Fiscal Restructuring and Economic Growth of Nigeria (1986–2024)

Abstract

This study investigates the relationship between fiscal restructuring and economic growth in Nigeria over the period 1986–2024. Real Gross Domestic Product (GDP) serves as the dependent variable, while the independent variables include the tax-to-GDP ratio, total debt as a percentage of government revenue, and fiscal balance (revenue minus expenditure). Data were sourced from the Central Bank of Nigeria Statistical Bulletin and analysed using the Error Correction Model (ECM). The findings indicate that the tax-to-GDP ratio exerts a statistically significant negative impact on economic growth. While total debt relative to government revenue exhibits a positive relationship with growth, the effect is not statistically significant. Fiscal balance, conversely, has a significant negative effect on economic growth. These results suggest persistent fiscal imbalances, underscoring the limited effectiveness of Nigeria’s fiscal restructuring efforts in fostering sustainable growth. The study recommends enhancing revenue mobilisation through tax base expansion, aligning debt management with fiscal capacity, and implementing prudent expenditure policies to achieve macroeconomic stability and promote long-term economic growth.