Background of the Study
The Nigeria economy has been plagued with several challenges
over the years. Researchers have identified some of these challenges as; Gross mismanagement/misappropriate of public funds (Okemini and Urata,2008). Corruption and ineffective economic policies (Gbosi, 2007); jack of integration of macroeconomic plans and the absence of harmonization and coordination of fiscal policies (Onoh,2007); inappropriate and ineffective policies (Anyanwu,2007). Imprudent public spending and weak sectoral linkages and other socioeconomic maladies constitute the bane of rapid economic growth and development (Amadi et al, 2006). It is evident that one of Nigeria’s greatest problems today is the inability to efficiently manage her enormous human and material endowment.
Fiscal policy as a macroeconomic tool became necessary in Nigeria given the enlargement in the size and growth of the public sector. There has been a tremendous growth in the public sector in Nigeria over the years. This can be traced to several factors among which includes the need for reconstruction after me civil war which was facilitated by the enhancement that accrued from the oil boom of 1970s; the militarization of governance and the oil glut of 1980s. Following the fall in the international price of oil in the 1980s, government revenue dwindled and poverty revenue widespread and pervasive. It became imperative that government intervention is needed to correct the perceived imbalance resulting from the oil shock. In view of this, several fiscal measures were introduced during this period including Structural Adjustment Programme (SAP). The broad objective of SAP was to totally restructure the productive base of the economy with particular references to agricultural sector and import substitution industries with a view to preserving the nation’s foreign exchange. This being the case however, the nation’s economic problems remained intractable even with SAP.
