By Abiodun Folarin
WorldStage— The Central Bank of Nigeria (CBN), and the Federal Ministry of Finance have formalised a new framework for fiscal monetary policy coordination aimed at strengthening macroeconomic stability, improving policy coherence and supporting sustainable economic growth.
The CBN Governor, Mr. Olayemi Cardoso, disclosed this on friday at the signing of a Memorandum of Understanding (MoU) on Fiscal-Monetary Policy Coordination between the Federal Government, represented by the Ministry of Finance, and the apex bank.
Cardoso said the agreement would institutionalise the longstanding collaboration between both institutions by providing a structured framework for regular consultation, information exchange and coordinated policy assessments.
According to him, the framework will strengthen cooperation in critical areas including government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
He said the agreement was particularly significant as the CBN advances its transition towards an Inflation Targeting framework, noting that the effectiveness of such a monetary policy regime also depends on a supportive fiscal environment.
“Fiscal and monetary policies remain two important and complementary instruments for the management of a modern economy,” Cardoso said.
He explained that 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 broader monetary conditions.
The CBN governor noted that when both policies operate in harmony, their combined impact on the economy could be greater than their individual effects.
He stressed that the MoU did not establish a new relationship between the CBN and the Ministry of Finance, as both institutions had collaborated for decades on issues including inflation management, debt sustainability, budget financing, exchange rate stability, economic reform programmes and responses to domestic and global shocks.
“What distinguishes today’s event is the formal institutionalisation of that collaboration,” he said.
Cardoso said the agreement would transform a relationship built largely on practice into one anchored by clear processes and enduring institutional commitment.
He added that predictable mechanisms for engagement would improve decision-making, reduce uncertainty and strengthen Nigeria’s capacity to respond to emerging economic challenges.
The governor said the MoU would also provide the foundation for developing an operational framework to guide its implementation, with regular dialogue and information sharing expected to help both institutions align actions and minimise policy trade-offs.
He said the ultimate objective was to build a more stable, resilient and productive economy capable of delivering broad-based prosperity for present and future generations.
Cardoso further noted that the agreement came at a time of heightened global economic uncertainty, geopolitical tensions, financial market volatility and evolving development challenges, making stronger coordination among key economic institutions increasingly important.
He said improved institutional coordination could strengthen economic stability, enhance investor confidence and improve the effectiveness of policy outcomes.
The CBN governor commended the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, for his commitment to collaboration and sound economic governance, as well as the technical teams from both institutions for their role in developing the framework.
He reaffirmed the CBN’s commitment to sound monetary policy, macroeconomic stability, financial system resilience and the long-term prosperity of Nigerians.
The signing, he said, reinforced the shared commitment of the CBN and the Ministry of Finance to work together in the national interest.
