The Federal Government has prohibited all Ministries, Departments, and Agencies (MDAs) from entering into contracts denominated in foreign currencies, under new fiscal control measures outlined in the 2025 Appropriation Act Implementation Guidelines.
According to a document issued by the Budget Office of the Federation, all MDAs must ensure that contracts are strictly denominated in Nigerian Naira. Any deviation from this directive must receive prior approval from the Minister of Finance and Coordinating Minister of the Economy.
“MDAs are to ensure that their contracts are wholly denominated in Nigerian Naira,” the guideline states. “No MDA is authorised to enter a contract denominated in any foreign currency without the prior approval of the Honourable Minister of Finance and the Coordinating Minister of the Economy.”
The guideline further mandates MDAs to submit monthly budget performance reports by the 15th of every subsequent month. Failure to comply will result in the suspension of capital or recurrent budget disbursements.
To curb inflation in personnel costs, the Budget Office has also announced plans for regular audits of payroll systems and nominal rolls to eliminate fraudulent or unjustified entries. It warned MDAs against initiating salary or promotion arrears on the Integrated Personnel and Payroll Information System (IPPIS) without proper clearance from the relevant committee.
In addition, MDAs must submit monthly reconciliations of non-regular allowances and account for any surplus funds. The Auditor-General of the Federation has been assigned the responsibility of monitoring compliance through ongoing audit programmes.
“No MDA is allowed to take any action that could increase personnel costs—such as new recruitment, payment of unapproved allowances, or staff replacement—without proper authorisation,” the guideline states, warning that violators will face sanctions.
A new recruitment policy has also been reinforced, requiring MDAs to comply with statutory ratios between academic and non-academic staff, and to uphold the five per cent employment quota for persons with disabilities.
On tax matters, the government reminded MDAs that they are not authorised to grant tax exemptions to any contractor or party. Any exemptions must undergo the appropriate legal and fiscal processes for approval.
“MDAs that frequently incur tax expenditures through exemptions, waivers, or failure to enforce statutory tax obligations must stay within the annual tax expenditure cap set by the 2025 Appropriation Act,” the document added.
Regarding support from development partners, all MDAs are now required to route requests through the International Cooperation Department (ICD) of the Ministry of Budget and Economic Planning. All financial or material support received must be reported monthly to both the ICD and the Office of the Accountant-General of the Federation.
These measures form part of a broader strategy to enforce budget discipline, reduce waste, and align federal spending with Nigeria’s fiscal priorities.
Earlier in May, President Bola Tinubu approved the “Renewed Hope Nigeria First” policy, which prioritises local goods, services, and expertise in all federal procurement. According to Minister of Information and National Orientation Mohammed Idris, an Executive Order to enforce the policy is underway.
“This policy puts Nigeria at the centre of every kobo the government spends,” Idris said. “Any business to be done by the government must place Nigerians first. If a local option exists, there is no reason whatsoever to import.”
Adewale Abimbola, a Lagos-based economist, applauded the measure as a crucial step toward curbing misuse of foreign currencies in public contracts.
“It’s essentially designed to minimise corrupt practices around procurement,” he said, stressing that robust monitoring and enforcement will be key to its success.
Development economist Dr Aliyu Ilias said the ban on foreign-denominated contracts was long overdue, noting that the country’s foreign exchange woes are partly driven by pricing both public and private transactions in foreign currencies.
“Most of our forex problems are because we pay for too many things in dollars—including contracts and even salaries,” he said.
He urged the government to go beyond requiring ministerial approval and impose a total ban on such contracts, warning that even authorised deals continue to strain the foreign exchange market.
Dr Ilias also called on private firms, NGOs, and diaspora-backed initiatives to adopt the naira in their transactions, arguing that broader use of the local currency would contribute to economic stability.
