The Federal Ministry of Finance and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU) to strengthen coordination between fiscal and monetary policies and promote greater macroeconomic stability.
The framework is aimed at improving policy consistency, strengthening information sharing, aligning economic forecasts and addressing areas where fiscal and monetary policies could work at cross purposes.
Speaking at the signing ceremony in Abuja on Thursday, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the agreement would institutionalise cooperation between the two institutions and make it a permanent feature of Nigeria’s economic management.
Oyedele stressed that although the Ministry of Finance and the CBN have distinct mandates and must retain their institutional independence, their policies ultimately affect the same economy and therefore require effective coordination.
He noted that government borrowing has implications for liquidity, interest rates and financing costs, while monetary policy decisions also affect government finances.
According to him, exchange rates, tariffs, government expenditure and agricultural policies similarly have direct implications for inflation, government revenue and economic activity.
The Minister identified the sustainable reduction of inflation to single digits as a major objective of the framework, stressing that the target could not be achieved through monetary policy alone.
He said the Ministry would contribute through fiscal discipline, sound cash and liquidity management and more efficient government financing, while fiscal interventions would focus on structural drivers of inflation, particularly food, energy, imported costs and logistics.
On food inflation, Oyedele said the Ministry would collaborate with relevant institutions and state governments to strengthen grain reserves, improve agricultural productivity and irrigation, build climate resilience and address gaps in farm-to-market infrastructure.
He also ruled out a return to fuel subsidy, arguing that such a policy would further strain public finances and put pressure on the naira.
The Minister said improved foreign exchange stability and tax exemptions on fuel had contributed to moderating fuel prices.
Oyedele also underscored the importance of reliable economic data to effective policymaking, noting that the Ministry was working with the National Bureau of Statistics (NBS) to improve the quality and scope of data available for economic decisions.
Under the new framework, the Finance Ministry and CBN will strengthen information sharing on government cash positions, financing plans, credit growth and foreign exchange flows.
“Better coordination starts with a common evidence base,” Oyedele said.
The Minister cited recent economic developments which, according to him, reflected increased confidence in the Nigerian economy, including a balance of payments surplus of more than $5 billion recorded in 2025 and external reserves exceeding $54 billion.
He also pointed to increased non-oil exports, declining refined petroleum product imports as domestic refining capacity expands, Nigeria’s return to Frontier Market status and its inclusion in JPMorgan’s new frontier local-currency government bond index.
Oyedele, however, said the government’s objective went beyond attracting short-term portfolio inflows, stressing the need to attract patient capital capable of supporting factories, infrastructure, technology and job creation.
He said achieving this would require policy consistency and certainty, as well as a regulatory environment that avoids imposing unnecessary burdens on businesses.
The Minister added that the coordination framework would also consider the economic consequences of insecurity and illicit financial flows.
He said the Finance Ministry would continue to pursue fiscal discipline, improved liquidity management, stronger transparency and data systems, efficient financing and reforms designed to increase production and ease structural inflationary pressures.
“Nigeria has one economy. Fiscal policy cannot succeed without price stability; monetary policy cannot deliver price stability if fiscal policy pulls in the opposite direction,” Oyedele said.
The CBN Governor, Olayemi Cardoso, described the MoU as a significant step towards strengthening Nigeria’s macroeconomic management and economic stability.
Cardoso said fiscal and monetary policies were complementary instruments whose combined impact would be stronger when they operate in harmony.
He explained that the MoU did not create a new relationship between the two institutions, which have collaborated over the years on inflation management, debt sustainability, budget financing, exchange rate stability and responses to economic shocks.
Rather, he said, the agreement formalises the longstanding collaboration through structured processes for regular consultation, information exchange and policy coordination.
According to the CBN governor, the framework will strengthen cooperation in government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
Cardoso said the timing was particularly important as the CBN advances its transition towards an inflation-targeting framework, whose effectiveness also depends on a supportive fiscal environment.
He commended Oyedele and the technical teams from both institutions for their roles in finalising the initiative and reaffirmed the CBN’s commitment to sound monetary policy, macroeconomic stability and financial system resilience.
He said the strengthened partnership would contribute to building a more stable and resilient Nigerian economy capable of creating greater opportunities for citizens.
By FirmNews Correspondent
