Fiscal Deficits and Economic Growth in Nigeria: An Empirical Analysis of Policy Implications and Macroeconomic Stability

The sustained decline in government expenditures in social services and infrastructure, and in investment in other vital sectors, has further consolidated Nigeria's reliance on borrowing, which poses a major danger to long-run economic sustainability. This study discusses the impact of fiscal deficits and economic growth in Nigeria: An Empirical Analysis of policy implications and macroeconomic stability. The study employed an ex-post facto research design, the study relied on secondary data as data were derived from the Central Bank of Nigeria (CBN) Statistical Bulletin (June, 2025), and the World Bank for the period 1990 to 2024. Ordinary Least Squares (OLS) estimation technique was used in the analysis of the effect of fiscal deficits and economic growth in Nigeria. The results of the research showed that the revenue from tax (TAXREV) and budget deficit (BD) had a significant effect on economic growth in Nigeria. The inflation (INF) was also seen to have a high positive correlation with RGDP to complement economic growth without having any immediate adverse effects. However, the exchange rate (EXR) lacked statistical significance on economic growth in Nigeria. The study determined that Nigeria's economic performance is largely based on the honor of its fiscal and budgetary policy. The study advised strategic deficit financing in infrastructure and public service provision, improved tax administration to enhance revenue mobilization, enhanced coordination between fiscal and monetary authorities, and economy diversification to reduce vulnerability to external shocks. These policy actions are required for long-term macroeconomic stability and broad-based growth.