THE IMPACT OF FISCAL POLICIES ON THE ECONOMIC GROWTH OF NIGERIA

THE IMPACT OF FISCAL POLICIES ON THE ECONOMIC GROWTH OF NIGERIA

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

The growth and stability of the Nigerian economy has been uneven over the years. As such, the country’s economy has experienced a great many internal and external shocks and turmoil over the decades. changes in expectations, partly due to the accelerator. Similarly, identified external factors, wars, revolutions, population growth rates and migration, technology transfer and change, and the openness of the Nigerian economy are some of the factors that may influence tax policy implementation.

Cyclical fluctuations in national economic activity have led to periodic increases in national unemployment and inflation rates, as well as imbalances in the external sector (Gbosi, 2001). In other words, fiscal policy is an important weapon of economic stabilization, taken to regulate and control the amount, cost, availability and direction of money in the economy in order to achieve a particular macroeconomic policy. Encompassing action. The economy (Gbosi, 1998). Other stabilizing tools, especially monetary and exchange rate policies, are therefore used to address the identified problems, and cannot be left to market forces of supply and demand (Ndiyo and Udah 2003). This may include tax increases or decreases, government spending that forms the basis of fiscal policy, but in practice government policy requires a combination of fiscal and monetary policy tools to stabilize the economy. there is. All Economic Problems (Ndiyo and Udah, 2003).

The Nigerian economy started in recession in his early 1980s and developed into recession in the mid-1980s. This depression continued without him recovering until the early 1990s. As such, the government has continuously launched fiscal measures to deal with, stabilize and overcome the shrinking economy. Based on the experience of the Great Depression, the government’s response to the Great Depression was to increase government spending (Nagayasu, 2003). According to Okunromu (1993), the Nigerian economy is unproductive and reluctant to manage to achieve macroeconomic stability, and the Nigerian economy is not functioning well. This is reflected in unfavorable inflationary trends, government fiscal policies, exchange rate volatility, falling and rising gross domestic product, unfavorable balance of payments, and rising unemployment, all of which destabilize the macroeconomic economy. is a sign of Therefore, the Nigerian economy cannot function well in an environment of low capacity utilization, not only because of Nigeria’s unstable and unpredictable government fiscal policy, but also because of the lack of foreign exchange (Isaksson, 2001).

1.2   STATEMENT OF THE PROBLEM

It is true that the market mechanism alone cannot fulfill all domestic economic functions. Public policies, such as fiscal policy, must therefore stabilize, modify, direct and complement market forces. Fiscal policy is one of the policies adopted by governments to correct market imperfections and failures. In Nigeria, the government has used these policies at various times to stabilize and manage the economy, promote job creation, ensure economic stability, maintain price stability and balance of payments profitability, and maintain exchange rate stability. We have achieved desirable macroeconomic goals, such as ensuring stability and maintaining stable economic growth. The fiscal thrust used to manipulate the economy depends on the goals that must be achieved at any given time. State intervention in the economy through fiscal policy was increasing

1.3   OBJECTIVES OF THE STUDY

1. A study of the impact of fiscal policy on stabilizing the Nigerian economy.

2. A study of the factors affecting the proper implementation of various tax policies in Nigeria.

3. Determines the outcome of fiscal policies implemented by the Nigerian government.

1.4   RESEARCH QUESTIONS

1. What is the impact of fiscal policy on stabilizing the Nigerian economy?

2. What are the factors that influence the proper implementation of various tax policies in Nigeria? 3. What are the consequences of the fiscal policies implemented by the Nigerian government?

1.5  SIGNIFICANCE OF THE STUDY

The significance of this research is as follows.


1. The findings of this study provide useful guidance to the Nigerian government, financial sector stakeholders, and the general public on how to use fiscal policy as a tool to stabilize the Nigerian economy.

2. This work will also serve as a resource base for other academics and researchers interested in doing further research in this area later on, providing a substantial new explanation of the subject when applied.

1.6 Scope/Limitations of Investigation

This study on the impact of fiscal policies on stabilizing the Nigerian economy describes various fiscal policies adopted by the Nigerian government, given their impact on stabilizing the Nigerian economy.

1.6  SCOPE/LIMITATIONS OF THE STUDY

Financial Constraints – Lack of funding tends to prevent researchers from obtaining relevant materials, literature, or information and efficiently conducting data collection (internet, questionnaires, and interviews).

Time Constraints – Researchers will be engaged in this study and other academic studies simultaneously. As a result, less time is spent on research work.