Nigeria’s economic performance remains mixed. The economy maintained a moderate rate of growth of real GDP, which reached 3.9 per cent in 2001, from the yearly average of 3.3 per cent since 1995. The outlook on growth remains mixed. Real GDP is estimated to decline by about 1.3 per cent in 2002, following which the economy is projected to resume positive growth at 3.1 per cent in 2003. The growth performance in 2001 was achieved in an atmosphere of weakening economic fundamentals: inflationary pressures were exacerbated, interest rates rose and the foreign exchange rate of the naira depreciated sharply. The government’s fiscal position deteriorated sharply in 2001 as expenditure increases were met with reduced revenues. The government’s effort to reduce expenditure is made difficult by Nigeria’s fiscal federalism. In spite of increased expenditures the key social services that bear directly on poverty alleviation have not seen significant improvement. Nigeria’s public finances are expected to improve with an estimated contraction in the overall balance in 2002 with further improvement in 2003…