An Examination of the Relationship Between Fiscal Consolidation and Economic Performance in Nigeria
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Background of the Study
Fiscal consolidation refers to the measures implemented to reduce budget deficits and public debt through prudent fiscal management. In Nigeria, persistent fiscal imbalances have prompted the adoption of consolidation strategies aimed at enhancing economic performance. These measures include expenditure cuts, revenue enhancements, and improved fiscal governance (Adeyemi, 2023). The rationale behind fiscal consolidation is to stabilize the macroeconomic environment, reduce reliance on external borrowing, and foster sustainable growth (Okoro, 2024). Recent reforms emphasize stringent budgetary controls and a focus on long-term fiscal discipline, which are essential in addressing the structural weaknesses of the Nigerian economy. Academic studies indicate that when fiscal consolidation is executed effectively, it can lead to lower inflation rates, improved investor confidence, and increased economic stability (Balogun, 2025). In the face of global economic uncertainties, the Nigerian government has increasingly prioritized consolidation as a pathway to resilient economic performance. The integration of fiscal discipline into national policy is viewed as a catalyst for structural reforms that ultimately enhance overall economic productivity. This study examines how fiscal consolidation measures influence key economic performance indicators, shedding light on both the benefits and potential trade-offs of these policies (Adeyemi, 2023; Okoro, 2024; Balogun, 2025).
Statement of the Problem
Despite the implementation of fiscal consolidation measures, Nigeria continues to struggle with economic volatility and sluggish growth. The challenges include rigid expenditure structures, political interference, and slow implementation of fiscal reforms (Okoro, 2024). These factors hinder the full realization of consolidation benefits, as budget deficits and public debt levels remain high. Furthermore, the anticipated improvements in economic performance have not consistently materialized, suggesting that consolidation efforts may be undermined by structural inefficiencies (Balogun, 2025). A critical evaluation is needed to determine whether fiscal consolidation effectively supports economic performance or if adjustments are necessary to overcome persistent fiscal challenges (Adeyemi, 2023).
Objectives of the Study
- To investigate the impact of fiscal consolidation on Nigeria’s economic performance.
- To identify the major challenges affecting fiscal consolidation efforts.
- To recommend policy strategies to enhance the effectiveness of fiscal consolidation.
Research Questions
- What is the relationship between fiscal consolidation and economic performance in Nigeria?
- Which factors impede effective fiscal consolidation?
- What policy interventions can improve the outcomes of consolidation measures?
Research Hypotheses
- Fiscal consolidation significantly improves economic performance in Nigeria.
- Structural inefficiencies negatively moderate the relationship between consolidation and performance.
- Enhanced fiscal discipline leads to better economic outcomes.
Significance of the Study
This study provides critical insights into the role of fiscal consolidation in stabilizing and enhancing Nigeria’s economic performance. The findings aim to guide policymakers in refining fiscal strategies to achieve sustainable growth, thereby benefiting the national economy and its citizens (Adeyemi, 2023; Okoro, 2024; Balogun, 2025).
Scope and Limitations of the Study
This study is limited to examining the relationship between fiscal consolidation and economic performance in Nigeria. It focuses solely on fiscal policy measures and their direct effects on macroeconomic indicators.
Definitions of Terms
• Fiscal Consolidation: Policies aimed at reducing budget deficits and controlling public debt.
• Economic Performance: A measure of the economic health of a nation, often indicated by GDP growth and stability.
• Fiscal Discipline: The practice of maintaining controlled government spending and effective revenue management.
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