Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the arrangement would make coordination between fiscal and monetary authorities more permanent and less dependent on the personalities occupying public offices.
The Federal Government and the Central Bank of Nigeria (CBN) have agreed to strengthen coordination of fiscal and monetary policies to control inflation, improve government borrowing and liquidity management, and protect private-sector access to credit.
The agreement, contained in a Memorandum of Understanding (MoU) signed by the Federal Ministry of Finance and the CBN, provides for regular consultation, information sharing, and joint policy assessment between the two institutions.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the arrangement would make coordination between fiscal and monetary authorities more permanent and less dependent on the personalities occupying public offices.
“Today matters not because we are signing a document, but because of what it represents. Our determination to institutionalise coordination between fiscal and monetary policy,” Oyedele said.
He said the two institutions have different responsibilities but operate within the same economy, making cooperation necessary for effective economic management.
“Government borrowing affects liquidity and interest rates. Monetary policy affects the government’s financing cost. Tariffs and exchange rates affect prices and revenue. Spending affects demand,” he said.
Oyedele said the new framework would provide for stronger information sharing, common macroeconomic assumptions, more consistent economic forecasts and clearer ways of resolving differences between fiscal and monetary authorities.
He, however, said the arrangement would not compromise the independence of the CBN.
“So this is independence with coordination. The operational independence of the central bank remains sacrosanct. Coordination must never become fiscal dominance,” he said.
According to him, the CBN will retain full independence in pursuing price and financial system stability, while the government will strengthen fiscal governance, accountability and cash management.
Oyedele said the government’s target is to bring inflation sustainably into single digits, adding that achieving this would require action beyond monetary policy.
“Inflation is, as a process, a whole-of-government agenda. Our objective is to bring inflation sustainably into single digits and keep it there. And that cannot be monetary policy’s job alone,” he said.
He explained that fiscal policy would contribute through disciplined government spending, better cash and liquidity management and more efficient financing that would not crowd out private businesses from accessing credit.
Oyedele also linked Nigeria’s inflation to structural problems, including food supply, imported costs, energy and logistics, which he said could not be solved by interest-rate policy alone.
He said the government would work on areas such as food reserves, better seeds and farm yields, irrigation, climate resilience and roads for moving agricultural produce to markets.
The minister also called for cooperation with state governments, particularly in removing unnecessary road levies and improving access roads to farms.
On fuel prices, Oyedele said the government wanted to achieve price stability without returning to discretionary fuel subsidy.
He said tax exemptions on oil and improved foreign exchange stability had already helped to moderate prices, warning that reversing existing policies could create further pressure on prices and affordability.
The minister also called for better economic data to support government decisions, saying poor or outdated information could weaken economic management.
He said the Ministry of Finance was working with the National Bureau of Statistics to provide additional data, including the producer price index, alongside consumer prices, employment and productivity information.
Oyedele said such information would help policymakers identify inflationary pressures before they reach consumers.
He added that economic growth should also be assessed by the number of real jobs created, rather than GDP growth alone.
The minister said fiscal and monetary authorities would share information on government cash positions, financing plans, credit growth and foreign exchange flows.
“Better coordination starts with a common evidence base,” he said.
CBN Governor Olayemi Cardoso said the MoU would turn the long-standing relationship between the two institutions into a more formal and structured arrangement.
He said the CBN and Ministry of Finance had worked together for decades on issues including inflation, debt sustainability, budget financing, exchange-rate stability, economic reforms and responses to domestic and global shocks.
“What distinguishes today’s event is the formal institutionalisation of that collaboration,” Cardoso said.
He said the agreement would cover government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and regular policy consultations.
According to him, predictable engagement between the two institutions should improve decision-making, reduce uncertainty and strengthen Nigeria’s ability to respond to emerging economic problems.
Cardoso said the agreement was particularly important as the CBN moves towards an inflation-targeting framework.
“The success of inflation targeting is known to rest not only on the effectiveness of monetary policy but also on the existence of a supportive fiscal environment,” he said.
The CBN governor said the framework would enable both institutions to align their actions, reduce policy conflicts and pursue common national economic objectives.
He said the ultimate objective was to build a more stable, resilient and productive economy capable of delivering broad-based prosperity.
CBN Deputy Governor Sani Abdullahi said the need for closer coordination had become more important because the same economic shocks could affect both fiscal and monetary policy at the same time.
He cited disruptions to energy and shipping routes in the Middle East as an example.
According to him, such disruptions could raise oil prices and increase Nigeria’s export earnings, government revenue and foreign exchange inflows, while higher energy, freight and insurance costs could also increase domestic prices.
He said global inflationary pressures could also affect interest rates, capital flows and financing conditions.
“This is why coordination matters,” Abdullahi said.
He said the agreement would require timely and reliable information sharing, joint technical analysis, scenario planning and stress testing on issues of common interest.
Abdullahi said the framework would be particularly useful in government cash management, liquidity forecasting, domestic financing operations and assessing economic conditions.
He said Nigeria must prepare for different oil-price and production scenarios because the country could not know with certainty how long external disruptions would last or where oil prices would be in the coming months.
The CBN deputy governor said the institutions should assess in advance how different oil-price and production outcomes would affect government revenues and foreign exchange inflows.
He said the success of the MoU would ultimately depend on implementation rather than the signing ceremony.
“The value of this agreement will be determined by its implementation. Its success will not be measured by judicial ceremony alone, but by what happens after today,” he said.
Permanent Secretary, Federal Ministry of Finance, Raymond Omachi, said the agreement would establish a transparent framework for closer alignment between fiscal choices and monetary strategies.
He said one of its main objectives was to balance inflation and economic growth so that government spending would not unnecessarily increase inflationary pressure while monetary tightening would not needlessly weaken growth and employment.
Omachi said the framework would also improve the coordination of government borrowing and money-market liquidity management to reduce the risk of government borrowing limiting credit available to the private sector.
He said the agreement would cover exchange-rate and revenue stability, including foreign exchange management, trade balances and Nigeria’s ability to withstand economic shocks.
The Permanent Secretary said the framework would also formalise regular policy dialogue and data sharing between technical officials of the Ministry and the CBN.
He said the agreement was aimed at creating a more predictable investment environment, strengthening public confidence and building a more resilient economic foundation.
For Oyedele, the broader objective is to ensure that fiscal and monetary policies no longer work at cross-purposes.
“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.
He said the two institutions would coordinate without compromising independence, share information while maintaining accountability, and resolve differences through evidence and in the national interest.
The minister said the long-term test of the arrangement would be whether Nigeria’s economic management could withstand future shocks without relying on individual personalities to maintain coordination.
“The greatest success will be measured when coordination no longer depends on who holds these offices,” Oyedele said.
