Structural Factors and Budget Deficits in Nigeria

Abstract

From records, many studies on public finance emphasis the problems of the Nigerian economy with focus on the revenue side
of the budget scrutinizing various ways of/ and means to improve on receipts. This paper has attempted to provide support
for the conjecture that certain structural characteristics, probably more related to the expenditure side of the budget than to
the revenue side, have made it more problematic for Nigeria to break out of the circle of budget deficits. Empirically, this study
seeks to ascertain those factors which might probably lead to increase in government deficit gap without a corresponding
increase in the level of economic development over the years. This study proposes that some structural factors have been
behind the ever teaming deficit gap of the Nigerian government. As such, four different factors were proposed and subjected
to statistical test in others to identify which of these factors truly deepen the government deficit gap in Nigeria. Having
subjected all proposed structural factors that could lead to increase in government budget deficit in Nigeria to statistical test,
the study reveals that economic development, lack of government control over expenditure and Government revenue growth
rate exhibit a positive and significant relationship, and thus deepens government budget deficit gap in Nigeria. The study,
therefore, suggests that lack of government control over its expenditure, growth rate of government revenue and economic
development pace are the major structural factors that deepen the budget deficit gap of the Nigerian economy. Hence, the
study concludes that government backwardness in terms of development and a very high degree of participation in the
commanding height of the economy makes it extremely difficult for the government to control its appetite for budget deficits.