Nigeria’s budget deficits fueling naira depreciation, CBN study finds
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Verified Synthesis~42s readNigeria’s rising budget deficits are a major driver of exchange rate depreciation and exert delayed upward pressure on interest rates, according to a study published in the Central Bank of Nigeria (CBN) Journal of Applied Statistics. Its findings suggest that persistent fiscal imbalances can weaken exchange rate stability, constrain monetary policy and create pressure on investment, although the study found no statistically significant direct relationship between budget deficits and inflation.
Context & Background
- ✦The study, titled “Budget Deficit Dynamics and Macroeconomic Performance in Nigeria,” was authored by Ndubuisi E.
Key Figures & Named Entities
2024:Uguru and examined the relationship between fiscal deficits and key macroeconomic variables using annual data from 1981 to 2024.2026:Tinubu seeks Senate approval for N10.79 trillion external borrowing to fund 2026 budgetGhana inflation rises to 5.5%, highest in 11 months ahead of November rate decisionNigeria’s private sector expands for fifth month, PMI rises to 53.2 in October It also found that fiscal deficits exert delayed upward pressure on interest rates and can trigger a contraction in money supply, which the study linked to defensive monetary tightening.100%:Other findings from the research include: Budget deficits account for 100% of their own variance initially and retain about 53% by the tenth period, indicating that fiscal imbalances can reinforce themselves.
Outlook & Next Steps
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Key Takeaways
Verified Extract- Nigeria’s rising budget deficits are a major driver of exchange rate depreciation and exert delayed upward pressure on interest rates, according to a study published in the Central Bank of Nigeria (CBN) Journal of Applied Statistics.
- Its findings suggest that persistent fiscal imbalances can weaken exchange rate stability, constrain monetary policy and create pressure on investment, although the study found no statistically significant direct relationship between budget deficits and inflation.
- The study, titled “Budget Deficit Dynamics and Macroeconomic Performance in Nigeria,” was authored by Ndubuisi E.
Key Facts:2024: Uguru and examined the relationship between fiscal deficits and key macroeconomic variables using annual data from 1981 to 2024.2026: Tinubu seeks Senate approval for N10.79 trillion external borrowing to fund 2026 budgetGhana inflation rises to 5.5%, highest in 11 months ahead of November rate decisionNigeria’s private sector expands for fifth month, PMI rises to 53.2 in October It also found that fiscal deficits exert delayed upward pressure on interest rates and can trigger a contraction in money supply, which the study linked to defensive monetary tightening.100%: Other findings from the research include: Budget deficits account for 100% of their own variance initially and retain about 53% by the tenth period, indicating that fiscal imbalances can reinforce themselves.2025: In December 2025, President Bola Tinubu presented the 2026 budget to the National Assembly with a proposed N23.85 trillion deficit.
Editorial Excerpt
Nigeria’s rising budget deficits are a major driver of exchange rate depreciation and exert delayed upward pressure on interest rates, according to a study published in the Central Bank of Nigeria (CBN) Journal of Applied Statistics.
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What is the latest development regarding Federal Capital Territory?
Nigeria’s rising budget deficits are a major driver of exchange rate depreciation and exert delayed upward pressure on interest rates, according to a study published in the Central Bank of Nigeria (CBN) Journal of Applied Statistics.
Who are the key organizations or public figures mentioned?
The primary parties identified in this coverage include Federal Capital Territory, National Assembly of Nigeria, Tax Reform & Fiscal Policy.
What timeline or key figures were confirmed?
Uguru and examined the relationship between fiscal deficits and key macroeconomic variables using annual data from 1981 to 2024.
