The governor of the Central Bank of Nigeria, Olayemi Cardoso has stated that the economy is not yet out of the woods, warning that excess liquidity in the system could hamper macro-economic stability and erode current economic gains.
Cardoso stated this in his presentation at the just concluded national economic council (NEC) meeting in Abuja even as an economic expert allayed fears over election spending, saying the electioneering comes with both pain and gain to the macroeconomic environment.
What CBN Governor is saying?
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He said the large volumes of money still circulating within the financial system must be carefully managed to prevent renewed inflationary pressures.
"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 said.
The CBN governor said election-cycle spending had injected significant liquidity into the economy, adding that such inflows must be closely monitored to avoid undermining reforms that have helped stabilise prices and restored 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 added
He also identified global trade tensions as an external risk factor that could worsen domestic pressures.
Cardoso cautioned that monetary policy alone cannot sustainably deliver low and stable inflation, especially in an economy where food supply shocks, high energy and logistics costs, infrastructure deficits, and informality weaken policy transmission
"Monetary policy is a necessary but insufficient tool," he said.
The central bank governor said lasting stability would require fiscal discipline, improved revenue mobilisation, efficient public spending, and stronger coordination between fiscal and monetary authorities.
He further said subnational governments play a critical role in managing liquidity and inflation, noting that states control about half of the federation revenue and significantly influence macroeconomic outcomes.
Foreign reserves now $49bn from $3bn in May 2023
Nigeria's net foreign reserves have risen to $49 billion in a remarkable sustained recovery from about $3 billion recorded in May 2023.
Governor, Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, said the nation's net foreign reserves hit $49 billion by February 5, 2026 as inflows from remittances, non-oil exports and other individual and institutional sources continued to provide strong buffers for the nation's currency stability.
He described the steady improvement in forex reserves as a clear sign of improving confidence in the country's economy.
He said: "This is obviously a very important statistic. When we took over, the net reserve figure was about $3 billion. As at the end of last year, the net reserve figure had gone up strongly into the $30s. And as I said, as of February 5, 2026, it was $49 billion. We are now net buyers".
He explained that the CBN now allows the foreign exchange (forex) market to largely determine prices, while the apex bank steps in to buy forex when necessary.
According to him, this approach has helped to close the gap between the official and parallel market exchange rates.
"The premium between the official and parallel market rates has collapsed to under two per cent," Cardoso said.
Cardoso said recent reforms have also made forex more accessible to ordinary Nigerians, especially those travelling abroad.
"When people travel now, you don't have to look for foreign exchange to travel. You use your naira card and pay for whatever you want. Now the naira is more competitive and people are not afraid to hold naira," Cardoso said.
He recalled that in the past, the naira was widely rejected in parts of the West African sub-region, but said that situation has changed.
He said: "In those days, if you went around West Africa and gave them naira, nobody wanted to touch it. That has all gone now. There is predictability and you can plan".
He warned Nigerians who are holding foreign currency without real need that such actions could lead to losses.
...Banking sector recapitalisation critical to achieving 1trn economy
On the banking sector, Cardoso said ongoing recapitalisation efforts are strengthening banks and positioning them to support Nigeria's long-term economic goals, including the ambition to build a $1 trillion economy.
"We all know how important the banking system is. Banks are recapitalising, investors are earning positive real returns, and equity markets are recovering due to improved earnings and stability," Cardoso said.
He said the CBN is also working on clear succession rules to ensure smoother leadership transitions in banks and greater resilience during periods of uncertainty.
Cardoso said recent economic data shows signs of stability, pointing to GDP growth of 3.98 per cent, a strong current account position, and a $3.42 billion surplus recorded in the third quarter of 2025.
He said: "We haven't had this kind of current account strength in a very long time".
He explained that the roadmap focuses on reducing inflation, normalising the foreign exchange market, and strengthening the financial system.
In simple terms, he said, the CBN plans to stay on course with current policies, noting "we will continue doing the things we have done".
Cardoso said key priorities include price stability through a gradual move towards inflation targeting, strengthening external reserves, and protecting the value of the naira.
He said: "We will do whatever it takes to safeguard the value of the naira".
He, however, warned that there are still risks that must be carefully managed. One of them, he said, is excess liquidity in the system.
"There is still a lot of liquidity in the system and we must manage it very carefully. We are not out of the woods yet," Cardoso said.
Why subnationals are critical
He also stressed the importance of state governments, saying subnational governments control a large share of public revenue and can strongly influence inflation, growth, and overall economic stability.
He urged state governments to align with national stability goals by investing in infrastructure, managing debt responsibly, and working with the financial system to expand access to credit and promote financial inclusion.
Looking ahead to 2030, Cardoso said success would mean single-digit inflation, growing foreign exchange reserves supported by non-oil exports, foreign investment, and remittances, as well as a strong and inclusive financial system.
He said: "Our view is that the future is looking bright".
He said price stability and the resilience of the external sector remain central to Nigeria's growth strategy.
Cardoso also said the bank will do "whatever it takes" to safeguard the value of the naira, while strengthening the country's external reserves.
He said the CBN's transition to inflation targeting, combined with prudent reserve management and banking sector recapitalisation, would support macroeconomic stability and the government's ambition of building a $1 trillion economy.
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"We will do whatever it is to ensure that we safeguard the value of the naira," he said.
...Expert sees upsurge in dollar supply
Commenting on fears of election spending, Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf in a chat with our correspondent said, "There are different ways of looking at it, during election period or prior to the election, politicians spend a lot of dollars which might even lead to an increase in supply of dollar which may even bring down the exchange rate if the supply increases because as they spend the dollars, those that they spend it to would offload it to the market to convert to naira.
"On the contrary, it may even have some positive impact on the currency because the main fear about liquidity is the fact that it may lead to exchange rate depreciation, inflation and so on. One way of looking at it is that the politicians are likely to spend more dollars which they have stashed away locally or abroad because it is easier for them to keep dollars because of traceability issues.
"So there may be a positive effect on the dollar because we are likely to see an upsurge in dollar supply. Secondly I agree with him that there may be a risk in terms of election spending. There are some that are legitimate spendings, there are some that are illegitimate. The legitimate spendings are those from INEC, spending on logistics, security, mobilisation, these are huge expenses, they have to print ballot papers and so on. Those ones may pose some risks in terms of the heavy expenditure on that side. There is also the risk of vote buying and so on."
While advising that the situation should be looked into carefully, he concluded that the election might not substantially upturn the macroeconomic trends in the country, adding, "The major fear is the distraction of the government in managing the economy."
