Towards enhancing coordination between fiscal and monetary policies and promoting greater economic stability in the country, the Federal Ministry of Finance and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU).
It is aimed at institutionalising closer collaboration between the two institutions through improved information sharing, aligned macroeconomic assumptions, consistent economic forecasts and clearer mechanisms for resolving potential conflicts between fiscal and monetary policies.
This was disclosed in Abuja by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, during the signing ceremony.
According to him, the framework would make fiscal and monetary policy coordination a permanent feature of Nigeria’s economic management rather than one dependent on individual personalities.
Stressing that the Ministry and the CBN have distinct mandates and must maintain their institutional independence, he said, their policies ultimately affect the same economy and therefore require effective coordination.
Government borrowing, he noted, has implications for liquidity, interest rates and financing costs, while monetary policy decisions also affect government finances.
He said that exchange rates, tariffs, government spending and agricultural policies similarly have direct consequences for prices, government revenue and economic activity.
He highlighted sustainable reduction of inflation to single digits as a major objective of the new framework, explaining that the target could not be achieved through monetary policy alone.
The Ministry of Finance, the Minister said, would contribute through disciplined spending, sound cash and liquidity management and more efficient government financing.
He also said that fiscal interventions would focus on structural drivers of inflation, particularly food, energy, imported costs and logistics.
Addressing food inflation, the Minister said the Ministry would collaborate with relevant institutions and state governments to strengthen grain reserves, improve agricultural yields and irrigation, build climate resilience and address gaps in farm-to-market infrastructure.
Noting that the government will not reintroduce fuel subsidy, he said that such a policy would place more pressure on public finances and the naira.
According to him, improved foreign exchange stability and tax exemptions on fuel has contributed to moderating fuel prices.
Harping on the importance of reliable economic data in improving policy coordination, he said the Ministry was working with the National Bureau of Statistics (NBS) to expand the quality and range of data available for economic decision-making.
Under the new framework, the Ministry and the CBN will improve information sharing on government cash positions, financing plans, credit growth and foreign exchange flows.
“Better coordination starts with a common evidence base,” Oyedele stated.
Recent economic developments, he said, showed strengthening confidence in the Nigerian economy, recalling a balance of payments surplus of more than $5 billion in 2025 and external reserves exceeding $54 billion.
The Minister also highlighted increased non-oil exports, declining refined-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.
Noting that government’s objective goes beyond attracting short-term portfolio investments, he harped on the need for patient capital capable of supporting factories, infrastructure, technology and job creation.
The Minister, however pointed out that achieving this would require policy consistency, greater certainty and a regulatory environment that avoids imposing unnecessary burdens on businesses.
He said that the coordination framework would also take into consideration the economic consequences of insecurity and illicit financial flows.
The Federal Ministry of Finance, he said, would continue to focus on fiscal discipline, improved liquidity management, greater transparency, stronger data systems, more efficient financing and reforms aimed at increasing production and addressing structural sources of inflation.
He said “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,”
On his part, the CBN Governor Olayemi Cardoso described the agreement as a significant step towards strengthening Nigeria’s macroeconomic management and economic stability.
He said fiscal and monetary policies were complementary instruments whose combined impact would be stronger when both institutions work in harmony.
According to him, the agreement formalises the longstanding collaboration through structured processes for regular consultation, information exchange and policy coordination.
The framework, he said, will strengthen cooperation in areas including government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
He said the timing was particularly important as the CBN advances its transition towards an inflation-targeting framework, noting that the effectiveness of such a framework also depends on a supportive fiscal environment.
He commended the Finance Minister and the technical teams from both institutions for their roles in developing the initiative.
The Governor reaffirmed CBN's commitment to sound monetary policy, macroeconomic stability and financial system resilience.
The strengthened partnership, he said, would contribute to a more stable and resilient Nigerian economy capable of creating greater opportunities for Nigerians.