Parthian Partners Warns CBN’s 75% CRR Policy Could Threaten Economic Recovery
Story: written by Myra October 20,2025
Investment firm Parthian Partners has cautioned the Central Bank of Nigeria (CBN) against enforcing the newly introduced 75% Cash Reserve Ratio (CRR) on non-TSA (Treasury Single Account) public sector deposits, warning that the policy could stall Nigeria’s fragile economic recovery.
In a report titled “Avoiding a Damaging Cure: Preventing the CBN’s 75% CRR on Non-TSA Public Funds from Hurting the Recovery,” the firm described the move as well-intentioned but potentially counterproductive, noting that it could disrupt fiscal operations, governance, and banking sector stability.
Parthian Partners argued that the CBN’s decision to immobilize three-quarters of funds held by state governments and public agencies outside the TSA is a blunt measure that may hinder service delivery and derail ongoing development projects.
The firm warned that state governments relying on commercial banks for salary payments, contractor funding, and social programs could face liquidity shortages, resulting in delayed wages and stalled infrastructure projects. Such disruptions, it added, could heighten political tensions and undermine state-level financial autonomy.
While acknowledging the CBN’s goal of promoting transparency by channeling more funds through the TSA, Parthian Partners stressed that implementing the policy abruptly—without transitional support—could harm public finance planning and the delivery of essential services.
The report also cautioned that locking up significant portions of commercial banks’ deposits would tighten credit supply, making borrowing more expensive for businesses and households. This, it said, could weaken private sector growth, investment, and job creation, ultimately slowing the economy’s recovery momentum.
Parthian noted that recent signs of economic growth and easing inflation could be reversed if the policy triggers a liquidity crunch that constrains both government spending and bank lending. The firm further observed that lowering the Monetary Policy Rate (MPR) while sharply restricting liquidity sends mixed signals to investors and complicates monetary policy coordination.
To mitigate these risks, Parthian Partners recommended a phased implementation of the CRR policy, allowing time for state governments and banks to adjust. It also proposed temporary liquidity windows for essential public expenditures and exemptions for capital project accounts to maintain continuity in public service delivery.
The firm emphasized the need for collaboration between the CBN, state treasuries, and finance ministries to balance fiscal accountability with economic stability.
“Macroeconomic stability and effective public service delivery are not conflicting objectives,” Parthian Partners stated. “Pursuing one at the expense of the other will only delay Nigeria’s recovery and deepen structural weaknesses.”
