The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has cautioned that high levels of liquidity in the financial system continue to threaten Nigeria’s macroeconomic stability, despite recent gains from economic reforms.
Speaking on Monday at the National Economic Council meeting in Abuja, Cardoso emphasized that the economy remains vulnerable and requires careful management of excess money supply 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,” Cardoso stated.
He highlighted that election-related spending had injected substantial funds into the economy, which must be monitored to avoid undermining the progress achieved through recent bold reforms.
Cardoso also pointed to global trade tensions as an external risk that could compound domestic economic pressures.
He noted that monetary policy alone is insufficient to ensure lasting price stability, particularly in an economy grappling with food supply shocks, high energy and logistics costs, infrastructure gaps, and a large informal sector.
“Monetary policy is a necessary but insufficient tool,” he said, stressing the need for fiscal discipline, improved revenue generation, efficient public spending, and stronger coordination between fiscal and monetary authorities.
The CBN Governor underscored the role of state governments in economic management, noting that they control about half of federation revenues and significantly influence national macroeconomic outcomes.
**CBN Committed to Naira Stability and Reserve Growth**
Cardoso reaffirmed the bank’s commitment to defending the naira and bolstering external reserves, with price stability and a resilient external sector central to Nigeria’s growth strategy.
He announced that Nigeria’s net foreign reserves have risen to $49 billion, a significant increase from the roughly $3 billion recorded in May 2023.
Looking ahead, Cardoso said the CBN’s shift toward inflation targeting, combined with prudent reserve management and banking sector recapitalization, will support macroeconomic stability and 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,” he affirmed.
The Bank’s forward-looking targets include achieving single-digit inflation by 2030 and growing foreign exchange reserves through non-oil exports, foreign direct investment, and diaspora remittances.
Cardoso described remittances as increasingly vital to Nigeria’s external sector and noted that the CBN has engaged Nigerians abroad to facilitate easier and more formal channels for sending money home.
He urged state governments to support national economic stability by investing in infrastructure, developing human capital, managing debt responsibly, and partnering with financial institutions to improve access to credit.
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