Full Article

This study investigated the impact of budget deficits on sustainable economic growth in Nigeria, Africa's largest economy, which faces persistent fiscal challenges. The ongoing mismatch between government spending and revenue collection, resulting in budget deficits, poses a significant threat to economic stability. Utilizing data from 1990 to 2022, sourced from the World Bank Development Indicators and the Central Bank of Nigeria Statistical Bulletin (2023), the study employed the Ordinary Least Squares (OLS) estimation technique and applies the Johansen co-integration test to confirm the long-term relationship between the variables at a 5% significance level. The variables considered are real gross domestic product (RGDP), budget deficit (BD), exchange rate (EXR), and inflation rate (INF). The findings reveal that increasing budget deficits significantly hinder economic growth. Additionally, there is a negative correlation between the exchange rate and RGDP, while inflation shows a positive and statistically significant relationship with RGDP, indicating that higher inflation rates are associated with increased economic output. The study concludes that budget deficits impede sustainable economic growth in Nigeria due to their detrimental effects on the economy. The policy implications highlight the need for fiscal discipline to achieve economic stability. Policymakers are recommended to prioritise reducing budget deficits and stabilising the exchange rate to promote long-term economic growth and stability.

Keywords: Budget deficits, Sustainable economic growth, Exchange rate, Fiscal discipline

Citation: Aladejana, , Ph.d, S.A., Alabi, , Adejare, J., , , Olaosebikan, , Ikeoluwa., O., Joseph, , & Alaba,, F. (2024). Addressing Budget Deficits to Promote Sustainable Economic Growth in Nigeria. International Journal of Innovative Research in Accounting and Sustainability, 9(4), 15-25.