THE CORONAVIRUS PANDEMIC AND FISCAL SUSTAINABILITY IN NIGERIA

Abstract

The study will examine the impact of the coronavirus pandemic on Nigeria’s fiscal sector. This was undertaken on the premise that the sector is the lifeline of a developmental state like Nigeria which needs to deliver dividends to her citizens after two decades of un-interrupted democratic governance. The specific objectives of the study are to (i) examine the effect of the coronavirus pandemic on government revenue, expenditure and debt management in Nigeria. (ii) assess the government’s response in managing the Covid-19 effect on the fiscal sector in Nigeria and (iii) set the agenda for the post COVID-19 strategy for recovery and fiscal sustainability in Nigeria. The study adopted an exploratory data analysis approach, where it obtained secondary data for the period Q1 2016- Q2 2020 from publications of the National Bureau of Statistics, Central Bank of Nigeria, and National Council for Disease Control and the World Health Organization, Descriptive Statistical tools was used to analyze the data. The findings of the study revealed expected declines in total gross revenue, total federal expenditure, external reserves and GDP growth rates, but unexpected declines in Deficit financing and foreign debt servicing. There was increase in total public debt. So, the study makes the following recommendations; The growth in non-oil revenue must be sustained. Government must have to change its expenditure framework to ensure that capital expenditure is more than revenue expenditure. External reserve should be shored up immediately to a level that can sustain the economy for a reasonable period of time. The decline in deficit financing should be sustained by engaging in realistic budgeting. Foreign Debts should be used mostly for capital expenditure that will finance itself in the long run. Debt servicing strategies should be properly streamlined not to become a burden on the economy. Total public debts should not be allowed to grow beyond sustainable threshold.