Key points are not available for this paper at this time.
Objective: The study examined the effect of subnational public finance components on states’ fiscal sustainability in Nigeria. Specifically, the study sought to examine the effect of internally generated revenue and statutory allocation, on states’ fiscal sustainability. Theoretical Framework: Keynesian theory suggests that public expenditure revitalizes the economy, and increases the rate of fiscal unsustainability, which in turn makes households feel wealthier on the basis of government spending and leads to an increase in savings. Method: An ex-post facto research design was adopted to carry out the research for the period 2016-2022. The panel data were collected and sourced from Audited Financial Statements of subnational, CBN statistical Bulletin, CBN Annual report and accounts, and other publications of 36 states. Ordinary least square regression was used to analyse the hypothesis with the aid of E-views 12. Results and Discussion: The study found that internally generated revenue has a significant effect on states’ fiscal sustainability in Nigeria. The study also found that statutory allocation has a significant effect on states’ fiscal sustainability. The study recommends that sub-nationals should ensure a steady increase in internally generated revenue which will help to control the level of fiscal sustainability and increase the statutory allocation sharing formula in favour of sub-nationals because many states are unable to finance their expenditure. Research Implications: Furthermore, the viability of many states and the need to allocate more resources and power to the lower-tier governments to enhance their fiscal capability and operational efficiency. Originality/Value: This study has provided new evidence on the contribution of fiscal policy in increasing the sustainability index of debt to GDP among 36 states in Nigeria using up-to-date data set through the pairwise methodology.
Wayas et al. (Thu,) studied this question.