Nigeria: Selected Issues

This Special Issues paper analyzes fiscal forecasting errors in Nigeria over the 2011–2023 period. Forecast errors in Nigeria’s budgeting process indicate persistent optimism with respect to the government’s ability to mobilize revenue. Positive revenue forecast errors have had limited impact on the fiscal deficit due to expenditure compression. Large and persistent forecast errors in budget revenue projections run the risk of underfunding of essential expenditures during the budget year when shortfalls occur, due to constraints on the borrowing envelope. Cross-country experience from other African economies indicates that forecasting performance can be improved if the macro-fiscal unit conducts ex post assessments of the accuracy and quality of their budget forecasts. The report recommends to ensure coordination between all fiscal departments to ensure data sharing and collaboration and enhancing quality and timeliness of data. Formal memoranda of understanding for data exchange can be drawn up between relevant agencies. It is recommended to conduct and publish forecast performance reviews, to enhance transparency, create incentives for improving accuracy, and build public and market confidence in the credibility of the budget documents as a guide for fiscal policy.