Capital flight Effects on Government Income and Budget Balance in Nigeria (2019-2030): A Dynamic SCGE Modelling Approach (Published)
This research analyse the dynamic effects of capital flight on government income and budget balance in Nigeria. The study used a dynamic structuralist computable general equilibrium (SCGE) model to run simulations that indicate the nature of capital flight effect on Nigerian government income and budget balance over the period 2019–2030. The findings show that a successive increase in capital flight in Nigeria will exerts a negative effect on government income and positive effect on government budget balance in the immediate, short, medium and very long term. This study concluded that the government income is vulnerable to capital flight and is affected by successive outflow of legal or illegal capital. On the basis of the findings, this study recommends the following strategies to curb capital flight from Nigeria, these include, plugging the holes through which money leaks, transparency and quality of bilateral trade data, checking the role of multinational corporations in trade misinvoicing, CBN should introduce selective, targeted, and time-bound capital controls to stem outflows, especially outflows through banking channels. Government should thus depend more on domestic borrowing as a means of supplementing its resources. Government and policymakers must establishment of well-functioning political and judicial institutions that will ensure political stability within a country and overly expansionary monetary and fiscal policies, an incompatible exchange-rate policy, and a repressive set of financial policies should be designed to divert resources toward the public.
Keywords: Capital Flight, Nigeria, SCGE, government income and budget balance