Fiscal Sustainability and Demographic Transition in Nigeria

Abstract

This study investigates the impacts of demographic changes on fiscal sustainability in Nigeria. The study employed the Autoregressive Distributed Lag model with times series data from 1980-2021. It was found that old-age and young-age dependency directly impact government balance in the short-run and long-run. Health and education expenditures have negative effects on government balance. There is an increased government debt in a developing old-age and young-age economy. It was concluded that the demography transition has a comprehensive effect on fiscal sustainability; hence government needs adequate reviews of public health spending and reduces unnecessary expenses to maintain fiscal balance in Nigeria.