Budget Management Strategies for Growing Nigeria Out of Debt: An Evaluation of the Rising Debt Profile

Abstract

Nigeria has been struggling to get out of its debt burden since the beginning of the new millennium using different budget management strategies. However, a deficit budget has been recurring with a huge debt liability to the government, which reduces the stock of reserves of the government significantly. The rising debt liability has constrained the structural transformation and development in Nigeria. Although this issue has received attention from some researchers, no effort was made to investigate the budget management strategies in the context of rising debt profile to shift the paradigm from the traditional budgeting strategies to a new model.  The study's main objective is to propose a fiscal policy model that could lead Nigeria out of the current rising debt profile. The study used a survey design using structured questionnaires in a sample of 72 respondents. The study concludes that the current Nigeria’s current debt management strategies are ineffective, and Nigeria’s debt is unsustainable. The study also found that foreign exchange volatility significantly affects debt servicing in Nigeria. The study also found that exploring alternative debt financing could address debt management crises in Nigeria. The study recommends among others that the government should prioritize cutting excessive government spending and implementing strict fiscal controls with more transparent and structured debt repayment strategies. The government should boost foreign reserves and stabilize the Naira. It is also recommended that exploring alternative debt financing could address debt management crises in Nigeria. Therefore, Nigeria should consider mechanisms such as Diaspora bonds, Green bonds, Public-Private Partnerships (PPPs), and asset-backed securities to reduce reliance on traditional borrowing. The study also recommends government should improve budget transparency, reduce wasteful spending, and allocate funds strategically to ensure effective debt management.