Agreement Targets Inflation, Government Borrowing, Liquidity Management and Private-Sector Credit
The Federal Government and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU) to strengthen coordination between fiscal and monetary policies.
The agreement provides for regular consultations, information sharing and joint policy assessments aimed at controlling inflation, improving government borrowing and liquidity management, and protecting private-sector access to credit.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the framework would institutionalise cooperation between fiscal and monetary authorities and make it less dependent on the individuals occupying public offices.
Oyedele stressed that the arrangement would not compromise the operational independence of the CBN, saying the central bank would retain responsibility for price and financial system stability.
He said the government was targeting sustainable single-digit inflation, noting that achieving the goal would require coordinated action beyond monetary policy, including disciplined government spending, improved cash management, food production, energy supply and logistics.
The minister said fiscal authorities would also pursue more efficient government financing to prevent public borrowing from crowding out private businesses seeking credit.
On fuel prices, Oyedele said the government was pursuing price stability without returning to discretionary fuel subsidies. He said tax exemptions on oil and improved foreign exchange stability had helped moderate prices.
He also called for improved economic data to guide policy decisions, saying the Ministry of Finance was working with the National Bureau of Statistics to provide additional information on producer prices, employment and productivity.
CBN Governor Olayemi Cardoso said the MoU would formalise the long-standing collaboration between the central bank and the Finance Ministry on inflation, debt sustainability, budget financing, exchange-rate stability and economic reforms.
He said the framework would cover government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and regular policy consultations.
Cardoso said stronger coordination was particularly important as the CBN moves towards an inflation-targeting framework, noting that its success would require a supportive fiscal environment.
CBN Deputy Governor Sani Abdullahi said coordinated policy-making was necessary because the same external shocks could affect government revenue, foreign exchange inflows, inflation, interest rates and financing conditions.
He said the agreement would facilitate timely information sharing, joint technical analysis, scenario planning and stress testing, particularly around oil prices, production, government revenues and foreign exchange inflows.
Permanent Secretary of the Federal Ministry of Finance, Raymond Omachi, said the framework would help align fiscal decisions with monetary strategies while balancing inflation control with economic growth and employment.
He added that better coordination of government borrowing and money-market liquidity management would help reduce the risk of public borrowing limiting credit available to the private sector.
Oyedele said the long-term objective was to ensure that fiscal and monetary policies did not work at cross-purposes and that effective coordination would continue regardless of who occupies the offices in the future.
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