It is important to understand budget deficit and its impact on the economic growth in Nigeria. The argument over the involvement of government in running the economic affairs of a country was put to rest by a renowned British economist, John Maynard Keynes.

Before Keynes, emphasis had been placed on the concept of æthe invisible handÆ where the economy is self adjusting. The role of the government as embodied in its fiscal operations in determining aggregate demand, income, prices and more recently, the balance of payments, is the outcome of Keynesian economists which came into being after Great Depression of the 1930’S. A major recognition by Keynes is that an economy could converge to a stable equilibrium which may be undesirable, since it might involve some involuntary unemployment and, in the Keynesian model, only government has the will and means through fiscal policy to move the economy towards a regulation of its revenue and expenditures.

There has been urgent need for rapid economic development in most developing countries. The need for the government to be involved in the process is more pronounced because the question of development cannot be answered without a conscious planning.