Senior officials at the Central Bank of Nigeria (CBN) have warned that rising political and election-related spending ahead of Nigeria’s 2027 general election could reignite inflationary pressures and undermine recent gains in price stability.
The concerns were outlined in the personal statements of members of the Monetary Policy Committee released by the apex bank following its 304th meeting held on 23 and 24 February 2026, where policymakers voted to reduce the Monetary Policy Rate by 50 basis points from 27% to 26.5%, while leaving other monetary parameters unchanged.
The warnings come amid growing concern over Nigeria’s fragile economic recovery, with inflation reversing its downward trend in March after months of moderation.
In the MPC communiqué signed by the governor of the central bank, Olayemi Cardoso, the committee acknowledged signs that inflationary pressures were easing but cautioned that fiscal expansion linked to political activities could threaten the outlook.
“The outlook indicates that the current momentum of domestic disinflation will continue in the near term,” Cardoso said.
However, he warned that “increased fiscal releases including election-related spending could pose upside risk to the outlook”.
In his personal submission to the committee, Cardoso argued that Nigeria’s narrowing fiscal space and the approach of the 2027 election cycle required close monitoring because of the historic relationship between pre-election spending and inflationary surges.
“Growing fiscal pressures, from reduced government fiscal headroom and the approaching 2027 election cycle, warrant particular attention given the well-established link between pre-election fiscal expansion and inflation,” he said.
Other MPC members echoed similar concerns, warning that liquidity injections associated with campaign activity and government spending could weaken the effectiveness of the bank’s tight monetary stance.
The deputy governor for economic policy, Muhammad Abdullahi, said heightened political activity ahead of the polls could intensify demand-side inflation.
“As political activities intensify ahead of the 2027 elections, increased fiscal injections and consumption spending could elevate demand-side inflation,” he said.
Abdullahi also warned that Nigeria’s widening fiscal deficit could deteriorate further as election spending accelerates in 2026 and early 2027, stressing the need for stronger coordination between fiscal and monetary authorities.
Similarly, deputy governor for operations, Emem Usoro, cautioned that the pre-election environment could trigger liquidity surges, stronger foreign exchange demand and rising inflation expectations.
“Crucially, the pre-election environment increases the risk of liquidity surges, higher FX demand and a drift in inflation expectations,” she said.
Usoro argued that such risks justified maintaining stringent liquidity conditions despite the modest reduction in interest rates.
Newly appointed deputy governor Lamido Yuguda also warned that increased fiscal releases tied to the electoral cycle could disrupt the current disinflation path.
“Potential increases in fiscal spending associated with the electoral cycle could generate demand pressures and disrupt the disinflation trajectory,” Yuguda said, while defending the retention of a 75% cash reserve ratio on non-TSA public deposits.
Members of the committee also raised concerns about mounting pressure on the foreign exchange market.
Aloysius Ordu said rising political spending ahead of the elections would test the resilience of the economy and place additional strain on FX demand.
“Domestically, rising political spending and FX demand pressures associated with the 2027 elections will test the resilience of the economy,” he said.
Another MPC member, Bandele Amoo, warned that excess liquidity from fiscal injections and early campaign-related activities could threaten exchange-rate stability and reverse disinflation gains.
“My primary concern is the persistence of excess liquidity from fiscal injections, which could undermine disinflation gains and exchange rate stability,” Amoo said.
Professor Murtala Sagagi similarly identified fiscal slippages and election spending as among the most significant domestic inflation risks over the medium term.
The warnings come ahead of the MPC’s next policy meeting scheduled for 19 and 20 May 2026, shortly after the release of Nigeria’s April inflation figures by the National Bureau of Statistics.
Nigeria’s headline inflation rate rose to 15.38% in March 2026, marking its first increase since March 2025, driven largely by higher food, transport and accommodation costs.
The Financial Market Dealers Association has projected that inflation could climb further to 16.42% in April, citing sustained pressure from food prices, energy costs and elevated global commodity prices.
