By Gloria Ikibah
The Federal Government and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU) to strengthen coordination between fiscal and monetary policies as the country steps up efforts to tackle inflation and improve economic stability.
The agreement, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, and CBN Governor Olayemi Cardoso, in Abuja on Friday, establishes a structured framework for regular consultation, information sharing and policy coordination between the two institutions. 
Speaking at the signing ceremony, Oyedele said the framework will make fiscal-monetary coordination a permanent institutional process rather than one dependent on the personalities occupying key offices.
He stressed that although the Ministry of Finance and the CBN have separate mandates and must retain their independence, their decisions ultimately affect the same economy.
According to him, government borrowing affects liquidity, interest rates and financing costs, while monetary policy also has implications for government finances. Exchange rates, tariffs, government spending and agricultural policies, he added, directly affect prices, revenues and economic activity.
According to Oyedele, bringing inflation sustainably into single digits was a major objective of the new framework, but stressed that the task could not be left to monetary policy alone.
“Our objective is to bring inflation sustainably into single digits and keep it there — and that cannot be monetary policy’s job alone,” he said.
The Minister said the Finance Ministry will contribute through disciplined spending, sound cash and liquidity management, efficient government financing and measures aimed at addressing structural causes of inflation, including food, energy, imported costs and logistics.
On food inflation, Oyedele said the government will work 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.
He also ruled out any return to fuel subsidy, saying such a move would place additional pressure on public finances and the naira.
The Minister said improved foreign exchange stability and tax exemptions on fuel had contributed to moderating prices, while efforts to strengthen domestic production would remain important to reducing inflationary pressures.
Oyedele said access to reliable and timely economic data would be central to the new coordination framework.
Under the agreement, the Finance Ministry and CBN are expected to strengthen information sharing on government cash positions, financing plans, credit growth and foreign exchange flows.
“Better coordination starts with a common evidence base,” he said.
The Minister said the framework will provide for aligned macroeconomic assumptions, more consistent forecasts and clearer mechanisms for resolving areas where fiscal and monetary policies could work at cross purposes.
He added that the government was working with the National Bureau of Statistics to expand the quality and range of data available for economic policy decisions.
Oyedele also cited what he described as improving confidence in the Nigerian economy, including a balance of payments surplus of more than $5 billion in 2025 and external reserves of over $54 billion.
He pointed to 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.
The Minister, however, said the government’s ambition went beyond attracting short-term portfolio funds, stressing the need for patient capital that would support factories, infrastructure, technology and job creation.
He said this will require policy consistency and certainty, as well as a regulatory environment that did not impose unnecessary burdens on businesses.
He added that the framework will also consider the economic consequences of insecurity and illicit financial flows.
Oyedele said the Finance Ministry will continue to pursue fiscal discipline, improved liquidity management, stronger transparency and data systems, more efficient financing and reforms designed to increase production and ease structural inflation.
“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,” he said.
Cardoso: MoU formalises decades of collaboration
Cardoso described the signing 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 they worked in harmony.
The CBN governor stressed that the MoU did not create a new relationship between the two institutions, noting that they had collaborated for decades on inflation management, debt sustainability, budget financing, exchange rate stability and responses to economic shocks.
Rather, he said, the agreement formalised the longstanding relationship through structured processes for consultation, information exchange and policy coordination.
“This memorandum provides a structured framework for regular consultation, information exchange and policy coordination. It will strengthen collaboration in critical areas such as government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations, thereby enhancing policy coherence and the effectiveness of economic management,” Cardoso said.
He said the framework would transform a relationship built largely on established practice into one anchored by clear processes and enduring institutional commitment.
According to Cardoso, the new arrangement would create predictable mechanisms for engagement, improve decision-making and strengthen the institutions’ capacity to respond to emerging economic challenges.
The CBN governor said the timing was particularly important as the apex bank advances its transition towards an inflation-targeting framework, noting that the effectiveness of such a framework also depends on a supportive fiscal environment.
He said the MoU will provide the foundation for an operational framework through which both institutions could align their actions, minimise policy trade-offs and pursue shared economic objectives.
Cardoso commended Oyedele and the technical teams from both institutions for their roles in bringing the agreement to fruition.
He reaffirmed the CBN’s commitment to sound monetary policy, macroeconomic stability and financial system resilience, saying the strengthened partnership would contribute to building a more stable and productive Nigerian economy.
The agreement is expected to deepen cooperation in government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations, while preserving the distinct mandates and institutional independence of the Finance Ministry and the CBN.
