CBN Urges States to Reduce Short-Term Borrowing

The Central Bank of Nigeria (CBN) has called on state governments to curb their reliance on short-term borrowing and overdrafts, warning that such practices could undermine the country's inflation targets and monetary policy framework. This statement was made by Deputy Governor Dr. Muhammad Abdullahi during an engagement with stakeholders at the Nigerian Governor Forum secretariat in Abuja.

Abdullahi stressed the importance of adopting stricter fiscal discipline to support price stability and macroeconomic reforms. He outlined four responsibilities for state governments within the inflation target framework, including maintaining fiscal discipline, improving cash and debt management, and enhancing internal revenue mobilization.

The CBN noted that excessive borrowing and unplanned expenditures could lead to unsustainable debt accumulation, which would exacerbate inflationary pressures. Dr. Victor Oboh, Director of the Monetary Policy Department, reiterated that achieving price stability requires collaboration between the CBN and state governments, as state fiscal actions significantly influence inflation outcomes.