The Central Bank of Nigeria (CBN) and the Federal Ministry of Finance have signed a Memorandum of Understanding (MoU) to institutionalise effective coordination of the nation’s fiscal and monetary policies with a view to boosting the nation’s economic growth on a sustainable basis.
Speaking during the signing of the MoU in Abuja on Friday, the CBN Governor, Olayemi Cardoso, described the agreement as a significant milestone in Nigeria’s economic management framework, noting that it formalizes decades of collaboration between the apex bank and the Finance Ministry and provides a structured mechanism for regular consultation, information sharing and coordinated policy implementation.
He clarified: “This memorandum provides a structured framework for regular consultation, information exchange and policy coordination. It will strengthen collaboration in critical areas such as government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations, thereby enhancing policy coherence and the effectiveness of economic management.
“It transforms a relationship built on practice into one anchored by clear processes and enduring institutional commitment. By establishing predictable mechanisms for engagement, the framework will improve the quality of decision-making, reduce uncertainty and strengthen our capacity to respond effectively to emerging economic challenges.
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“The timing of this agreement is particularly noteworthy as the Central Bank of Nigeria advances its transition towards an inflation-targeting framework. Across the world, 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.
“The Memorandum will also provide the foundation for developing the operational framework that will guide its implementation. Through regular dialogue, information sharing and coordinated policy assessments, both institutions will be better positioned to align their actions, minimise policy trade-offs and pursue shared national objectives.
“The ultimate goal is clear: to build a more stable, resilient and productive economy capable of delivering broad-based prosperity for present and future generations of Nigerians”, the CBN governor added.
Cardoso said the MoU was far beyond the signing of a document but represented a shared commitment by the apex bank and the ministry to strengthen macroeconomic stability and deliver sustainable prosperity for Nigerians.
The banker explained: “Fiscal and monetary policies remain two important and complementary instruments for the management of a modern economy. While fiscal policy influences economic activity through government expenditure, taxation and borrowing decisions, monetary policy promotes price stability and financial system soundness through the management of liquidity, interest rates and monetary conditions. When these policies work in harmony, their combined impact is far greater than their individual efforts.”
Cardoso maintained that when these policies work in harmony, their combined impact remained far greater than their individual efforts.
He recalled that although the apex bank and the ministry had worked together for decades on inflation management, debt sustainability, budget financing, exchange rate stability and responses to domestic and global economic shocks, adding that the new MoU institutionalises that partnership through clear processes and enduring commitments.
Specifically, Cardoso said the MoU established a structured framework for collaboration in critical areas such as government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations, and expressed optimism that the pact would improve policy coherence, enhance the quality of decision-making, reduce uncertainty and strengthen the country’s ability to respond effectively to emerging economic challenges.
The banker also linked the agreement to the bank’s ongoing transition to an Inflation Targeting framework, pointing out that successful inflation targeting globally depends not only on effective monetary policy but also on a supportive and disciplined fiscal environment.
Cardoso said the ultimate goal of the partnership would build a more stable, resilient and productive economy capable of delivering broad-based growth and prosperity for present and future generations, adding that the signing of the MoU comes at a time of heightened global economic uncertainty, geopolitical tensions and financial market volatility, making stronger coordination between key economic institutions more important than ever.
He added that the partnership would strengthen investor confidence, improve policy outcomes and reinforce Nigeria’s economic policy architecture.
Cardoso commended the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, for his commitment to sound economic governance and collaboration, as well as the technical teams of both institutions for their professionalism in bringing the initiative to fruition.
This is even as he reaffirmed the apex bank’s commitment to sound monetary policy, macroeconomic stability, financial system resilience and the long-term prosperity of the Nigerian people, saying the agreement reinforces an enduring partnership in the national interest.
Commenting on the pact, Oyedele harped on the need for the two authorities to closely work together and still be maintaining their respective autonomies, given the fact that they were work in the interests of the Nigerian economy.
The minister expatiated: “Good economic management requires independent institutions, but independence does not mean isolation. Fiscal and monetary authorities have distinct mandates, but we serve the same economy.
“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. Our mandates are distinct, but our outcomes are interconnected. That is the philosophy behind this MOU. We are institutionalising coordination.
“We are not starting from scratch like the governor said already. We already have the Economic Management Team, the National Economic Council, and legal linkages between the ministry and the bank.
“The CBN Act provides for the bank’s autonomy, while its governance architecture includes representation from the ministry of finance.
This MOU makes those linkages more deliberate and effective through stronger informational sharing, aligned macroeconomic assumptions, more consistent forecasts, and clearer mechanisms for resolving areas where fiscal and monetary actions may pull in different directions”, he added.
