The Central Bank of Nigeria (CBN) and the Federal Ministry of Finance have signed a Memorandum of Understanding (MoU) aimed at improving coordination between monetary and fiscal authorities in managing the Nigerian economy.
The agreement was signed in Abuja by CBN Governor Olayemi Cardoso and the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
Speaking during the signing ceremony at the CBN headquarters, Cardoso said the agreement reflects the commitment of both institutions to strengthen cooperation in promoting economic stability and sustainable growth.
He explained that fiscal and monetary policies are important tools for managing the economy, with fiscal policy covering government spending, taxation and borrowing, while monetary policy focuses on areas such as inflation, interest rates, liquidity and financial system stability.
Cardoso said better coordination between the two policies would improve their overall impact on the economy.
He noted that the MoU does not establish a completely new relationship between the CBN and the Ministry of Finance, as both institutions have collaborated over the years on issues including inflation, debt management, government financing, exchange rate stability and responses to economic shocks.
However, he said the new agreement would provide a formal structure for their cooperation instead of leaving the level of engagement to the discretion of individual officials.
According to him, the MoU will promote regular consultations, information sharing and policy coordination in areas such as government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy discussions.
Cardoso said the framework would help improve decision-making, reduce uncertainty and strengthen the country’s ability to respond to emerging economic challenges.
He also linked the agreement to the CBN’s move towards an inflation-targeting framework, noting that effective inflation targeting requires not only appropriate monetary policy but also a supportive fiscal environment.
The governor said the agreement would provide a basis for developing an operational framework for its implementation, allowing both institutions to regularly exchange information and coordinate their assessment of economic conditions.
He added that the broader objective was to support the development of a stable, resilient and productive Nigerian economy capable of creating wider prosperity.
Oyedele, in his remarks, said closer cooperation between the two institutions was necessary, while stressing that their respective independence and mandates would remain intact.
He said independent institutions could still work together because their decisions ultimately affect the same economy.
The minister explained that government borrowing can influence liquidity and interest rates, while monetary policy can affect the government’s cost of financing. He added that tariffs and exchange rates can influence prices and government revenue, while government spending can affect demand.
Oyedele said the MoU would therefore institutionalise coordination between fiscal and monetary authorities.
He noted that existing platforms, including the Economic Management Team and the National Economic Council, already provide avenues for cooperation, while the CBN Act also establishes institutional links between the bank and the Ministry of Finance.
According to him, the new agreement would make these existing relationships more deliberate through improved information sharing, better alignment of economic assumptions, more consistent forecasts and clearer processes for addressing situations where fiscal and monetary policies may conflict.
The two institutions said the MoU is expected to strengthen Nigeria’s overall economic policy management and support greater macroeconomic stability.
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