The Federal Government and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU) to institutionalise coordination between fiscal and monetary authorities, as Nigeria seeks stronger macroeconomic stability and a more predictable policy environment.
The agreement, signed in Abuja on Friday by Taiwo Oyedele, Finance Minister and Coordinating Minister of the Economy, and Olayemi Cardoso, CBN Governor, establishes a structured framework for regular consultation, information sharing and joint policy assessment.
The move comes as the CBN advances its transition towards an inflation-targeting framework, which places greater emphasis on price stability and clearer monetary policy transmission.
Cardoso said the MoU formalises a relationship that has existed between the CBN and the Ministry of Finance for decades, covering issues including inflation management, debt sustainability, budget financing, exchange-rate stability and responses to domestic and global economic shocks. “What distinguishes today’s event is the formal institutionalisation of that collaboration,” Cardoso said.
Under the agreement, the CBN and Finance Ministry will strengthen cooperation in areas including government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
The framework is also expected to improve information sharing, align macroeconomic assumptions and forecasts, and provide clearer mechanisms for resolving areas where fiscal and monetary policies may work at cross-purposes.
Cardoso said stronger coordination would create more predictable channels of engagement, improve economic decision-making and strengthen the authorities’ capacity to respond to emerging economic shocks.
He also stressed that the timing was important because of the CBN’s move towards inflation targeting.
According to him, successful inflation targeting depends not only on effective monetary policy but also on a supportive fiscal environment.
Oyedele said the MoU recognises that the fiscal and monetary authorities have separate mandates but operate within the same economy. “Good economic management requires independence of institutions but independence must not mean isolation,” he said.
He explained that government borrowing can affect liquidity, interest rates and private-sector credit, while monetary policy influences the government’s financing costs.
Similarly, tariffs and exchange rates can affect prices and government revenue, while public spending influences demand. “Our mandates are distinct but our outcomes are interconnected,” Oyedele said.
The minister said the agreement is not intended to create a new relationship between the two institutions, noting that existing mechanisms already include the Economic Management Team and National Economic Council.
Instead, the MoU is designed to make coordination more deliberate and less dependent on the personalities occupying key offices.
Oyedele also stressed that the CBN’s operational independence would remain intact and that greater coordination should not translate into fiscal dominance.
