Fiscal policy rules for managing oil revenues in Nigeria

Indeed, figure 4 confirms that for the past two decades, the lowest level of debt
to GDP in Nigeria coincides with high variability in government expenditure. 21
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 2001 2002 2003 2004
coeff var debt stock
Figure 4: Nigeria Debt and Coefficient of Variation on Government Expenditure (% of
GDP) 1980-2004
The stock of debt averaged from 63 percent of GDP between 1984 and 1985
(when CV on government expenditure is about 50 percent) to 118.3 and 124.2
between 1986-90 and 1990-94 (when CV ranges from 10 to 20 percent only).
Between 1995 and 1997, another period of high variability on government
expenditure (about 40 percent), the stock of debt averaged 55 percent of GDP.
In 1999 alone, when CV is about 45 percent, the stock of debt is only 32.5
percent compared with 73.2 percent in 2004 with less than 10 percent
variability.
21 This time, measured by the same formulae but based on the Nigeria data, 1980-2004 and not
on the simulation results..
20