The Central Bank of Nigeria (CBN) cautioned state governments that weak fiscal practices risk undermining national efforts to curb inflation and bolster economic stability. Speaking at a Nigeria Governors’ Forum event attended by finance commissioners, accountants-general, and other officials from over 20 states, CBN Deputy Governor for Economic Policy, Muhammad Abdullahi, stressed the need for federal-state collaboration in inflation control.
Abdullahi highlighted how state-level issues—like excessive borrowing, mounting domestic debt, erratic spending, unpaid wages, contractor payments, and poor handling of federal allocations—fuel price pressures. He warned that such lapses could derail CBN’s shift to an inflation-targeting framework, which prioritizes transparent, forward-looking policies for price stability but demands fiscal restraint at all government tiers to avoid “fiscal dominance” where deficits force central bank financing.
Key state actions driving inflation include unplanned spending, bloated supplementary budgets, and unsustainable debt, which flood the economy with liquidity. Abdullahi urged states to curb overdrafts, cap loans within sustainable bounds, refine revenue forecasts and budgets, prioritize expenditures, and sync policies with economic conditions.
Under the new regime, states must uphold fiscal discipline, borrow prudently via medium-term plans, enhance debt-cash coordination, and boost internal revenue generation—framing inflation targeting as a shared duty for growth, jobs, and citizen welfare.
CBN Monetary Policy Director Victor Oboh called it a “win-win” for households, businesses, and governments by fostering policy confidence, while NGF’s Olalekan Yunusa praised the early engagement as vital for macroeconomic harmony in Nigeria’s federal setup.
