in the financial system rather than assumptions.
He said the bank would monitor currency in circulation, banking system liquidity, monetary aggregates and foreign exchange demand.
“We will not base things on assumptions. We will carefully monitor currency in circulation, banking system liquidity, monetary aggregates and foreign exchange demand and act accordingly,” Mr Cardoso said.
He added that the CBN would proactively deploy available instruments to mop up any excess liquidity that emerges during the election period.
“We are going to be proactive. We will not allow ourselves to be caught unawares in any form,” he said.
Mr Cardoso’s comments came after the MPC reduced the Monetary Policy Rate (MPR) to 23 per cent from 26.5 per cent.
The committee also recalibrated the Standing Facilities Corridor to +50/-300 basis points around the MPR.
It retained the Cash Reserve Requirement (CRR) at 45 per cent for deposit money banks and 16 per cent for merchant banks.
The CBN said its monetary policy decisions would continue to be guided by developments in inflation, economic growth, liquidity conditions and other macroeconomic indicators.
The CBN’s preparations come as Nigeria moves towards the 2027 general elections, with increased election-related spending potentially affecting liquidity and foreign exchange demand.
The Independent National Electoral Commission (INEC) had earlier revised the timetable for the 2027 general elections, fixing the presidential and National Assembly elections for 16 January 2027.
INEC has also told the National Assembly that it requires N873.78 billion to conduct the 2027 elections, in addition to N171 billion to fund its operations in 2026.
The proposed election budget is significantly higher than the N313.4 billion released for the 2023 general elections.
The CBN’s latest position indicates that the apex bank will closely monitor the impact of election-related spending on monetary conditions and intervene where necessary.
