mORGANABLE economy watch
Cardoso noted that although the Ministry of Finance and the CBN had historically collaborated on issues such as inflation management, exchange rate stability and responses to economic shocks, the new agreement formally institutionalises the relationship and sets clear expectations for ongoing cooperation.
KaNo—
The Federal Government of Nigeria and the Central Bank of Nigeria have signed a landmark agreement aimed at strengthening coordination between fiscal and monetary authorities as part of broader efforts to curb inflation, manage public debt and stabilise the economy.
The Memorandum of Understanding on Fiscal-Monetary Policy Coordination, signed in Abuja on Friday, establishes a formal framework for collaboration between the Federal Ministry of Finance and the apex bank, focusing on key areas such as inflation control, government borrowing, liquidity management and foreign exchange stability.
Speaking at the signing ceremony, the Governor of the Central Bank, Olayemi Cardoso, said the agreement would deepen cooperation between both institutions while preserving the independence of the central bank.
He described the pact as a structured platform for regular consultations, data sharing and coordinated decision-making, noting that it would enhance policy coherence and improve the overall effectiveness of economic management.
“This Memorandum provides a structured framework for regular consultation, information exchange and policy coordination,” Cardoso said.
“It will strengthen collaboration in critical areas such as government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.”he added.
Cardoso Says Fiscal, Monetary Policies Complementary
The CBN governor explained that fiscal and monetary policies are inherently complementary, with government spending, taxation and borrowing decisions shaping economic activity, while monetary policy influences liquidity conditions, interest rates and price stability.
“The timing of this agreement is particularly noteworthy as the Central Bank of Nigeria advances its transition towards an inflation-targeting framework,” he said, adding that such a system requires strong alignment between fiscal discipline and monetary policy actions.
Cardoso noted that although the Ministry of Finance and the CBN had historically collaborated on issues such as inflation management, exchange rate stability and responses to economic shocks, the new agreement formally institutionalises the relationship and sets clear expectations for ongoing cooperation.
He emphasised that closer coordination would not undermine the operational independence of the CBN, stressing that the central bank would retain full authority over its core mandate of maintaining price and financial system stability.
“The operational independence of the Central Bank remains sacrosanct. Coordination must never become fiscal dominance,” Oyedele said.
The minister disclosed that the government was targeting a sustainable reduction in inflation to single digits, noting that monetary policy alone would be insufficient to achieve the objective.
“Our objective is to bring inflation sustainably into single digits and keep it there, and that cannot be monetary policy’s job alone,” he said.
“Fiscal policy must play its part through disciplined, disinflationary spending, sound cash and liquidity management, and efficient financing that does not crowd out the private sector.”he added.
Finance Minister Identify Inflation Drivers
Oyedele identified key structural drivers of inflation in Nigeria, including high food prices, imported inflation, energy costs and logistics challenges.
He said the government would address these issues through measures such as strengthening grain reserves, boosting agricultural productivity, expanding irrigation and improving farm-to-market infrastructure.
“A return to subsidy would create a fiscal collapse, pressure the naira, and ultimately undermine the price affordability it seeks to provide,” he said.
As part of the agreement, both institutions are expected to improve the sharing of critical economic data, including government cash positions, borrowing plans, credit growth trends and foreign exchange flows.
This, officials say, will support better policy alignment and reduce uncertainty in financial markets.
The Deputy Governor of the CBN in charge of Corporate Services, Muhammad Abdullahi, said the agreement had become even more important in the context of global economic uncertainty and geopolitical tensions.
He cited developments in the Middle East and other regions, noting that disruptions to energy markets and global shipping routes could simultaneously affect oil prices, government revenue, inflation and capital flows.
“This is why coordination matters,” Abdullahi said. “Coordination does not mean blurring respective mandates or compromising the independence required for effective monetary policy.”
He explained that the framework would support regular consultations, joint technical analysis, scenario planning and stress testing, enabling both institutions to better anticipate and respond to economic shocks.
According to him, the arrangement would also allow policymakers to assess how fluctuations in oil prices and production levels could impact fiscal revenues, foreign exchange inflows, external reserves, inflation and overall financing conditions.
“Uncertainty is not an argument for waiting; it is an argument for preparedness,” he added.
In his remarks, the Permanent Secretary of the Federal Ministry of Finance, Raymond Omachi, said the agreement was designed to strike a balance between controlling inflation and supporting economic growth.
“The core objective of the framework is to achieve a balance between inflation control and growth,” Omachi said.
He added that the pact would align government borrowing plans with money market liquidity conditions to prevent excessive public sector borrowing from crowding out private sector credit and driving up interest rates.
Analysts say the agreement could mark a turning point in Nigeria’s macroeconomic management if effectively implemented, particularly in an environment characterised by high inflation, currency volatility and rising debt levels.
They note that stronger coordination between fiscal and monetary authorities is critical for restoring investor confidence, stabilising the naira and creating conditions for sustainable economic growth.
World Bank Mobile $22bn In Private Capital For African Economies
Meanwhile, in a separate development, the World Bank Group said it mobilised $22bn in private capital for African economies in its 2026 fiscal year, highlighting growing investor interest in emerging markets.
According to the World Bank, private capital mobilisation across developing countries more than tripled from $35bn in 2022 to $112bn in 2026, with strong growth recorded in both lower-middle-income and upper-middle-income economies.
The President of the World Bank Group, Ajay Banga, said the institution had reformed its approach to make it easier and faster to crowd in private investment.
“Three years ago, our shareholders and clients were clear: utilise World Bank Group financing and knowledge to mobilise more private capital and become a better partner to the private sector,” Banga said.
He added that the organisation had since streamlined its processes and adopted a more unified approach to delivering financing and advisory support.
Experts say increased private capital flows into Africa could complement domestic reforms such as Nigeria’s new fiscal-monetary coordination framework, potentially improving investment, infrastructure development and economic resilience.
