CBN, Finance Ministry Formalise Fiscal-Monetary Coordination as Inflation Targeting Looms

• The CBN and Federal Ministry of Finance have signed an MoU to institutionalise coordination on debt, liquidity and macroeconomic policy.

• Olayemi Cardoso says the framework will improve information sharing, policy coherence and economic decision-making.

• The agreement comes as the CBN advances its transition towards an inflation-targeting framework.

September 18, () – The Central Bank of Nigeria (CBN) and the Federal Ministry of Finance have formalised a framework for fiscal and monetary policy coordination, seeking to strengthen macroeconomic management and improve policy coherence.

The agreement was sealed through a Memorandum of Understanding (MoU) signed on Friday, with CBN Governor Olayemi Cardoso describing it as a significant step towards stronger economic management and lasting stability.

Speaking at the signing ceremony, Cardoso said the agreement would institutionalise a collaboration between the two institutions that has existed for decades but has largely been based on established practice.

He said fiscal and monetary policies are complementary tools of economic management, with government spending, taxation and borrowing shaping economic activity, while monetary policy focuses on price stability, liquidity, interest rates and financial system soundness.

Framework targets debt, liquidity management

According to Cardoso, the MoU provides a structured framework for regular consultation, information exchange and policy coordination between the CBN and the Ministry of Finance.

The framework will cover areas including government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.

Cardoso said formalising the relationship would establish predictable mechanisms for engagement, improve the quality of policy decisions and reduce uncertainty in economic management.

“It transforms a relationship built on practice into one anchored by clear processes and enduring institutional commitment,” he said.

The CBN governor said closer coordination would also help the authorities manage policy trade-offs and respond more effectively to emerging domestic and global economic challenges.

Inflation targeting adds urgency

Cardoso said the timing of the agreement was particularly important as the CBN advances its transition towards an inflation-targeting framework.

He noted that the effectiveness of inflation targeting depends not only on monetary policy but also on a supportive fiscal environment, making coordination between the central bank and fiscal authorities critical to achieving price stability.

The MoU will also provide a foundation for developing the operational framework that will guide its implementation, with both institutions expected to use regular dialogue, information sharing and coordinated policy assessments to align their actions.

The governor said the ultimate objective was to build a more stable, resilient and productive economy capable of delivering broad-based prosperity.

Stronger policy coordination

Cardoso said the CBN and Ministry of Finance had historically worked together on issues including inflation management, debt sustainability, budget financing, exchange-rate stability, economic reform programmes and responses to domestic and global shocks.

He said the formal framework would strengthen that partnership at a time when economies globally are dealing with geopolitical tensions, financial-market volatility and other economic disruptions.

Cardoso commended Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, for his commitment to the initiative, while also recognising the technical teams from both institutions for developing the framework.

He reaffirmed the CBN’s commitment to sound monetary policy, macroeconomic stability and financial-system resilience, saying stronger institutional cooperation would support Nigeria’s long-term economic prospects.