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Government Budget Deficit and Economic Performance in Nigeria



 1.1 Background to the Study: 

The relationships between government budget deficits and macroeconomic performance have received tremendous attention amongst researchers and policy makers around the globe. Persistent increases in budget deficits have assumed greater height in many emerging economies like Nigeria (Oladipo and Akingbola, 2011). However, evidence has shown that government budget deficit has been an issue of discuss in Nigeria because of the persistent increase recorded since 2000 till date as shown on the figure 1 below. For example, budget deficit was about N 2 billion and N 3.9 billion in 1980 and 1981 respectively. In 1986, it rose to N8.2 billion and later fell to N5.8 billion in 1987. Notwithstanding the significant recorded fall from 1987 to 1999, between 2000 and 2004, there was an amazing increase which led to a record of about N 101 and N 609.2 billion in 2006 and 2007 respectively. However, considering the international financial crisis that eroded world economy in 2008, its ugly consequence which result to a sharp fall in demand for the nation’s crude oil, witnessed N0.56 trillion increases which stand to be over 2.5% of GDP. In addition, during the 2009 and 2010 fiscal years, Nigeria recorded about N249 billion and N1.1trillion respectively. Thus, in 2011 and 2012, it rose from N9, 152.5 billion to N9, 905.6 billion respectively (NBS, 2012). However, according to Keynesian theory on budget deficit, there is nothing wrong in government borrowing if it is properly channeled to boast economic performance of a country (Olusoji and Oderinde, 2011). The development of deficit financing is often traced to adoption of the Keynesian inspired public expenditure which Nigeria adopted to motivate economic performance. Keynes recommended deficit spending to moderate or end a recession. To him, when an economy is recording high unemployment, an increase in government purchases will help a market for business output thereby creating income which through multiplier effect encourages the demand for business output. The policy of deficit spending has however posed challenges to the Nigeria economy with regard to its effectiveness and the accumulation of debt, the justification of growth notwithstanding (Anyanwu and Oaikhenan, 1995; Ogboru, 2006).

Review project detailsComments
Number of Pages89 pages
Chapter one (1)Yes  Introduction
Chapter two (2)Yes  Literature review
Chapter three (3) Yes methodology
Chapter  four (4) Yes  Data analysis
Chapter  five (5) Yes Summary,discussion & recommendations
ReferenceYes Reference
QuestionnaireYes Questionnaire
Appendixyes Appendix
Chapter summaryyes 1 to 5 chapters
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