The article examines how the Nigerian government manages its money and spending, and how this affects the country's balance of payments. They found that deficit financing through the central bank leads to more money in circulation, higher inflation, and worsened balance of payments. The government quickly adjusts its spending to inflation, but revenue changes more slowly. In the long and short term, fiscal deficit, prices, and private sector credit impact money supply. Money supply affects inflation in the short term, while in the long term, there is a two-way relationship between money supply and prices. Domestic credit reduces exchange market pressure, and foreign reserves are used more than exchange rate changes to balance external trade. These findings can help policymakers create better economic policies and encourage responsible fiscal practices.