Funding Options for Budget Deficit in a Resource Rich Country
Main Article Content
Abstract
This study investigates various funding options for Nigeria’s annual budget deficit, utilizing quarterly data spanning the period from 2011q1 to 2021q4. To achieve the study's objective, the Vector Error Correction model was employed, establishing the existence of a long-run relationship among the series. Findings indicate that tax revenue exhibits a higher rate of re-adjustment to equilibrium in the short run compared to other funding options, suggesting its greater effectiveness. This is followed by external borrowing and domestic borrowing. However, the Granger causality test reveals that tax revenue does not Granger-cause economic growth in Nigeria, implying inefficiency in Nigeria's tax revenue. This situation might necessitate broadening the tax base in the economy and improving overall government fiscal operations to narrow the persisting deficit in the budget.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors retain copyright. The journal’s current publication licence is Creative Commons Attribution 4.0 International (CC BY 4.0): CC BY 4.0 licence. Readers may copy, share and adapt licensed material, including for commercial use, provided they give appropriate credit, link to the licence and indicate changes. No additional restrictions may be imposed. Third-party material is covered only where the article explicitly states that it is included in the licence; otherwise permission may be required. Authors grant the journal the right of first publication. This policy takes effect on 6 October 2026. Earlier articles retain the licence expressly stated in their published version unless the rights holders authorise a change.