Linkage between Fiscal Policy and Poverty Reduction in Nigeria

Abstract

This study investigates the linkage between fiscal policy and poverty reduction in Nigeria using a descriptive analysis. It explores the effectiveness of fiscal policy tool, especially government expenditure, in addressing the level of poverty and economic growth in the country. The study found that government capital and recurrent expenditures have not significantly reduced the level of poverty in Nigeria because of a weak linkage, which has not allowed fiscal policy to reflect its true opportunity cost. This gap created loopholes in the implementation of the various measures of fiscal policy in the country. The study therefore concludes that the level of government capital expenditures in Nigeria have weak impact on the level of poverty in the country over the period of time covered. The study therefore recommends the formulation of stable macroeconomic policies that are consistent with the peculiarity of poverty situation in the country. This would promote productivity from which both the poor and non-poor would benefit.