a. Roles of Fiscal Policy in Nigeria:
Economic Stabilization: Fiscal policy plays a critical role in stabilizing the Nigerian economy. During economic downturns or recessions, the government can increase government spending and reduce taxes to boost aggregate demand, stimulate economic growth, and create jobs.
Revenue Generation: Fiscal policy is a significant source of government revenue in Nigeria. The government collects taxes, tariffs, and other duties to fund public services, infrastructure projects, and development programs.
Redistribution of Income and Wealth: Fiscal policy is used to address income and wealth inequality in Nigeria. Progressive taxation and targeted social welfare programs aim to support lower-income individuals and reduce inequality.
Infrastructure Development: The government allocates funds through fiscal policy for infrastructure development, such as roads, bridges, airports, and public utilities. These investments can boost economic productivity and attract private sector investment.
Sectoral Support: Fiscal policy provides targeted support to specific sectors of the economy. For example, tax incentives and subsidies may be offered to promote industries that are deemed critical for economic growth, job creation, or national development.
b. Principles of Virile Public Financial Management:
Transparency: Transparency is essential in public financial management to ensure that financial information, budgets, and expenditures are open and accessible to the public and relevant stakeholders. Transparency reduces the risk of corruption and mismanagement.
Accountability: Public financial management should be characterized by clear lines of accountability. Government officials and agencies responsible for financial management should be answerable for their actions and decisions. Accountability mechanisms help prevent mismanagement of public funds.
Efficiency and Effectiveness: Public financial management should strive to use resources efficiently and effectively. This includes allocating funds to projects and programs that deliver the best results and benefits for the public, considering cost-effectiveness and value for money.
Prudence: Prudence in financial management entails careful planning and budgeting to ensure that expenditures are sustainable and do not lead to fiscal deficits. It also involves prudent borrowing practices to avoid excessive debt burdens.
Equity: Equity in public financial management means that government policies and expenditures should be fair and equitable, addressing the needs of all citizens. It includes ensuring that social spending and welfare programs benefit the most vulnerable segments of society.
