By Tony Obiechina, Abuja
The Federal Ministry of Finance and the Central Bank of Nigeria (CBN) have formalised a new framework for closer fiscal and monetary policy coordination, in an effort to strengthen economic stability, improve policy consistency and address inflation.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the MoU would institutionalise coordination through stronger information sharing, aligned macroeconomic assumptions, consistent forecasts and clearer mechanisms for resolving areas where fiscal and monetary policies could work at cross purposes.
Speaking at the signing ceremony in Abuja, Oyedele said the framework was designed to move coordination beyond personalities and make it a permanent feature of Nigeria’s economic management.
He stressed that while the Ministry and the CBN have distinct mandates and must retain their institutional independence, their policies ultimately affect the same economy and therefore require closer coordination.
He explained that government borrowing has implications for liquidity, interest rates and financing costs, while monetary policy affects government finances.
Exchange rates, tariffs, government spending and agricultural policies also have direct consequences for prices, revenue and economic activity.
Oyedele identified bringing inflation sustainably into single digits as a major focus of the framework, stressing that this could not be achieved through monetary policy alone. He said the Ministry would contribute through disciplined spending, sound cash and liquidity management and more efficient government financing, while fiscal interventions would address structural drivers of inflation, particularly food, energy, imported costs and logistics.
On food inflation, the Minister said the Ministry would work with relevant institutions and state governments to strengthen grain reserves, improve agricultural yields and irrigation, build climate resilience and address farm-to-market infrastructure gaps.
He also ruled out a return to fuel subsidy, saying it would put further pressure on public finances and the naira, while improved foreign exchange stability and tax exemptions on fuel had contributed to moderating prices.
Oyedele said better economic data would also be critical to effective policy coordination, noting that the Ministry was working with the National Bureau of Statistics to expand the quality and range of data available for policy decisions.
Under the new framework, the Ministry and the CBN will also strengthen information sharing on cash positions, financing plans, credit growth and foreign exchange flows. “Better coordination starts with a common evidence base,” he said.
The Minister said recent economic developments showed strengthening confidence in the Nigerian economy, citing a balance of payments surplus of more than $5 billion in 2025 and external reserves of over $54 billion.
He listed 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.
He, however, stressed that the government’s focus extended beyond short-term portfolio inflows to attracting patient capital that would translate into factories, infrastructure, technology and jobs.
“This required policy consistency and certainty and a regulatory environment that does not impose unnecessary burdens on businesses, while the coordination framework would also take account of the economic consequences of insecurity and illicit financial flows.
Oyedele explained that the Federal Ministry of Finance would continue to drive fiscal discipline, improved liquidity management, stronger transparency and data systems, more efficient financing and reforms aimed at increasing production and easing 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.
The CBN Governor, Olayemi Cardoso, described the signing as a significant step in strengthening Nigeria’s macroeconomic management and economic stability, noting that fiscal and monetary policies are complementary instruments whose combined impact is stronger when they work in harmony.
Cardoso said the MoU did not create a new relationship between the two institutions, which have collaborated for decades on inflation management, debt sustainability, budget financing, exchange rate stability and responses to economic shocks.
Rather, he said, it formalises that longstanding collaboration through structured processes for regular consultation, information exchange and policy coordination.
He said the framework would strengthen cooperation in areas including government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
The CBN Governor added that 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.
Cardoso commended Oyedele and the technical teams from both institutions for their roles in bringing the initiative to fruition, reaffirming the CBN’s commitment to sound monetary policy, macroeconomic stability and financial system resilience. He said the strengthened partnership would help build a more stable and resilient economy capable of creating greater opportunities for Nigerians.
