The Central Bank of Nigeria is pushing for tighter fiscal discipline at the state level as it moves to adopt an inflation targeting framework, warning that unchecked spending by governors could derail efforts to stabilize prices.
At a meeting with state officials facilitated by the Nigerian Governors’ Forum, CBN Deputy Governor for Economic Policy Muhammad Sani Abdullahi said inflation control now requires closer coordination between monetary and fiscal authorities.
“In an inflation-targeting regime, persistent, unpredictable or expansionary fiscal behaviour at the sub-national level can significantly undermine price stability,” Abdullahi said.
The call comes as Nigeria’s inflation edged up to 15.38% in March 2026 from 15.06% in February, snapping an 11-month disinflation run. Food inflation climbed to 14.31% from 12.12%, while transport costs jumped to 16.9% from 14.7%.
With 2027 election campaign spending expected to surge, the CBN warned that borrowing and spending patterns of sub-national governments could fuel inflation if left unchecked.
Abdullahi outlined four responsibilities for states under the new framework: maintain fiscal discipline, borrow responsibly within medium-term plans, strengthen cash and debt management, and boost internally generated revenue. He urged states to cut reliance on overdrafts, improve budget realism, and align borrowing with debt sustainability limits.
CBN Director of Monetary Policy Victor Oboh said inflation targeting is a “win-win framework” that can anchor expectations and improve policy credibility, but stressed that price stability cannot be achieved by monetary policy alone in a federal system.
NGF Executive Director for Policy, Strategy and Research Olalekan Yunusa welcomed the early engagement, saying the shift from monetary targeting to inflation targeting shows a deliberate push to make price stability the anchor of Nigeria’s economic policy.
Officials from more than 20 states attended, including commissioners of finance, accountants-general, and statisticians-general. Most backed the CBN’s reform agenda and pledged support for the transition.
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