Fiscal-monetary truce must translate growth into development — Alliance
The Alliance for Economic Research and Ethics Ltd/Gte has urged the Federal Government and the Central Bank of Nigeria, CBN, to ensure that their new fiscal-monetary coordination translates economic growth into tangible improvements in Nigerians’ living standards.
The Alliance made the call in an analysis titled, “The Wedding of the Two Elephants: Why Nigeria’s Fiscal-Monetary Truce Must Now Marry Growth to Development,” following the September 18, 2026 Memorandum of Understanding between the Federal Ministry of Finance and the CBN.
It commended the two institutions for agreeing to align macroeconomic assumptions, improve information sharing, coordinate government financing and cash management, and work together on inflation while maintaining the CBN’s operational independence.
According to the Alliance, the agreement represents a significant shift from the longstanding disconnect between fiscal and monetary policy authorities.
It, however, warned that coordination alone would not be sufficient unless the resulting policies translated economic growth into poverty reduction, jobs and improved access to basic services.
The group cited Nigeria’s 4.43 per cent year-on-year GDP growth in the second quarter of 2026 and 3.87 per cent growth recorded in 2025, but noted that real GDP per capita grew by only 1.9 per cent in 2025.
It also referenced the 2022 National Multidimensional Poverty Index, which found that 62.9 per cent of Nigerians, equivalent to 132.92 million people, were multidimensionally poor.
The Alliance said the World Bank had projected that about 52.5 per cent of Nigerians would live below its international poverty line in 2025.
It acknowledged recent improvements in the economy, including the decline in annual-average inflation from 33.2 per cent in 2024 to an estimated 23 per cent in 2025, international reserves of $45.5 billion at the end of 2025 and Nigeria’s restoration to FTSE Russell Frontier Market status from September 21, 2026.
However, it warned that high government borrowing costs remained a major constraint on economic development.
According to the group, Federal Government interest payments accounted for an estimated 53.2 per cent of government revenue in 2025, compared with 40.8 per cent in 2024.
It also said banks held government securities equivalent to 22 per cent of their total assets, arguing that the development could restrict credit available to private businesses.
To ensure that fiscal and monetary coordination benefits poorer Nigerians, the Alliance proposed the introduction of what it described as a “Poverty Governor” alongside inflation targeting.
Under the proposal, major fiscal and monetary decisions would be accompanied by estimates of their likely effects on the bottom 40 per cent of the population.
It also recommended a legally backed plan to reduce government interest payments to below 30 per cent of revenue by 2028, with savings redirected towards food systems, rural roads and primary healthcare.
The group further called for measures to encourage banks to increase private-sector lending and reduce excessive concentration of bank assets in government securities.
On inflation, the Alliance urged the government and CBN to complement monetary policy with supply-side measures targeting food, energy and transportation costs.
It recommended strategic grain reserves, improved security along agricultural corridors and logistics reforms to reduce the cost of transporting food from farms to markets.
The Alliance also urged the government to institutionalise the fiscal-monetary coordination framework to ensure that it survives changes in political leadership and election cycles.
It further called for clearer public communication of the poverty impact of major economic policies.
The group said the ultimate measure of the September 18 agreement should not be macroeconomic statistics alone, but whether Nigerians experience improved food affordability, job opportunities, access to healthcare and other measurable improvements in living standards.
“Growth is a means. Development — human, shared, visible — is the destination,” the Alliance said.
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