The Federal Government and the Central Bank of Nigeria (CBN) have signed a new agreement aimed at strengthening coordination between fiscal and monetary authorities 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 apex bank as Nigeria moves towards a new inflation-targeting framework.
The Memorandum of Understanding on Fiscal-Monetary Policy Coordination is designed to improve information sharing and policy consultations while maintaining the CBN’s operational independence.
CBN Governor Olayemi Cardoso said the agreement would provide a structured framework for regular consultation between the two institutions. Areas covered include government cash management, debt issuance, liquidity forecasting, macroeconomic analysis and broader economic policy coordination.
The development comes as Nigeria continues to focus on controlling inflation and improving economic stability. Coordination between fiscal and monetary authorities is particularly important because government spending, borrowing and liquidity conditions can affect inflation and foreign exchange markets.
The framework is also expected to give policymakers a more coordinated approach to managing the government’s financial operations. Better forecasting of government cash flows and liquidity could help the authorities make more informed decisions about borrowing and monetary conditions.
Foreign exchange management is another major area covered by the agreement. Movements in the naira and the availability of foreign currency remain important concerns for businesses that rely on imported raw materials, equipment and other inputs.
For businesses and investors, greater coordination between the Finance Ministry and the CBN could provide clearer signals about the direction of economic policy. However, the effectiveness of the framework will depend on how consistently the agreed coordination mechanisms are implemented.
The agreement represents another step in Nigeria’s ongoing efforts to strengthen macroeconomic policy management as the government seeks to balance inflation control, economic growth, public finances and foreign exchange stability.
Officials are expected to continue consultations as the new framework is incorporated into economic policy implementation.
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