CBN ready to manage election-related liquidity risks, says Cardoso

The Central Bank of Nigeria (CBN) is prepared to manage potential liquidity pressures arising from increased spending ahead of the 2027 general elections, Governor Olayemi Cardoso has said.

Cardoso gave the assurance while briefing journalists on the decisions of the CBN’s 307th Monetary Policy Committee (MPC) meeting in Abuja.

He said the bank had analysed different election-related spending scenarios and would deploy appropriate monetary policy tools if excess liquidity emerged in the financial system.

CBN prepares for election liquidity pressures

Cardoso said the CBN had conducted extensive analysis to understand how the financial market could change during an election period.

• “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 bank would base its response on developments in the financial system rather than assumptions, while monitoring 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,” Cardoso said.

He added that the bank would deploy appropriate instruments to address any excess liquidity that could emerge during the election period.

• “We will proactively deploy any tools and instruments to mop up any excess liquidity as it has to. We are going to be proactive. We will not allow ourselves to be caught unawares in any form,” he said.

The CBN’s preparations come as Nigeria approaches the 2027 general elections, with election-related spending potentially affecting liquidity and foreign exchange demand.

CBN cuts MPR to 23%

Cardoso’s comments followed the 307th MPC meeting, at which the committee reduced the Monetary Policy Rate (MPR) to 23% from 26.5%.

• 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% for deposit money banks and 16% 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.
• Earlier in February this year, INEC released a revised timetable for the 2027 General Elections, fixing the presidential and National Assembly polls for Saturday, January 16, 2027, bringing the polls forward from February 20, 2027.

Earlier in the year, INEC informed the National Assembly that it requires N873.78 billion to conduct the 2027 general elections, along with N171 billion to fund its operations in 2026.

The proposed N873.78 billion represents a significant increase from the N313.4 billion released for the 2023 elections.

The commission has also published the final list of presidential candidates and their running mates for the January 2027 general elections.