Policy Analysis
Fiscal policy is the use of public spending and taxation to affect the economy, particularly macroeconomic conditions.
The Federal Government must constantly monitor and analyze economic activity and act to maintain a non-inflationary growing economy through spending or taxing legislation.
One of the areas NABRO provide professional services is in the area of Fiscal Policy Analysis.
Nigeria's Fiscal Policy and Economic Policy
Real GDP growth in Nigeria decreased to 2% in the third quarter of 2022, while year-on-year inflation reached 21% in October, with food inflation approaching 24%. About 63 percent of Nigeria's population is multidimensionally poor, while the federal government's debt service-to-revenue ratio reached 83 percent in the first eight months of 2022. In short, the country has enormous fiscal-macroeconomic issues that will affect current and future administrations.
Without fiscal policy, a country cannot attain macroeconomic stability. Fiscal policy is necessary for economic growth and stability. It can be used to regulate the manufacturing and consumption of specific goods, services, and products. The government boosts aggregate demand by lowering taxes and boosting spending. It also increases demand by lowering taxes and increasing transfer payments. These policies raise average household earnings and encourage customers to spend. Fiscal policy effects aggregate output and employment via increasing infrastructure expenditure, in addition to managing the demand side of the economy. Overall, fiscal policy may be used to redress economic imbalances during recessions and depressions.
Nigeria must address a number of issues in order to achieve a more integrated and comprehensive fiscal policy framework, with a focus on improved domestic resource mobilization, increased expenditure efficiency, alternative sources of fiscal-deficit financing consistent with macroeconomic stability and growth, reduced or eliminated quasi-fiscal activities, and effective coordination between monetary and fiscal policy.
NABRO analyzes these issues in order to guarantee that the country's economic plan stays valuable.