FISCAL SUSTAINABILITY UNDER DECLINING OIL REVENUE IN NIGERIA
Zacchaeus Kunemoemi, PhD
Volume 6 Issue 1
Abstract
The study examined the impact of fiscal sustainability under declining oil revenue in Nigeria covering 1990 to 2025. Debt to Gross Domestic Product Ratio, Debt to Revenue Ratio, Fiscal Balance and Exchange Rate were used as a surrogate for fiscal sustainability while oil revenue served as the dependent variable. World Banks World Development Index (WDI) and computed data were the major sources of data collection while the Augmented Dickey Fuller (ADF) Unit Root test and the Autoregressive Distributive Lag (ARDL) were used to test the variables and analyze the hypothesis. The empirical result revealed that fiscal sustainability is correlated with oil revenue according to the bound test. Further findings showed debt to revenue ratio, fiscal balance and exchange rate are positive and significantly relate with oil revenue while debt to gross domestic product ratio had a negative but and significant impact on oil revenue Thus, it was concluded that fiscal sustainability had a substantial impact on oil revenue in Nigeria it was therefore, recommends that the Federal Ministry of Finance and the Budget Office of the Federation should strengthen fiscal discipline and improve public financial management to sustain healthy fiscal balances. This will improve fiscal sustainability and enable the government to maximize the benefits of oil revenue for long-term economic development. Keywords: Debt to Gross Domestic Product Ratio, Debt to Revenue Ratio, Fiscal Balance, Exchange Rate Oil Revenue
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