Fiscal Policy and the Performance of the Nigerian Economy

Vollständiger Abstract

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This study evaluates the impact of fiscal policy on the performance of the Nigerian economy from 1987 to 2023 using an ex-post facto research design. Secondary data from the Central Bank of Nigeria (CBN) Statistical Bulletin, 2023, was analyzed with the E-views statistical package. Independent variables included total government expenditure, revenue, borrowing, and debt servicing costs, measured against the dependent variable, gross domestic product (GDP). Unit root tests showed all variables integrated at order (1). Johansen cointegration tests confirmed long-run relationships among the variables, and the error correction model indicated that total government expenditure has a negative and insignificant impact on the GDP of the Nigerian economy. Total government borrowing had a positive and significant impact on GDP. Total government revenue showed a positive but insignificant impact, while debt servicing costs were also positively significant. The study concludes that fiscal policy significantly influences economic performance in Nigeria. Recommendations to enhance economic performance include improving revenue utilization efficiency through stringent fiscal responsibility, prioritizing capital expenditure over recurrent spending, ensuring prudent borrowing with effective debt management, and adopting strategic debt servicing plans. These measures aim to maximize the economic benefits of fiscal policy and foster sustained economic growth.