Governor of Central Bank of Nigeria, CBN, Godwin Emefiele has said that there is need for continuous interaction between fiscal and monetary authorities so as to jointly decide issues relating to policy design and implementation.
He stated this in a keynote address during the Fiscal Liquidity Assessment Committee, FLAC retreat in Abuja yesterday.
The CBN boss asserted that without the foregoing, the overall policy framework will be voided of the requisite credibility, following the long-term inconsistency of policy mixes and signals. “This ultimately undermines the effectiveness of monetary policy,” he said.
He added that policy coordination ensures commitment to mutually agree upon objectives thus helping to circumvent the problem of time inconsistency that may arise with the design of policies.
Emefiele also said that such move would enhance policy credibility, anchors public expectations and ensures sustainability of fiscal and monetary policy thereby promoting macroeconomic stability.
Stressing the importance of coordination, the CBN governor said that monetary policy is adopted for short-run fine-tuning of prices and output trajectories, while fiscal policy affects the traverse of a broader range of economic and social variable for long-run macroeconomic stabilisation.
He added that policy coordination provides the headroom for a symbiotic realisation of both the fiscal and monetary policy objectives in a coherent and efficient manner.
He also asserted that the retreat would avail the participants the opportunity brainstorm and synergise ideas on how to restructure, re-orientate, reinvent and restrategize in order to diversify the country’s economy and shield the economy from the vagaries of exogenous markets.
Speaking in the same vein, Director, Monetary Policy Department CBN, Moses Kpeghur Tule said that considering the developments around the nation’s fiscal and monetary operations, the need to be proactive in designing a coordinated approach towards managing the Nigerian economy cannot be overemphasised.


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