CBN, Finance Ministry Sign MoU To Strengthen Fiscal-Monetary Policy Coordination
By Sunday Etuka
The Federal Government of Nigeria, through the Federal Ministry of Finance, and the Central Bank of Nigeria (CBN) on Friday signed a Memorandum of Understanding (MoU) aimed at deepening coordination between fiscal and monetary policy, in a move officials say will strengthen macroeconomic management and support lasting economic stability.
Speaking at the signing ceremony in Abuja, CBN Governor, Mr Olayemi Cardoso, described the event as a significant milestone in Nigeria’s pursuit of stronger macroeconomic management and sustainable prosperity, noting that it represented a shared commitment between both institutions to deepen collaboration in the interest of the economy and the Nigerian people.
Cardoso explained that fiscal and monetary policy remain complementary tools for managing a modern economy, with fiscal policy operating through government expenditure, taxation and borrowing, while monetary policy focuses on price stability and financial system soundness through the management of liquidity, interest rates and monetary conditions.
He said the combined impact of both policies, when properly coordinated, is far greater than their individual effects.
He clarified that the MoU does not establish a new relationship between the two institutions, noting that the CBN and the Ministry of Finance have collaborated for decades on issues including inflation management, debt sustainability, budget financing, exchange rate stability and economic reform programmes.
What the agreement does, he said, is formally institutionalise that longstanding collaboration.
According to Cardoso, the framework will provide for regular consultation, information exchange and policy coordination, strengthening collaboration in areas such as government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
He said this would enhance policy coherence and improve the overall effectiveness of economic management.
The CBN governor noted that the timing of the agreement is significant, coming as the apex bank advances its transition toward an Inflation Targeting framework, a monetary policy approach whose success, he said, depends not only on effective monetary policy but also on a supportive fiscal environment.
He added that the MoU would serve as the foundation for developing an operational framework to guide its implementation, with both institutions expected to be better positioned, through regular dialogue and coordinated policy assessments, to align their actions and pursue shared national economic objectives.
Cardoso commended the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, for his role in the initiative, describing his leadership as instrumental to its realisation.
He also praised the technical teams from both institutions for their work in bringing the agreement to fruition.
The CBN governor reaffirmed the bank’s commitment to sound monetary policy, macroeconomic stability and financial system resilience, stating that the partnership would help build a more stable and resilient economy capable of creating greater opportunity for Nigerians.
The signing was attended by senior officials from both the Federal Ministry of Finance and the Central Bank of Nigeria, including deputy governors of the apex bank and special advisers and directors from both institutions.
