The Federal Government and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU) to strengthen coordination on inflation, public debt, government borrowing, liquidity and foreign exchange management.
The agreement, signed in Abuja on Friday, establishes a formal framework for cooperation between the Federal Ministry of Finance and the CBN as Nigeria moves towards an inflation-targeting monetary policy framework.
CBN Governor Olayemi Cardoso said the agreement would improve coordination in government cash management, debt issuance, liquidity forecasting, macroeconomic analysis and policy consultations.
Cardoso said closer fiscal and monetary coordination was necessary because government spending, taxation and borrowing decisions affect economic activity, while monetary policy influences liquidity, interest rates and price stability.
He said the agreement was particularly significant as the CBN advances its transition towards inflation targeting, adding that the framework would support regular consultations, information sharing and coordinated policy planning.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the framework was designed to prevent fiscal and monetary policies from working at cross purposes.
Oyedele, however, stressed that the CBN’s operational independence would remain intact, noting that coordination between the government and the apex bank would not amount to fiscal dominance.
He said the Federal Government was targeting a sustainable reduction in inflation to single digits, adding that monetary policy alone could not address the country’s inflation challenges.
According to Oyedele, fiscal policy would also focus on disciplined government spending, improved cash and liquidity management and efficient financing to reduce pressure on the private sector.
The minister identified food prices, import costs, energy and logistics as major structural drivers of inflation.
He said the government would continue to pursue measures including stronger grain reserves, improved agricultural production, irrigation and better access roads to farms.
Oyedele also ruled out a return to fuel subsidy, warning that such a policy could place additional pressure on public finances and the naira.
The new framework will also facilitate greater data sharing between the Finance Ministry and the CBN on government cash positions, borrowing plans, credit growth and foreign exchange flows.
Officials said the agreement would support joint technical analysis, scenario planning and stress testing to enable both institutions to better respond to economic shocks and changing global conditions.
The Federal Government and CBN said the framework would help align borrowing plans with money-market liquidity management, while supporting price stability, economic growth, financial stability and resilience to external shocks.
