June 18, 2013

The Role Of Fiscal Policy In Promoting Growth

The paper examines fiscal policy as it influences growth through taxes
and service delivery. It also reviews Nigerias experience with fiscal policy
as well as challenges to its current system.

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Author:Menachem Katz

Publication Date: December, 2012

Document Size:31pages


Recent experience with fiscal policy

  • Prior to 2004 fiscal policy was pro-cyclicalsubjecting the economy to boom-bust cycles
  • During 2004-2008 , with oil price-based ruleand ECA, economy stabilized and inflation fell.
  • In 2009 and 2010 external shock and largespending expansion resulted in high budgetdeficits and depletion of ECA
  • Since 2012, fiscal policy has been tightened.




Related

 

Nigeria Economic Update (Issue 4)

Recently released labour force report by the NBS shows a quarter-over-quarter increase in Nigerias working age and labour force population. Working population rose from 110.29 million in 2017Q2, to 111.13 million persons in 2017Q32. The working age population in 2017Q3 constituted 85.08 million persons in the labour force (an increase from 83.94 million), of which 40 percent were either unemployed or underemployed.  Thus, total employed persons in the quarter reached 69.1 million.

Appropriation Act (Budget)

Appropriation Act (Budget): Capital expenditure remarkably increased in 2016 relative to preceding year, on the account of the present governments renewed commitment to infrastructure development.

Nigeria Economic Update (Issue 37)

Recent data by the CBN shows a decline in manufacturing capacity utilization by 2.0 percentage points to 50.7 percent in 2016Q2. Foreign exchange challenges in addition to cash squeeze in the review quarter, led to the decline in capacity utilization. This has hindered activities in the sector while impacting negatively on business confidence. Nonetheless, the CBN recently directed authorized FX dealers to dedicate 60 percent of FX purchases to manufacturers. This policy measure is therefore expected to meet the sectors critical FX need for the purchase of imported raw material and other machineries, while boosting the potential for economic growth in the long term.