Fiscal Policy and Strategic Financial Management Efficacy in Nigeria: Co-integral Regression Approach

Abstract

This study examines the relationship fiscal aggregates and balance of payments, anchored on strategic financial management efficacy. Successive Nigerian governments had pursued various programmes to revitalize and synergize the economy. One of these is the Debt Conversion Programme (DCP). The conversion was for acquisition of government privatized enterprises, establishment of new projects, and enhancement of portfolio management. The proceeds were to be utilized to boost production using local inputs for better employment generation. With strategic financial management, fiscal policy is expected to bring about favourable balance of payments for the economy. Essentially, fiscal aggregates pertaining to regulation and deregulation dispensations in Nigeria are analyzed using co-integral regression approach, with secondary data contained in publications of Federal Ministry of Finance (FMF) and Central Bank of Nigeria (CBN). The results indicate that balance of payments has significant relationship with fiscal aggregates such as government expenditure, private investments, foreign capital inflow, and foreign capital outflow. The strategic imperatives underscore selective import restriction and productive budgetary appropriation. Paradoxically, as much as doing fiscal policy contributes towards curbing inflation, it takes strategic financial management efficacy to make the hypothetical become unequivocal in redefining the nation’s macroeconomic fundamentals.

Key Words: Balance of payments, Fiscal policy, Strategic financial management