The research investigates the influence of budget shortfalls on key economic indicators in Nigeria. spanning the period from 1981 to 2022 through the utilization of VAR analysis. The findings reveal that budget deficits negatively affect the exchange rate in both the short and long run Moreover, they negatively influence the real interest rate in the short term but exhibit a positive impact in the long run. Furthermore, money supply responds unfavorably to budget deficit shocks in both time frames. The study aligns with Keynesian principles and proposes the adoption of restrictive measures in monetary, fiscal, and exchange rate policies to address ongoing inflation and escalating interest rates.