The Federal Ministry of Finance and the Central Bank of Nigeria (CBN) have introduced a new framework aimed at improving coordination between fiscal and monetary policies as the country works to strengthen economic stability and manage inflation.
The two institutions signed a Memorandum of Understanding (MoU) designed to improve information sharing, policy alignment and cooperation on major economic decisions affecting Nigeria.
The agreement was announced in Abuja in a statement issued by the Ministry’s Head of Information and Public Relations Unit, Efe Ovuakporie.
New Framework to Improve Policy Coordination
Speaking at the signing ceremony, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the agreement would create a more structured relationship between the finance ministry and the apex bank.
He explained that the arrangement would ensure both institutions share relevant economic information, coordinate forecasts and address possible conflicts between government spending decisions and monetary policy.
According to him, the objective is to make cooperation a permanent feature of economic management rather than depending on individual relationships.
Fiscal and Monetary Policies Must Work Together
Oyedele noted that government borrowing, liquidity management, interest rates and financing costs are interconnected.
He said decisions involving exchange rates, tariffs, public expenditure and agricultural policies also influence inflation, government revenue and economic activities.
The minister stressed that both institutions would continue to maintain their separate responsibilities while recognising that their decisions affect the wider economy.
Inflation Reduction Remains Key Priority
Oyedele identified reducing inflation to sustainable single-digit levels as one of the major goals of the new framework.
He said achieving this would require disciplined government spending, effective liquidity management and policies addressing structural factors responsible for rising prices.
On food inflation, he said the ministry would collaborate with relevant agencies and state governments to strengthen grain reserves, improve agricultural productivity and invest in irrigation and farm-to-market infrastructure.
Government Rules Out Fuel Subsidy Return
The finance minister also stated that the government would not return to fuel subsidy payments.
He argued that reinstating subsidy would place additional pressure on public finances and foreign exchange resources.
Oyedele said improved foreign exchange stability and fuel tax exemptions had contributed to easing some price pressures.
Better Data for Economic Decisions
The minister highlighted the importance of reliable economic data in making effective policies.
He said the Ministry of Finance was working with the National Bureau of Statistics (NBS) to expand the quality and availability of economic information.
Under the new framework, both institutions will exchange information covering: government cash positions, financing plans, credit growth, foreign exchange movements, macroeconomic forecasts.
Oyedele described access to reliable data as essential for better economic coordination.
Nigeria Reports Economic Confidence Indicators
The minister pointed to recent economic indicators, including a reported balance of payments surplus exceeding $5 billion in 2025 and external reserves above $54 billion, as signs of improving confidence.
He also mentioned growth in non-oil exports and declining refined petroleum imports as domestic refining capacity increases.
According to him, the government’s priority is not only attracting financial investment but also encouraging capital that supports factories, infrastructure, technology and employment creation.
CBN Says Agreement Will Support Economic Stability
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, described the agreement as an important step towards strengthening Nigeria’s economic management system.
Cardoso said fiscal and monetary policies work best when implemented in harmony.
He explained that cooperation between both institutions would cover areas such as: government cash management, debt issuance planning, liquidity forecasting, economic analysis.
Move Comes Amid Inflation Targeting Plans
The CBN governor said the agreement comes at a significant period as the bank continues its transition towards an inflation-targeting framework.
He explained that achieving monetary policy goals requires support from a disciplined fiscal environment.
Cardoso reaffirmed the CBN’s commitment to maintaining sound monetary policy, financial stability and resilience within Nigeria’s banking system.
