The Federal Government has barred all Ministries, Departments, and Agencies (MDAs) from entering into contracts denominated in foreign currencies, as part of sweeping new fiscal control measures outlined in the 2025 Appropriation Act Implementation Guidelines.
According to the document issued by the Budget Office of the Federation, all MDAs must ensure that contracts are denominated solely in Nigerian Naira, and any deviation from this directive would require the prior approval of the Minister of Finance and Coordinating Minister of the Economy.
“MDAs are to ensure that their contracts are wholly denominated in Nigerian Naira,” the guideline states. “No MDA is authorised to enter a contract denominated in any foreign currency without the prior approval of the Honourable Minister of Finance and the Coordinating Minister of the Economy.”
The guideline also mandates MDAs to submit monthly budget performance reports by the 15th of every subsequent month. Failure to comply will lead to withholding of further capital or recurrent budget releases.
In a bid to tighten control over personnel costs, the Budget Office disclosed plans for regular audits of payroll systems and nominal rolls to eliminate fraudulent or unjustified entries. It also warned MDAs against initiating salary or promotion arrears on the Integrated Personnel and Payroll Information System (IPPIS) without clearance from the relevant committee.
Additionally, MDAs are required to submit monthly reconciliations of non-regular allowances received and account for surplus funds. The Auditor-General of the Federation has been tasked with monitoring compliance as part of ongoing audit programmes.
“No MDA is allowed to take any action that could increase personnel costs—such as fresh recruitment, payment of unapproved allowances, or staff replacement—without proper authorisation,” the document said, adding that violators will face sanctions.
The guideline also reinforced a new recruitment policy, mandating compliance with statutory ratios between academic and non-academic staff, as well as adherence to the five per cent employment quota for persons with disabilities.
On taxation, the Federal Government warned MDAs that they are not authorised to grant tax exemptions to any contractor or party. All exemptions must follow due process and receive legal and fiscal approvals through appropriate channels.
“MDAs that frequently incur tax expenditures through exemptions, waivers, or failure to enforce statutory tax obligations must stay within the annual tax expenditure cap set by the 2025 Appropriation Act,” it added.
Concerning support from development partners, the government directed all MDAs to route requests through the International Cooperation Department (ICD) in the Ministry of Budget and Economic Planning. All received support—whether in cash or kind—must be reported monthly to both the ICD and the Office of the Accountant-General of the Federation.
The directive is part of a broader government strategy to enforce discipline in budget execution, curb wastage, and align spending with national fiscal goals.
Earlier in May, President Bola Tinubu approved the “Renewed Hope Nigeria First” policy, which prioritises local goods, services, and expertise in all federal procurement activities. According to the Minister of Information and National Orientation, Mohammed Idris, the Executive Order to enforce the policy is in the works.
“This policy puts Nigeria at the centre of every kobo the government spends,” Idris stated. “Any business to be done by the government must place Nigerians first. If a local option exists, there is no reason whatsoever to import.”
Adewale Abimbola, a Lagos-based economist, welcomed the move, describing it as a vital fiscal control strategy to curb the misuse of foreign currencies in public contracts.
“It’s essentially designed to minimise corrupt practices around procurement,” he said, stressing the importance of monitoring and enforcement to ensure effectiveness.
Development economist Dr Aliyu Ilias described the ban on foreign-denominated contracts as long overdue. He said Nigeria’s foreign exchange challenges are worsened by the culture of pricing public and private transactions in foreign currencies.
“Most of our forex problems are because we pay for too many things in dollars—including contracts and even salaries,” Ilias said.
He argued that the government should not just require ministerial approval for such contracts but ban them entirely, warning that even approved transactions still exert pressure on the foreign exchange market.
Dr Ilias also called on private firms, NGOs, and diaspora-linked initiatives to embrace the naira in their financial dealings, stating that increased reliance on local currency would help stabilise the economy.
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