The Federal Government and the Central Bank of Nigeria (CBN) have moved to institutionalise coordination between fiscal and monetary policy, replacing an arrangement that had largely depended on the working relationship between successive economic managers.
The Federal Ministry of Finance and the CBN signed a Memorandum of Understanding (MoU) in Abuja on Friday, to establish a structured framework for aligning macroeconomic assumptions, economic forecasts, government financing and liquidity management.
The agreement is designed to reduce policy conflicts between fiscal and monetary authorities while strengthening the government’s response to inflation, particularly pressures arising from food, energy and logistics costs.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the significance of the agreement went beyond the signing itself, describing it as a move towards stronger economic institutions.
“Our mandates are distinct, but our outcomes are interconnected. Strong economies are not built around strong personalities. They are built around strong institutions,” Oyedele said.
Under the framework, the two institutions will work with more consistent projections for inflation, GDP growth, government revenue, liquidity, financing requirements and the external sector, while establishing stronger information-sharing mechanisms where fiscal and monetary measures could otherwise work at cross-purposes.
The framework also provides for closer coordination of government financing and cash management in an effort to limit the crowding out of private-sector credit.
On inflation, the government and the CBN are to pursue a whole-of-government approach combining disciplined fiscal spending with measures aimed at reducing supply-side costs, including grain reserves, farmer support, rural road investment and engagement with state governments over road levies and farm-access infrastructure.
The agreement further provides for expanded economic data, including producer-price, employment and productivity statistics, to support the CBN’s transition towards an inflation-targeting framework.
The CBN Governor Olayemi Cardoso said the agreement demonstrated Nigeria’s determination to strengthen its economic policy architecture, adding that institutional collaboration could improve policy outcomes, investor confidence and economic stability.
The development comes amid reported improvements in Nigeria’s external position, with the government putting the country’s external reserves above $55 billion and pointing to a balance-of-payments surplus of more than five billion dollars in 2025.
The government also cited Nigeria’s return to FTSE Russell’s Frontier Market classification and JPMorgan’s inclusion of Nigerian government securities in its new frontier local-currency bond index as evidence of improving investor access and confidence.