ABSTRACT
Fiscal Deficit has being found to be one of the most important aspects of fiscal policy management. The main focus of this study is to analyze the effects of fiscal deficit on economic development in Nigeria using simple percentage to analyze the variables.
This simple tables was used to determine the effect of fiscal deficit on the growth rate of the Nigeria economy, money supply, inflation and fiscal deficit.
It was therefore recommended that fiscal deficit should be reduced effectively so that the Nigeria economy can develop to very high standard. Hence fiscal reforms will need to be decisive, transparent and equitable if they are to receive public support if they are to be successful.
TABLE OF CONTENT
CHAPTER ONE
INTRODUCTION
1.1. Background of the study
1.2. Problem statements
1.3. Objectives of the study
1.4. Hypothesis
1.5. Significance of the study
1.6. Scope of the study
1.7. Limitation of study
CHAPTER TWO
2.1. Literature Review
2.2. Introduction
2.3. Macroeconomic Framework of Fiscal deficits
2.4. Fiscal deficit and inflation
2.5. Overview of Nigeria’s fiscal performance
2.6. Towards sustainability of deficits an macroeconomic stability in Nigeria.
CHAPTER THREE
Methodology
3.1. Population of the study
3.2. Sample size of the study
3.3. Sources of data
3.4. Method of data collection
3.5. Method of data analysis
CHAPTER FOUR
4.1. Data presentation
4.2. Data analysis
CHAPTER FIVE
5.1. Summary of findings
5.2. Recommendations
5.3. Conclusions
BIBLIOGRAPHY
APPENDIX
CHAPTER ONE
INTRODUCTION
1.1.BACKGROUND OF THE STUDY
One of the most important aspects of fiscal policy is the management of fiscal deficit, such fiscal deficit refers to the excess of the public sector spending over its revenue; such fiscal deficit has been at the forefront of macroeconomic adjustment. However, fiscal adjustment was recommended to developing countries [including all African countries] during the 1980’s, as being able to lead them out of their economic problems. It is broadly noted that fiscal deficit – a key fiscal indicator influences economic growth. Good fiscal management preserves access to foreign lending and avoids the crowding out of private investment while economic growth stabilizes the budget and improved the fiscal state of the countries. The virtuous circle of growth and good fiscal management is one of the strongest argument for a policy of low fiscal deficit.
The decade of the 1960’s and 1970’s are often called “Golden years” for developing countries in most economic development history. This is because of the fact that the growth rate of these countries was not only high, but was internally generated mostly and it increased their investment with least reliance on external sources. From 1970s and early 1980s most of the economic growth of less developed nations was debt laden as they gradually maintained current account deficit [World Bank 1999].
In Nigeria, to speed up economic growth after experiencing internationally oil glut, made government to spend more of it revenue. This made the country to join other countries like Columbia and Ghana, which also experience fiscal deficit.
According to Anyanwu [1997], the Nigeria deficit was contracted for different reasons, such as financing of trade, execution of projects and provision of social and economic needs of the citizens including infrastructure, education and health facilities.
The major source of revenue has been through taxation, oil and other sources of revenue. The experiences of the countries like Mexico in 1982 and Nigeria since 1981 have however marked the end of an era of belief in the non-detrimental nature of an unrelieved current account deficit has assumed critical dimension. Slow growth in sub-Sahara Africa in general and Nigeria in particular has been blamed on a number of factors including constantly deteriorating terms of trade, high rate of inflation, poor investment, inappropriate domestic policies as well as subsequent credit rationing [Mankin and Ball, 1998].
Several attempts have been made to reserve this deteriorating trend, this has led to the introduction of various domestic economic policies and management of fiscal policy applied by Nigeria. Various programmes has been initiated by the International Monetary Fund and the World Bank eg. Structural Adjustment programme [SAP]. Despite all these attempts, the Nigeria economy has continue to experience over heating from the growth of fiscal deficit.