EFFECT OF BUDGET IMPLEMENTATION ON THE ECONOMIC GROWTH OF NIGERIA
- Project Research
- 1-5 Chapters
- Quantitative
- Regression
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Educators
- NGN 3000
Background to the Study
A budget is a framework for revenue and expenditure outlays over a specified period usually one year (Olurankise 2012). The role of budget in an economy cannot be overemphasized Olomola (2009). It is an essential factor for economy in facilitating and realizing the vision of government in a given fiscal year. Olomola (2009) opined that the budget process has always been coming with unending faults. The most visible bottlenecks are associated with budget implementation. Frequently the compliant is about non-release, partial release and delay in releasing approved funds for budgeted expenditure. It has been well observed that a quarter to which funds are related may end before the related funds are made available. Clearly, this has negative implications for institutional planning and management as well as the overall impact of the budget on development and welfare of the people.
It is about five decades since Nigeria has been involved in annual budgeting as an independent state. A look at the performance of Nigeria’s previous and current budgetary estimates shows that they have not helped the state achieve or maintain a better economic climate. The country’s successive budgets have been in most cases recording deficits. Even when they were expected to be balanced or surplus budget, they end up disappointing their operators and economic observers by recording deficits. This contributes immensely in worsening the socio-economic problems in Nigeria. Such problems include high inflation, poverty, unemployment, income inequality, adverse balance of payments, low standard of living etc. Although, it should be noted that at times deficit financing is deliberately undertaken by any government, so as to stimulate economic activities in the country which it controls, establish more industries to absorb those who are unemployed, provide more social amenities to the people and in fact, improve the general well being of the populace. But in Nigeria, instead of the afore-stated being the case, the reverse occurs. As a matter of fact, it causes more harm than good to Nigerians.
Budgeting and its process in Nigeria remain problematic both in the areas of preparation and implementation, hence, the need for adequate control aimed at improving effective resources utilization at the budget implementation stage. Fiscal policy is a fundamental instrument that can be used to lessen short-run fluctuations in output and employment. Meanwhile, in macroeconomic issues such as high unemployment, inadequate national savings, excessive budget deficits, and large public debt burdens, fiscal policy has been acknowledged to hold centre stage in policy debate in both developed and developing economies. During the global economic recession of the 1930s, the government sectors of both developed and developing economies played a vital role in stimulating economic growth and development. In situations like that, every economy attempts to promote its economic growth through increasing government expenditures and reducing taxes. Public expenditure is a fundamental instrument that influences the sustainability of public finances via effects on fiscal balances and government debt. Budget is traditionally generally seen from the phenomenon of shrink the target income, in contrast to the tendency to raise the expenditure budget target. This phenomenon helps to explain that the target revenue would be diminished if the area shows achievement in its realization.
In Nigeria, before ministries and spending agencies of the government can incur an obligation to make expenditures, they must secure spending authorization from the Ministry of Finance through the use of warrants. This warrant will authorize officers controlling votes to incur expenditure in accordance with the approved estimates subject to any reserved items. If the Appropriation Act has not come into operation at the beginning of the year, a provisional General Warrant may be issued to ensure continuity of the services of government at a level not exceeding those of the previous year. During the phase of budget implementation, there are many possibilities for interventions and manipulations in view of the fact that officials have a great amount of discretionary power to decide which spending ministry or agency will be granted spending authorization. In spite of the specific nature of appropriation laws, the commitment phase of the expenditure process is a fertile ground for corrupt activities. This study will however examine the effect of budget implementation on the economic growth of Nigeria.
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