The Challenges and Prospects of Nigeria’s Fiscal and Monetary Policies, (2005 – 2010)

The main thrust of this paper was on the challenges and prospects of Nigeria’s fiscal and monetary policies framework, 2005 -2010. Specifically, issues of monetary or fiscal dominance, financing of fiscal deficits, fiscal-monetary policy conflicts and policy coordination were intimately discussed. A synopsis of the relationship between monetary and fiscal policies behaviors in Nigeria with particular attention to the pattern and changes of fiscal behavior, the incidence of fiscal dominance, and the implications of the pattern of fiscal behavior for monetary policy and its management were provided. Findings resulting from the paper revealed that performance of the economy was better under cooperation in the sense that “Losses” to the government and the Central bank were lower than under non-cooperation. The study suggested that all tiers of government in Nigeria should inculcate the habit of financing budgetary deficits from noninflationary sources than continuous borrowings from the financial system.