## Fiscal Policy in Nigeria: Any Role for Rules?

_IMF Working Papers, July 1, 2003_

## Source details

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## Bibliographic details
- Authors: Thomas Baunsgaard
- Published: July 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451857337.001

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### Summary
- Fiscal policy in oil-producing countries can be profoundly affected by oil revenue uncertainty and volatility.
- Policy formulation should factor in the exhaustibility of the natural resources and aim at reducing oil revenue volatility passed on to the economy.
- Past fiscal policy in Nigeria has not been successful in this regard, since both revenue and expenditure have been highly volatile, to a large extent reflecting oil price developments.
- The paper discusses the role an appropriately designed fiscal rule, nested within the long-run sustainable use of oil revenue, could have in providing a more stable framework for fiscal policy formulation.
- The paper also highlights practical implementation and transitional issues.

### Key findings
- Oil revenue uncertainty and volatility are central drivers of fiscal instability in oil-producing countries, including Nigeria.
- Both revenue and expenditure in Nigeria have been highly volatile, largely reflecting oil price developments.
- Sustainable fiscal policy should incorporate the exhaustibility of natural resources and aim to reduce the transmission of oil revenue volatility to the broader economy.

### Role of a fiscal rule
- An appropriately designed fiscal rule, aligned with long-run sustainable use of oil revenue, can provide a more stable framework for fiscal policy formulation.
- The rule should be designed to address oil revenue volatility and the nonrenewable nature of oil resources.

### Practical implementation and transitional issues
- The paper highlights practical implementation issues that need to be addressed when introducing a fiscal rule in Nigeria.
- Transitional issues are emphasized as important considerations in moving from past policies to a rule-based framework.

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## Content in this bundle

- **Fiscal Policy in Nigeria: Any Role for Rules? - WP/03/155**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/fiscal-policy-in-nigeria-any-role-for-rules-16728_