The current global economic crisis is unprecedented. The fiscal policy is the only solution to the Global Economic Crisis as advocated by Keynes. the mortgage industry in the U. and it’s having a catastrophic effect on the financial well being of millions of people around the world. The 1 Suleiman is a Lecturer at the Department of Economics. The conclusion is that the Global Economic Crisis does impact negatively on the Nigerian budget. as well as the policy initiatives that can be employed to minimize the impact from the external shocks. and the recommendation is made on how the impact could be minimized.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies ASSESSMENT OF THE IMPACT OF GLOBAL FINANCIAL CRISIS ON THE NIGERIAN BUDGET SULEIMAN.S represent about 21% of the global economy and impact of U. through the response of the Nigerian oil revenue from the external Abstract There is no doubt that Nigerian budget have come under the pressure due to the on going global financial crisis. ‘Alan Greenspan” the former head of the US reserve system called it an “an event that occurs once in 100 years’. Nigeria Conference Proceeding. Keffi.During the early 2004. there had been speculations of a possible United States recession. The U. in the history of the modern world. Introduction Since 2007. due to huge debt burden caused by the collapse of the mortgage industry.S enjoyed an unprecedented boom where by mortgage brokers enticed prospective buyers with inadequate income or poor credit history in to taking mortgage loans with little or no down payments. 2010 Page 1  .S in early 2004 until the mid 2007 when the bubble burst . Dahiru 1 Sdahiru97@yahoo. Zaria-Nigeria. The paper adopts a simple descriptive method of analysis based on secondary data. 9-11 March. The paper explores the impact of the Global Financial Crisis on the Nigerian Budget.S recession includes sub-prime –mortgages crisis which pushed up credit costs world wide and forced European and Asian banks to write down billions of dollars in holdings. Nasarawa State University. Faculty of Administration. Volume 1. Ahmadu Bello University. The first causalities were Fannie May and Freddie Mac who were forcefully taken over by the Federal Reserve Bank (FRB) in September 2008. The current crisis is rooted to the mortgages loan crisis (sub-prime loans) which became heightened in the U. The analysis is based on both the oil revenue and public expenditure.

The developing economies too are in recession are even the worst hit.S and the other developed economies connected with the crisis as well as it’s capacity to absorb the shocks.S has the largest single market in the world. reduction in the demand for commodities e. because the global economic crisis has affected the developing economies through labor market and another investment banking giant MERILL LYNCH filled for bankruptcy and was bought out by bank of America for $50 billion. Volume 1. Reducing foreign direct investment. The worst impact of global economic crisis on Nigeria is dwindling petroleum earnings means less budgetary resources. worsening poverty. Nigeria Generates 85% of its Faculty of Administration. the eight largest producer of crude oil and a strong member of the organization of petroleum producing countries (OPEC). falling reserves. Nigeria is not left out. because it led to the massive unemployment. Nigeria Conference Proceeding. Subsequently. Nasarawa State University. because Nigerian’s economy is crude oil export oriented. Nigeria. 2010 Page 2  . Although the impact on a particular country will depend on the degree of exposure of it’s economy to U.S is in recession and this is affecting the whole world economy because U. Keffi. including Nigeria. Nigeria is a one commodity –based economy which makes our situation more precarious. for both the developed and developing countries. Now the U. This in a way explains the rapidly falling price of oil in the world market from $140 per barrel nine months ago to around $45! This development has forced government to review the 2009 budget benchmark down words from $65 to $45. lower industrial output.S when the financial authorities announced the bankruptcy of LEHMAN BROTHERS.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies stock wave also came from the U. another organization American International Group (AIG). Amid the shock over the collapse of Lehman Brothers.S was at the blink of collapse. The Nigerian economy experienced an oil boom in 1970s. THE LARGEST Insurance Company in the U. reducing growth rate. the global economy has witnessed what some experts describes as the worst global financial crisis in decades. The Global Economic Crisis has serious consequences. we are affected through international trade. falling demand for commodities. There is a saying that when U. Reducing capital outflows. worsening poverty etc. Fall in the price of crude oil will result to decline in government revenue. jobs etc. greater attentions has been paid to the consequences of government revenue to increased government expenditure. from September 2008-2009. The oil price collapse is by far the biggest component of the external shocks that has hit Nigeria! Since the beginning of the 1970’s especially when Nigerian’s public revenue increased through the discovery and sales of crude oil. 9-11 March. the fall in government revenue from oil will have a serious impact on government spending –provision of infrastructural facilities. This reduces the government revenue and in turn affects the previsions of goods and services that is the performance of the economy in the year.S sneezes the whole world catches pneumonia.

In the 19th and early 20th century many recessions coincided with these panics. Assuming the oil production of 2. Before now the price of crude oil was between $140 and $145 per barrel. Keffi. Nigeria Conference Proceeding. but now the price of crude oil per barrel lies around $45 Available data shows that the international market price for crude oil which was at an all time high of $157 per barrel come down to an all time low of $36 per barrel (All Africa . and looking for ways to finance the deficit.Com 2008). 9-11 March.which is least desirable. 2009). Financial crisis can be defined as a situation in which supply of money is outpaced by the demand for money Crocket (1997). Now consider that oil prices average $97 per barrel in 2008 and are forecast to average $50 per barrel in 2009. Nasarawa State University. this drop would have serious consequences in the economy (Ngozi. currency crisis and sovereign defaults (Wikipedia. The drop in the price of crude oil has affected the federal and state governments spending because the federal government uses the price of crude oil to bench mark its budget. 1991). running a budget deficit. adjusting some capital projects.292 mbpd and bench mark oil price would lower exports by about $7. ahead. Other situations that are often called financial crisis include stock market crashes and the bursting of other financial bubbles. (Frederic.76 and fiscal revenues by approximately $6. Persistent drop in crude oil means that government would have less to spend for capital projects in barrowing from outside the economy . 2009).26b. Volume 1. Golden Smith defined financial crisis as “a Faculty of Administration. such as homes. unforeseen circumstance or on a more global basis through economic crisis when the whole economy is in a slump. The external shocks here are by lowering the demands for Nigeria’s export’s particularly crude oil. and therefore they stand to lose asset. The term financial crisis is applied broadly to a variety of situations in which some financial institutions of assets suddenly lose a large part of their value. The problem and implication here is that Nigeria’s economy is based on one commodity crude oil (Mono cultural economy) the country largely depends on oil for substance and negative development in the global market oil have similar impact on government funding which would lead to spending less. because of its inflationary impact . Conceptual Definitions Financial Crisis is a term commonly used when individuals find them selves in an unsustainable financial life style. where by there debt for out weights their income. which is either by printing money .which would also increase the country’s debt to other countries or by borrowing from the public which will put strain on liquidity in the system and will crowd out credit for the private sector (Duru. a stunning drop of $47 per barrel. 2010 Page 3  .Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies revenue from crude oil the Federal Government Finances the annual budget largely through the sales of crude oil. 2009). whose price has been on the decline since the crisis. This can occur through poor personal management of money.

stagnant wages and fall in retail sales. A recession is a period of general economic decline. Goode (1954). defines fiscal policy as “changes in taxes and expenditures which aim at short-run goals of full employment and price level stability. defined usually as a contraction in the GDP for six months (two consecutive quarters) or longer. Burkhead (1981) define budget as a financial statement of the proposed expenditure and expected revenue of the government during a particular period of time. fiscal policy is the part of government is overall economic policy which aims to achieve the governments economic objectives through the use of the fiscal instrument of taxation. 9-11 March. According to Jhingan (1997). so as to meet the wants of the people in the country”. non market criteria of economic resources . it’s seen as a means of executing government policies and Faculty of Administration. “By fiscal policy we refer to government actions affecting its receipts and expenditures which we ordinarily taken as measured by the government’s receipts. Eckestein (1979). it’s a planning documents that enables the government. Nigeria Conference Proceeding. Fiscal policy is a powerful instrument of stabilization. In general terms. public expenditure is “expenses which the public sector incurs for its maintenance. brief. for the benefit of the economy. land) prices. According to Musgave (1986) budget is the programme of action that indicates how financial and other economic resources are allocated and utilized by Government.that it has acquired from firms and house holds. to set priorities and monitor progress toward selected goals. 2010 Page 4  . public expenditure donates the dispensation by the state. Ndu (2000) defines public expenditure as “a way of utilizing national output. 1991). its surplus or deficit .Powell (1993). Due and fried laend (1977) defined budget as the basis for expenditure decision –making and subsequent control of expenditures. It’s a planning documents that enables for a specific period of time. Marked by high unemployment. external bodies and for other countries”. Nasarawa State University. review of the plan by the legislative where there is one execution of the plan and (ideally) evaluation and public reporting of the result. defined budget as the outcome of a process that includes preparation of the financial plan. stated similar with Jhingan in his definition. (stock. Also Adubi (1998) explains that. ultra –cyclical deterioration of all or most of a group of financial indicators –short term interest rates. Keffi. Public expenditure is important in the economic development of the country therefore. According to him. a recession generally does not longer than one year and is much milder than a depression ( Mukshin. According to Encarta (1997). Volume 1.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies sharp. real estate. public spending and budget deficit or surplus. a budget is “Forecast of expenditures and revenues for a specific period of time. commercial insolvencies and failures of financial institutions. house hold etc.

particularly since mid 1986 when SAP was adopted. 1991 financial year had a surplus record where the revenue was N100.13 Faculty of Administration. the average level one might expect will prevail over time (Ngozi. In 1977. sapped a lot of money from the economy leading to expenditure exceeding revenue.5b represents a 41. The reason for setting up the ECA was precisely for a rainy day like this. For instance. 9-11 March.547.6m while the expenditure was N66. A number of institutions and policy reforms have been introduced. In which part of those surpluses were put into the “excess crude account’’ (ECA). In 1999-2006.8b generated in 1997.2m. Government Budget Since the introduction of structural adjustment programme (SAP) deliberate efforts have been made by the Nigerian government to improve the budgetary process so as to make the budget an effective tool for national economic management.5b (CBN. the money spent on the funding of the campaign and election process. and highest levels of average annual revenue. in 1998 as preparation for election and a change from military to democratic system of governments was in progress. 2003. annual report and statement of accounts. total revenue generated in 2001 amounted to N2. the financial year had recorded a deficit. exceed revenue generated resulting into another deficit situation. 2009).5% increase over the level in 2004 of N3. 991 . Nasarawa State University. through public spending most government objectives are achieved. Keffi. On the other hand. The money expanded for the organization and hosting of the festival.268. Nigeria Conference Proceeding. 1996). adopted a multi-year budgeting framework (the rolling plan) so as to reduce the impact of uncertain ties on the performances of the nations development plans and budgets. Also. stressed that national income is determined by the total expenditure on consumption and investment by both the private sector and government sector of an economy (Onojo. 2007. Nigeria has generated an increasing. Government has for instance.82. Volume 1.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies programes. the creation of departments of planning research and statistics (DPRS) in ministries and extra ministerial departments and parastatals. The establishment of the national planning commission and the inaguration of vision 2010 committee.9 percent increase over the N5.1986 and 1988 had records of deficits . 1997-2005).partly as a result of the introduction and change of the structural Adjustment program (SAP) policy respectively. 2004.231. and lastly. sudden change of government led also to a deficit budget situation. Gross federally collectable revenue for 2009 is put at N5. Keynes (1936). had record a surplus. to improve public expenditure management in Nigeria. probably because of the organization of festival of art and culture (FESTAC). 1985 similarly. when prices of oil fall bellow.6b which represented a 282. Also total federally collected revenue in 2005 of N5.920. 2010 Page 5  . In 2009.

the deficit reduces and vise-versa (yar’adua budget speech. relative to revenues derivable after allocation or distribution of the federally collectible revenue of N1. higher inflation. Nigeria Conference Proceeding. as per capita income of an economy grows.7b is significantly higher than the actual capital expenditure of N491b in 2007. the budget deficit will be driven by the correctness of the assumption made. which require intervention of the Faculty of Administration.748trillion initially appropriated in 2008 and an 8. if the revenue collection improves due to a positive change in variables. with the associated social vices such as crime. fall in the values of equities e.e the Keynesian theory of financial crisis and the Wagner's theory of public expenditure. so that the government sector grows faster than the economy (Musgrave. 2009). The aggregate expenditure represents a 4.c. there will be increase in the number of urban centers.45mbpd for 2008). Due to the decline in international oil prices has compelled government to make some exceptional adjustment in the spending plans and priorities. deficit balance of payment. This is because Keynes seen financial crisis as a situation whereby economies experience decline in fix investment. implies a budget deficit of N1.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies trillion. The Keynesian economist do not believe in the policy of the classical which says the economy is self regulating around fall employment level of income that the economy is self regulating around full employment level of income that the economy has build it’s mechanism or automatic stabilizer for laissez-faire free market system which has led to market failure in the world of capitalism. The average budget prices per barrel of crude oil is put at $45 ($59 for 2008) and a daily forecast production of 2.87trilion. 9-11 March. Wagner’s theory of public expenditure The theory states that there’s a functional relationship between the growth of an economy and the growth of the government activities.78trillion. More crutially.95%. Keynesian theory of financial crisis The theory of global economic crisis that will best explain the current global economic crisis is that of Keynes.t. The 2009 budget capital spending is planned in five key priority sectors of the economy.09trillion. Keynes rather advocated for government interventions in the economy to bring about desired result.647trilion.42% increases over the 2008 amended budgets level of expenditure N2. As the economy grows.45% increase over the N2. Keffi. The ratio of the deficit to the GDP(N27. deficits budget. Nasarawa State University.929 mbpd (2. Theoretical Framework Two theories would be adopted for both the financial crisis and the public expenditure i. Volume 1. the capital vote of N796. 2010 Page 6  . the relative size of public expenditure grows along with it. The expenditure planned of 2. fall in price of oil. In order words Wagner’s law states that. 1969).672trillion) is an estimated 3.

As the country’s revenue largely depends on oil by 80%. According to Sufyan (2009). Still. (2003) found that countries that traded less with the rest of the world. Also. the 1994 Mexican crisis and the 1997 Brazilian crisis were transmitted predominantly through trade (Glick and Rose 1999. Several studies have argued that the 1992-1993 European exchange rate crisis. Because the most often asked question during the collapse is how long and how deep the decline will be as well as what policy initiatives can be employed to shorten the recession. Nasarawa State University. that imbalances stand as the causes of financial crisis that countries of the world are facing. The global economic crisis that frizzingly shift the revenue downward also bring the reduction in budget and for federal government to efficiently. In their work they identified. past government deficits. et al (2009). Keffi. which had a relatively open capital account and where crisis Faculty of Administration. Gupta et al. 2000: van Rijeckeghem and weder.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies government. 2004). found (using a sample of 20 industrial countries) that factors such as capital controls.2004). pointed out that the pressurized global financial /economic crisis which lead to following in the price of crude oil slims the revenue generation from the oil. Eichengreen et al. Caramazza et al. 2010 Page 7  . Nigeria Conference Proceeding. future GDP and employment or growth and past current account balances were important determinants of currency crisis (such as failed speculative attacks. public office holders by cutting down their salaries and allowances and in order to reduce excessive spending over the little available government revenue. past and future inflation. who were among the first researchers to examine the causes of financial crisis. revaluation). 9-11 March. in another study carried out by Roland. 2001. Forbes. Volume 1. the falling in the revenue is the falling in expenditure and low revenue. It was also identified that the quality of governance has also been associated with financial crisis in emerging market countries. low budget plans. manage the available revenues these takes a drastic decision of writing the RM afc to review the salaries of the political. other researchers contend that the financial channel was the main mode of transmission across countries during the 1990’s (Kaminsky and Reinhart. Few of these works are reviewed here to give on insight in to the basis of the study. devaluation. titled “fiscal stimulus and the duration of financial crisis” stating financial system around the world with the on-going financial meltdown that have engrossed in to every nations sectors (Budget and Budgetary process which is under ministry of finance inclusive) in their work they estimated a model of the duration of financial crisis in an attempts to identify whether fiscal policy can reduce the time to recovery. Several empirical works have been done with regards the impact of financial crisis on public expenditure. 2001. to reduce such activities to the best minimum. (1995).

international trade and liberalized capital account policies in determining the speed of recovery from such crises in both developed and developing countries. budget and finance are related. which in turn have been linked to financial crisis. domestic credit growth is high. government of countries always cut down expenditure. Government ought to spend especially the excess crude account in making sure that government maintained it’s quality. large abrupt changes in world interest rates or the terms of trade (IMF. particularly. 9-11 March. Bordo et al (2000) compares the recovery time from contractionary crisis during the Gold standard era with the post Bretton woods period. 1998). it’s out that. when foreign reserves are low. monetary and fiscal shocks. The study found that poor macro economic fundamentals and capital account liberalization have no significant impact on the duration of recovery. Deb (2005). 1998). were more likely to be associated with contraction during crisis. Their result suggests that in countries with higher levels of international integration unanticipated shocks can potentially lengthen the duration of financial crisis. Frankel and Rose (1996) test whether variables like interest rates and output. offers a more comprehensive assessment of the importance of economic fundamentals. can explain currency crashes. The contraction was more pronounced if trade competitors devalued. but all trade related variables were significant. (2008) model the vulnerability of an economy to a financial crisis as rising from the interaction of the degree of economic specialization and the mode of financial opportunities. external variables such as over –valuation. interest rate rise. According to (IMF. Volume 1. On a broader note. Nasarawa State University. They Faculty of Administration. Gande et al. Keffi. Using annual series from 1971-1992 on a panel of 100 developing countries. but this is not right in the face of recession. They also spelt. Their results suggest that currency crashes tend to occur when foreign direct investment (FDI) inflows dry up. so the crisis has in one way or the other transent in to budgetary process and its implementation. These distortion frequently occur during periods when countries are undergoing rapid financial liberation and innovation. Honig (2008) shows that the quality of governance has an (non-linear) effects on the incidence of sudden slop. To summarize the result of Roland et al (2009) their study used OLS to show the fiscal stimulus by the government.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies were proceeded by large capital inflows. the current account and the level of indebtedness. however. and the composition of the debt. and when the real exchange rate is over valued. distortion in the financial sector coupled with macro economics instability from another set of factors that lead to financial crisis. they also tend to be associated with sharp recession. 2010 Page 8  . other types of factors that have played a role in financial crisis are external conditions. Nigeria Conference Proceeding. In deed. oil prices rose during the crisis and post crisis period was marked by tight monetary policy and expansionary fiscal policy.

Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies suggest that the overall measure of government consumption has a statistically insignificant impact on financial crises. Keffi. 2008 and 2009 the period during the crisis while pie chart in the study will be use to depict the amount been collected to various sectors of the economy as government expenditure. The study will used trend analysis. This is indicating that Nigerian revenue from crude oil has responded negatively to the external shocks from global financial crisis. In contrast. the revenue from oil keeps on increasing until in the 4th quarter 2008. Methodology Descriptive data analysis would be employed in analyzing the data collected. Hindu (2009). which rely heavily depends on revenues from sales of oil and royalties from oil companies. Federal ministry of finance and economic journals/literature and internet. in fact 80% of Nigeria’s earning is from oil sources. appropriation bills. Fiscal stimulus is another strategy adopts by many governments including India to over-come the repercussion of economic crisis. According to the trend the 2007 forth quarter was an increase of $ 462. Faculty of Administration. the revenue has been increasing but not at regular interval. Since 80% of revenues come from oil. the Nigerian economy is highly sensitive to such a negative external shocks in oil revenue. The data used are mainly from secondary sources. central bank of Nigeria. where oil revenue experienced a significant fall in the level of government revenue as a result of global financial crisis. Any instruments which lead to productive output or unproductive output as part of public expenditure is desired as it increases the demand for goods and services. Nasarawa State University. 9-11 March. As seen from the Trend. to show the variation of oil prices in Nigeria. Results and Discussions Table 1 and Figure 1 show the variation in oil revenue from the year 20062009. budget office of the federation (BOF).95. That was the period when the Global economic crisis started affecting the global economies. To show the oil price at the period of 2006 when there was no crisis and 2007. Nigeria is among the less developed countries. indicating that public spending tends to reduce the duration of financial crisis. carried out a study that public expenditure is one of the way that government all over the world has resorted to solve the problem of global economic crisis. 2010 Page 9  . These data are derived mainly from budget speeches. Nigeria Conference Proceeding. the unanticipated component of government spending has the opposite effect on the duration of these episodes. Volume 1. This means that the anticipated component of government consumption was inversely related to the duration of financial crisis. The year 2008 especially the 3rd quarter recoded the highest increase in the level of government revenue from sales of crude oil.

Mukhtar and Babalola minister of finance had hinted of the hardship that awaits both the budget and the nation in the face of Faculty of Administration. trillion and that of 2009 forecasted at N2895. It could be seen from the table above that the expenditure for 2007 was N 2447. The trend gives us a clear movement of Nigeria oil revenue. in the long run.363 Source: CBN Statistical Bulletin. though. a hypothetical negative shock in oil revenue would force government to abandon projects and incur deficit to meet the minimum requirements of spending such as salaries and running administrative coast. this is because the government is running a deficit in other to meet its macro economic target. Volume 1.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies To the extent that if care is not taken. Indeed as far back as March.82 600 500 400 300 200 100 1 s t 2 n d 3 r d 4 th Q u a r te r s 2006 1 s t 2 n d 3 r d 4 th q u a r te r s 2007 1 s t 2 n d 3 r d 4 th q u a r te r s 2008 1s t 2nd q u a r te r s 2009 The table above shows the federal government revenue and expenditure 2000-2009.6737 2007 295. Because if all funds disbursed are not be spent or to spend high.9664 462. 2009 Figure 1: Nigeria Quarterly Oil Revenue (2006-2009) 4th Quarter 343. The level of government expenditure has been on the increase. Table 1: Nigeria Quarterly Oil Revenue (2006-2009) YEAR 1st Quarter 2nd Quarter 3rdQuarter 2006 344.343 193.2 2009 187.52 531.95 251. The percentage increase in government expenditure stands at 9.4%.49.2732 379. 2010 Page 10  .4 524. 9-11 March. The fall in revenue would not be enough to sustain government spending at current level.68 361. Nigeria Conference Proceeding. in the future the oil revenue projected for the federal government budget would fall significantly thereby distorting planned government spending. Keffi.37 2008 473. Nasarawa State University.54 trillion.6617 381. There has been increasing government expenditure. there is a reduction in the level of government revenue.88 396.

Keffi.50 2003 2. 2008 701. Table 2: Government Revenue and Expenditure (2000-2009) YEAR TOTAL REVENUE(N) TOTAL EXPENDITURE (N) 2000 1.6000.590. 9-11 March.40 1.095. Nigeria Conference Proceeding.715.00 2.965. customs as against the budget target of N1.059.00 Source: CBN Statistical Bulletin andBOF.90 2004 3. Between January and march only N9.240. But 2009 has recorded so far a very low level of government revenue of about Faculty of Administration. But in 2005.866.450.231.820.018.00 2006 5.920. 2010 Page 11  .200.23 billion was generated by revenue generating agencies of government.426.822.500.159.100.590.575.938.225.837. it shows a little increase in 2000 and 2001 but a little decrease in 2002.10 2009 2.10 trillion. FIRS. did not come in as planned. Nasarawa State University.155.896. 866.00 2.70 2001 2.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies dwindling production due to the Niger-Delta crisis and the declining crude oil prices. Figure 2: Government Revenue and Expenditure(2000-2009) As seen from the chart. The situation was made worse as revenue kept falling because income from other sources expected to support revenue from crude oil sales.241.101.500.00 1.228 trillion. 2006 and 2007 the revenue has been doing well until when it reaches it’s peak in the 2008 of about N7.895.906.60 1.731.80 1. NNDC.002.90 2007 5.00 2008 7.00 2005 5.600.650.018. Volume 1.00 1.00 The diagram below shows the Chart and the movement in the revenue and expenditure of the federal government of Nigeria from 2000-2009.965.54.70 3.025. the revenue of the federal government has been fluctuating.90 1.547.79.00 2002 1.

95% envisaged by the budget.The provision under the international Faculty of Administration.09 trillion. Nigeria Conference Proceeding. security. Many observers believe the 2009 budget has failed to power the economy. 2010 Page 12  .10 billion. energy. international travels and transport:.09 trillion which represent 37% of the entire budget as a problem that market the budget out for failure. in the sense that some capital projects have been adjusted and some are suspended. human capital development and transportation. In MDA’s allocations for 2009. environment e. This in turn will affect the standard of living of the people that are under such MDA’s and affects the Nigerian economic growth. as a result of global economic crisis. it will open up a gap of $6 billion (about N696 billion) gap in the budget which projected total revenue at N2. independent corrupt practices and related offices commission.c. 2008 has recorded the highest expenditure due to the high revenue generated especially in the first half of the year. The Minister of state for finance predicted that if the unimpressive scenario persist till the end of 2009. Despite the fact that the government expenditure proposed exceeds the proposed government revenue which led to the running of about N1. agriculture and water resources. Keffi. His calculation become reality given the fact that for only the first quarter of the year. the level of budget deficit was N249. well over 30% of his prediction for the entire year. Volume 1. And the experts point to the budget inbuilt deficit of N1.00 trillion Naira. As at May the IMF estimated that Nigeria’s budget deficit would like to widen to around 8. This means the government expenditure is affected by the Global financial crisis as a result of decreases in government oil revenue. It can be seen from the chart above that government expenditure has been increasing but not on equal amount with the revenue generated.26 trillion. received zero allocation in 2009 budget. the chart shows the increasing level of government expenditure. departments and agencies like commerce and industries. about 90% of the capital expenditure went to governments’ priority sectors of power. This shows that there has been an excess which part of it is been saved in the excess crude account (ECA). Nasarawa State University.650.241. For 2009 the data gotten is the first half of the year. but it indicates the increase of government expenditure over government revenue from January to march 2009 “A deficit of N249. education.5% compares to the 3. The likely effect that mitigate against smooth implementation of the Nigerian budget includes the inherent disadvantage of the budget from conception. In this case global economic crisis has effected the government expenditure to the extent that some project have been deferred for instance. auditor general of the federation.10 billion or 10% of the budget has already occurred”. women affairs.t.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies 2. Ministries. 9-11 March. Still the Global economic crisis has affected the Nigerian government spending. On the expenditure side.

there are serious challenges facing the Nigerian budget.8 billion for land reform and food security focusing on agriculture and water resources.5b for petroleum resources. This is noticed when some ministries got zero allocation as a result of the crisis. comprising of 27.12b on the NNDC and 50b on the newly created ministry of Niger-Delta.6b for MDG’s conditional grants.12b on the Niger-Delta. 2010 Page 13  .3b for MDGs capital building.3b for works. N91. MDA’s may continue to meet their manpower training and capacity building requirements by patronizing local management training programmes. Keffi. Volume 1. N36.9b for human capital development including 3. Nigeria Conference Proceeding. Conclusion and Recommendations It can be seen that the Nigerian economy has been seriously affected both in terms of the revenue the country and the expenditure (recurrent and capital) due to the fact that the economy is a mono-cultural economy that heavily dependent on crude oil. N131. As seen from the chart the 2009 budget provides 90% of the capital vote to five key priority sectors of the economy. including provisions for enhancing critical infrastructure.7b(out of capital vote of 64. N67b for security and N77. where necessary. Nasarawa State University. and 19. The insurance premium-provisions for insurance for group life. youth development and grassroots empowerment.6b for education. As a result of global economic crisis. 32. buildings and vehicles in the chart of accounts MDA’s is to be centralized for monitoring and cost efficiency. For agencies and parastatals not funded by the budget the above mention measures will apply with equal force to all parastatals and agencies of government that are not funded by the treasury.7b for MDGs quick wins project and 6. notwithstanding the restrictions on non-technical international management training. 129.45b) for critical infrastructure within the federal capital territory. training and capacity building. 33.5 billion for critical infrastructure including capital allocation of N 88.4b for aviation.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies travel and transport item of expenditure has been reduced by 50% across the board. It is highly recommended that Nigerian government should take in to consideration some key measures to bail Nigerians economy particularly budget from this ongoing financial crisis and to put in place such framework that is going to sustain the bailout plan for the future. 9-11 March. local management. or bringing in foreign experts to conduct the training. Some of the key measures are listed below: Faculty of Administration.5b for power.2b for transport and 48. 35. 15. environmental protection.96b for the health. However. 26.

providing appropriate incentives for investors and encouraging diversification of foreign exchange earnings enough increased activities in the non-oil sector. Increase in tax collection. We are presented with the opportunity to now look at the non oil sector. manufacturing and mining. as well as creating an enabling environment for these sub-sectors to fully express themselves in line with economic growth. ECA funds should be used to finance part of the deficit and to create assets. power. the demand for Nigerian product will increase and quantity exported will increase. corporate organizations.This will make the Nigerian agricultural and industrial products relatively cheaper in foreign market. Devaluation of the naira:. Keffi. 2010 Page 14  . thus creating a conducive environment for the manufacture of exports products. non-governmental organization e. Through customs and excise duties.It gives us an opportunity in Nigeria to restore macroeconomic stability. Facilitating full capacity utilization in agriculture. Volume 1. This would reduce over dependence on oil sales. its advisable to give priority to agriculture and know where our comparative advantage lies. and transport should be funded with enough funds that serves as an incentive to encourage them to do well. The crisis situation presents an opportunity and a challenge: . Also productive sectors like manufacturing. such as infrastructural investments. value added taxes (VAT) this will substitute the revenue from oil to the independent revenue and reduce country’s over dependence on oil revenue. 9-11 March. reducing operating costs and inflationary measures. industries by improving physical and social infrastructure. providing appropriate protection of domestic industries against unfair competition from imports and dumping.c. Its assumed if naira is devalued. Nigeria Conference Proceeding. Let us move away from mono-cultural status of the economy.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies Diversification of the Nigerian economy: Nigerian being an economy that depends solely on the production and sales of crude oil must takes steps to diversity the economy as part of its response to the global economic crisis.t. when the oil prices fall below the average level which is expected to prevail over time. Nasarawa State University. This would minimize the impact. which support long-run non oil growth as well as economic diversification. by taxing the private sectors. public agencies. This is the time to use money from the excess crude account (ECA): The reason for setting up the ECA was precisely for a rainy day like this. This also has a Faculty of Administration.

9-11 March. “Do Improvements In Government Quality Necessary Faculty of Administration. EFCC.C (2009). (2001). (1979). Eckslien. (1999). Ferbes. “The Public Finance”. e. In Nigeria”: fiscal planning. This would boost public confidence and also attract foreign investors to invest in the Nigerian private sectors. Crocket. Irwin in C.A. k. “Anatomy of Financial Crisis” Columbia Business School. A. “The Potholes in 2009 Budget”. (1997). Public Finance. M. Federal Ministry of Finance & BOF (2009) “Fiscal Strategy Paper Revised Version. (NBER) Gande. and Obima. 16th. embezzlement.c. A. M. References Adubi. Monday. “Public expenditure Management.Bardo. Frankel. J. Journal of International Economics. “Financing Modern Government” Contemporary Issues. “Contagions Currency Crisis”.t. (1991). Income would be generated both at home and abroad. E. P. B. Improving ICPC. This would increase revenue and provide smooth implementation of Nigerian budget. . Daily Trust.H.B et al (2001) “Is the crisis problem growing more Severe Economic Policy” April 2001. CBN Statistics and National Bureau of Statistics (2006-2009). Rose A.K (1996).A and Rose. Singapore. A. et al (2008) “Economic Specialization And Financial Crisis in Energy” Economics Journal Of International Money And Finance. “Are trade links important determinants of Counting Vulnerability to Crisis? NBER Working Paper. “Currency Crashes in Emerging Markets” an Empirical treatment.M. Gupta. Keffi. . Bird.E. Orientation on how to minimize corruption. Fredrick.M. Honig.The Nigerian public should be oriented towards the importance of investment in private sectors. R. A. First Test Scandinavian Journal of Economics. Volume 1. A. “Wagner’s law of expanding state”. Nigeria Conference Proceeding. et al (2003) “Output Response To Currency Crisis” IMF Working Paper. S.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies chain reaction because if more is demanded in international markets. A. k (1995). Management in Nigeria.O.S. CBN Annual Reports and Statements of Account (1977-2005). Employment will also increase back at home to meet world demand. (1971). Eichengreen. 2010 Page 15  . Nasarawa State University. U. (1981). This would also lead to inflow of revenue gotten from the exportation of agricultural and industrial products. (2008). Duru. 2009. mismanagement of public finds so that the little available resources we have could be utilized efficiently. Burkhead. Public orientation and confidence:.

India. Encarter.New York Ngozi. financial crisis: opportunity to Improve public finance. Faculty of Administration. The Fluctuation in the crude oil prices. a conceptual definition. “2009 Budget address to Nigeria’s National Assembly”. “The growth of public expenditure in the U. Punching. (2009) “The Appraisal of the 2009 Federal Budget” This day Monday 14th February. http://www. Com http://www . (1997): Budget.cenbank. Abuja. J. Roland et al. Cave Hill Campus Bridge town.K” Princeton. ‘Yar Adua. “The Global Economic Crisis and resurgence of Keynesian Economics”. (2009). Washington DC.B Musgrave (1989). oil. U. Nigeria: Global Financial Crisis. K (2009). Nasarawa State University. . Delhi. Africa. A and P. “The Global Economic Crisis Impact and Implications for Nigeria”.. Hindu.P and Wiseman.Budget office. McGraw-Hill. 2010 Page 16  . “Public Expenditure: Solution to Financial Crisis & Recession”.asp. Public Finance in Theory and Practice. WWW. University Press. Barbados.M.Conference Theme: Managing the Challenges of Global Financial Crisis in Developing Economies Reduce the Costly Sudden Stop” Economic Journal. International Monetary Fund (1998) “World Economic Outlook. WWW. (1961). (2008). (2009). 9-11 March. http://www. R. Nigeria Conference Proceeding.L (1997). A. (2009) “Fiscal Policy and the duration of Financial Crisis”. “Macro Economic Theory” Vrindo Publications (D) fiscal strategy paper (revised edition) 2009. Wolassa. A. L. Musgrave. Peacock.O. M. Volume 1. Sufyan. A paper presentation At African University of science Abuja.

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