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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Possible effects of a managed devaluation, debt reduction and pre-1986 budget practices on key fiscal targets and the domestic price level
Author:Garba, Abdul-GaniyuISNI
Periodical:The Nigerian Journal of Economic and Social Studies
Geographic term:Nigeria
Subjects:fiscal policy
monetary policy
Abstract:This study carries out an ex post simulation analysis of the possible effects of a managed devaluation of the naira, as proposed by the IMF, debt reduction, and pre-1986 budgetary practices on Nigeria's federal budget deficit, allocation of federal expenditure, public debt, and domestic prices. The results of the analysis indicate that a smaller devaluation of the naira than that which occurred would have reduced the burden of external debt service and the crowding-out of domestic debt service and non-debt federal expenditure, especially capital expenditure, but at the cost of lower federal retained revenue and higher deficit. The adoption of the three novel budgeting practices introduced by General Babangida in 1986-1993 (dedication/special accounts, extrabudgetary spending, and stabilization funds) during a period of high and persistent devaluation of the naira is inconsistent with fiscal reform and stability of domestic prices. External debt reduction, by contrast, makes fiscal reform and domestic price stability easier to attain. A combination of lower devaluation of the naira, external debt reduction, and reversion to pre-1986 budgeting practices would be the most effective in attaining fiscal reform, supporting social and economic infrastructure, and cutting inflation rates in Nigeria. App., bibliogr., notes, ref., sum.