Academic Scientific JournalsWays and Means Advances in Deficit Financing: Silver Bullet or White Elephant in Nigeria’s Fiscal Management?
Keywords:
Deficit financing, fiscal deficits, monetary policy, public debt, Ways and Means AdvancesAbstract
After the mid-1970s oil crisis, Europe began to experience substantial deficits, which grew further after 1980. This was mostly due to government expenditure rather than low tax collections. The budgetary deficits of developing nations are often higher than those of developed nations. Fiscal deficits in developing nations are exacerbated by ripple effects of the global slowdown, structural fragility of public finances, and persistently high debt levels. Ways and Means Advances have become a critical option in deficit financing particularly in developing countries around the world. The study aims to assess the impact of Ways and Means Advances on deficit financing in Nigeria. Documentary research design was adopted to carry out the investigation. The study established that Nigeria has consistently experienced fiscal deficits, even during periods of economic upturns. It also maintained that the Federal Government's frequent use of Ways and Means Advances exposes flaws in the administration of public finances given the existing lack of effective institutional safeguards and repeated recourse to direct monetary financing could increase threats to macroeconomic stability. The study recommends constrained budgeting, regulated borrowing, fiscal prudence, increased Foreign Direct Investment, and formulation of a legal basis for Ways and Means securitization as strategies to remediate fiscal deficits and long-term Ways and Means Advances in Nigeria's fiscal management.
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