For years, fiscal and monetary authorities have worked at cross purposes in Nigeria.
While the CBN raised rates and tightened liquidity to fight inflation, the Federal Government kept spending and borrowing to fund deficits. Government borrowing then competed with businesses for funds, pushing up costs.
To close the gap, the Federal Ministry of Finance and the CBN signed a Memorandum of Understanding on Fiscal-Monetary Policy Coordination on September 18.
The deal creates a formal system for joint consultation on inflation, borrowing, debt issuance, liquidity, FX and external shocks.
CBN Governor Olayemi Cardoso said it provides a structured framework for consultation, information sharing and coordination on cash management, debt planning and liquidity forecasting.
The test is tough. Inflation moderated to 15.39% in August 2026, but public debt hit N159.35trn by March 2026 and the MPR remained at 26.5% in July. Credit to government is growing far faster than credit to businesses.
Yet growth is returning. GDP grew 4.43% in Q2 2026, up from 3.89% in Q1 and 4.23% a year earlier.
Minister of Finance, Taiwo Oyedele, said the goal is single-digit inflation, but the CBN cannot do it alone.
“Fiscal policy must play its part: disciplined, disinflationary spending; sound cash management; efficient financing that does not crowd out the private sector,” he said.
Food inflation was still 19.57% in August. Oyedele said supply issues like insecurity, poor rural roads, storage gaps and energy costs must be fixed.
On borrowing, debt rose from N97.34trn in Dec 2023 to N159.35trn in March 2026. Domestic debt alone rose 11% year-on-year to N87.40trn, with Treasury Bills up 30.45% to N16.57trn.
CBN data show credit to government jumped 65.5% from N23.93trn in April 2025 to N39.60trn in April 2026, while private sector credit rose only 8% to N80.59trn.
Permanent Secretary, Finance Ministry, Raymond Omachi said the framework will align borrowing with liquidity management to prevent crowding out and optimise rates.
CBN Deputy Governor, Dr Muhammad Abdullahi, said the value of the agreement will be judged by implementation, not the signing ceremony.
Leave a comment