Fiscal Forecasting Errors in Nigeria
Selected Issues Papers, July 11, 2025
Source details
- Canonical URL
- Fiscal Forecasting Errors in Nigeria
Other formats
Bibliographic details
- Authors: Salma Khalid
- Published: July 11, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229017794.018
Key Findings
- Large fiscal forecast errors occurred over the 2011-2023 period for a range of fiscal aggregates including total revenues, expenditures, and the fiscal deficit.
- Revenue forecast errors are driven by optimistic budget projections for oil production which consistently exceed actual outturn.
- Capital expenditures exhibit systematic optimism bias, with outturn falling short of budget allocations.
- Large fiscal forecast errors limit the usefulness of the budget as a framework for the authorities' fiscal policy intentions.
Analysis of Causes
- Optimistic budget projections for oil production underpin recurring overestimation of revenues.
- Systematic optimism in capital spending allocations leads to persistent under-execution of capital outlays.
- Weaknesses in forecasting capacity and incentive structures reduce the accuracy and credibility of budget projections.
Policy Recommendations
- Enhance the capacity of the macro-fiscal unit responsible for forecasting.
- Publish internal and external forecast performance reviews to increase transparency and accountability.
- Strengthen political commitment to budget targets to improve adherence and credibility.
- By improving forecast quality, the budget can better serve as a credible guide to fiscal policy in Nigeria.
Subject Areas Covered
- Budget execution and treasury management
- Budget planning and preparation
- Expenditure
- Macroeconomic and fiscal forecasts
- Public financial management (PFM)
- Revenue forecasting
- Tax policy
Source: "Fiscal Forecasting Errors in Nigeria", Salma Khalid, July 11, 2025.
Content in this bundle
- Fiscal Forecasting Errors in Nigeria; IMF Selected Issues Paper No. 2025/095; July 11, 2025