Research for Policy Action

State of States: The Debt Overhang

In the last year, Nigeria has experienced significant macroeconomic and fiscal imbalances. Following the continued decline in oil revenues since mid-2014 amidst slow policy responses, the economy gradually slowed into negative growth in 2016. Fiscal deficits have remained wide, debts are rising, and governments are faltering on public sector wages. This report lays out the stylized facts about the debt environment across the 36 States of the federation. It underlines the largely homogenous negative fiscal condition of States, which heightened with the slump in oil revenues and continued to worsen after bailout responses from the Federal Government. It also shows that government reforms targeted at maintaining fiscal stability through the use of bailouts have not been sufficient in pulling States out of the crisis. The second section suggests more contextualized policy responses given the constrained fiscal space, as part of ongoing reforms to improve fiscal stability in the country.

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Fiscal Sustainability, Fiscal Reform, Nigeria Governors Forum

Focus Area(s): Fiscal Sustainability at the Subnational Level

Country of Reform: Nigeria

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