This study examines the impact of budget implementation on economic growth in Nigeria from 1993 to 2010. The researcher developed an econometric model using gross domestic product (GDP) as the dependent variable and public total expenditure, public recurrent expenditure, public capital expenditure, and external debt as independent variables. The results of the ordinary least squares regression analysis show that budget implementation has a positive effect on economic growth in Nigeria. Specifically, GDP was found to have a positive relationship with public total expenditure and public recurrent expenditure, while it had a negative relationship with public capital expenditure and external debt. The study recommends that the government increase capital expenditure relative to recurrent expenditure and enact laws to ensure budgets are implemented according to plans in order to promote growth and development.
The main focus of this study is to investigate the impact of expansion in economic growth on
government expenditure in Nigeria covering the periods 1970 to 2012. Gross Domestic Product (GDP) was
used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach
in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately
employed in this study. The findings of this study revealed that expansion in economic growth has significant
impact on government expenditure in Nigeria. The study further provided evidence of long-run causality from
boom/expansion in economic growth to government expenditure in Nigeria but could not support any evidence
of short-run causality. The researcher recommended among others, that Governments in Nigeria should give
more impetus to policies that will guarantee sustainable economic growth.
Government Expenditure and Economic Growth Nexus: Empirical Evidence from Nig...iosrjce
This study has examined the impact of public expenditure on economic growth in Nigeria using time
series data for the period 1970-2012. Secondary data were sourced from the CBN, NBS, journals, text books
etc. The adopted model was fitted with three variables: real GDP, capital and recurrent expenditure. The tools
of analysis were the ADF unit root test and ordinary least square multiple regression accompanied by pairwise
Granger causality test. The major objective of this study is to analyse the impact as well as direction of
causality between the fiscal variables and economic growth. All the variables included in the model are
stationary at level. Empirical findings from the study show that there is positive and insignificant relationship
between capital expenditure and economic growth while recurrent expenditure had a significant positive impact
on economic growth. Also, Granger causality test demonstrates a unidirectional causality running from the
fiscal variables to economic growth in validation of the Keynesian theory. Consequently, the study
recommended more allocation of resources for recurrent purposes as well; government should establish the
body that will monitor contract awarding process of capital projects closely, to guard against over estimation of
project cost and stealing of public funds.
The spending allocation pattern of national governments varies depending on public policy for
desired effects but the outcome is rather controversial according to existing literature. This research aims to
explore the relationship between government expenditure, economic development and economic growth in
Brazil from 1994 to 2017. The Human Development Indicator (HDI) index is a representative measure of
economic development and is comprised of three dimensions:
Effect of budget deficits on economic growthNigus Temare
The main objective of this study was to investigate the effect of budget deficit on economic growth in Ethiopia. For this purpose, the study used time series secondary data, and the data was extracted from the World Bank development indicators, Ministry of Finance, and National Planning and Development Commission of Ethiopia. The data covered a period running from 1994 to 2020.The study employed the Autoregressive Distributed Lag (ARDL) co-integration technique to determine the long and short-run relationship between budget deficit and economic growth. The findings resulted from modeling and analysis of the study showed that there exists a negative relationship between budget deficit and economic growth in Ethiopia and these results are consistent with the neoclassical economist schools of thought. Besides, the inflation rate is affecting the economic growth negatively and significantly whereas, government expenditure and trade openness affect the economy positively and statistically significant in the long run. On the other hand, the analysis in the short-run revealed that the budget deficit is positive but statistically insignificant. This indicates that budget deficit changes have no immediate effect on economic growth. The study suggested some policies which are important for the government of Ethiopia to avoid certain levels of the budget deficit to achieve the desired level of growth.
The main focus of this study is to investigate the impact of expansion in economic growth on
government expenditure in Nigeria covering the periods 1970 to 2012. Gross Domestic Product (GDP) was
used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach
in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately
employed in this study. The findings of this study revealed that expansion in economic growth has significant
impact on government expenditure in Nigeria. The study further provided evidence of long-run causality from
boom/expansion in economic growth to government expenditure in Nigeria but could not support any evidence
of short-run causality. The researcher recommended among others, that Governments in Nigeria should give
more impetus to policies that will guarantee sustainable economic growth.
Government Expenditure and Economic Growth Nexus: Empirical Evidence from Nig...iosrjce
This study has examined the impact of public expenditure on economic growth in Nigeria using time
series data for the period 1970-2012. Secondary data were sourced from the CBN, NBS, journals, text books
etc. The adopted model was fitted with three variables: real GDP, capital and recurrent expenditure. The tools
of analysis were the ADF unit root test and ordinary least square multiple regression accompanied by pairwise
Granger causality test. The major objective of this study is to analyse the impact as well as direction of
causality between the fiscal variables and economic growth. All the variables included in the model are
stationary at level. Empirical findings from the study show that there is positive and insignificant relationship
between capital expenditure and economic growth while recurrent expenditure had a significant positive impact
on economic growth. Also, Granger causality test demonstrates a unidirectional causality running from the
fiscal variables to economic growth in validation of the Keynesian theory. Consequently, the study
recommended more allocation of resources for recurrent purposes as well; government should establish the
body that will monitor contract awarding process of capital projects closely, to guard against over estimation of
project cost and stealing of public funds.
The spending allocation pattern of national governments varies depending on public policy for
desired effects but the outcome is rather controversial according to existing literature. This research aims to
explore the relationship between government expenditure, economic development and economic growth in
Brazil from 1994 to 2017. The Human Development Indicator (HDI) index is a representative measure of
economic development and is comprised of three dimensions:
Effect of budget deficits on economic growthNigus Temare
The main objective of this study was to investigate the effect of budget deficit on economic growth in Ethiopia. For this purpose, the study used time series secondary data, and the data was extracted from the World Bank development indicators, Ministry of Finance, and National Planning and Development Commission of Ethiopia. The data covered a period running from 1994 to 2020.The study employed the Autoregressive Distributed Lag (ARDL) co-integration technique to determine the long and short-run relationship between budget deficit and economic growth. The findings resulted from modeling and analysis of the study showed that there exists a negative relationship between budget deficit and economic growth in Ethiopia and these results are consistent with the neoclassical economist schools of thought. Besides, the inflation rate is affecting the economic growth negatively and significantly whereas, government expenditure and trade openness affect the economy positively and statistically significant in the long run. On the other hand, the analysis in the short-run revealed that the budget deficit is positive but statistically insignificant. This indicates that budget deficit changes have no immediate effect on economic growth. The study suggested some policies which are important for the government of Ethiopia to avoid certain levels of the budget deficit to achieve the desired level of growth.
Abstract: The paper examines the impact of public sectoral expenditure on economic growth in Nigeria for the period 1981-2013. It was observed that the growth of government expenditure has not fully felt by the economy. The econometric methodology employed is the ARDL model and results show that while the impact of government expenditure on administration and debt servicing were positive on economic growth in the long and short run, expenditure on economic and social sectors has negative impact. We argue that this may not be unconnected with the high level of corruption prevalent in the public sector where funds that are meant for provision or maintenance of social-economic activities like agriculture, roads, transportations, schools and hospitals are diverted for personal use. The CUSUM and CUSUMSQ test show the model is stable as neither of them cross the 5% boundary. The paper recommended that government should increase expenditure to the social and economic sectors while debts or debt servicing should be reduced. Also, corruption so prevalent in the public sector must be minimized if cannot be eradicated.
Assessment of Public Financial Management and State of Infrastructure in Tara...IJASRD Journal
This study examined public financial management and state of infrastructure in Taraba State of Nigeria. The study used survey design. Data were collected through administration of questionnaire to respondents across the state, interviews were also conducted. The questionnaire was designed on 5-point Likert scale. Descriptive statistics, Pearson correlation were employed in the analyses of data. Also, chi-square was used in testing the research hypotheses. The study reveals that budget performance has positive and significant effect on state of infrastructure. In addition, it was revealed that the state of infrastructure in Taraba State does not reflect the budget. The findings have implications on government officials, relevant government agencies, and the general public. The study therefore recommends that government should take it as an obligation to implement significant proportion of budget to improve the state of infrastructure.
An Analysis of the Relationship between Fiscal Deficits and Selected Macroeco...IOSR Journals
This study investigates the relationship that exists between the Government Deficit Spending and selected macroeconomic variables such as Gross Domestic Product (GDP), Exchange Rate, Inflation, Money Supply and Lending Interest Rate. The period covered is 1970 (when the civil war ended) and 2011. Ordinary Least Squares (OLS) technique was adopted to analyze the relationships. The study concludes that Government Deficit Spending (GDS) has positive significant relationship with GDP. Government Deficit Spending also has positive significant relationship with Exchange Rate, Inflation, and Money Supply. Government Deficit has negative significant relationship with Lending Interest Rate and most likely crowd-out the private sector by raising the cost of funds. Deficit spending has been known to have adverse effects on the economy and government is advised to curtail excessive deficit spending. It is recommended that further research is done to establish other variables that are affected by government deficit spending.
Government expenditure is a very instrumental demand tool in achieving economic stability and policy makers frequently use it to influence certain economic outcomes. Government expenditure majorly consists of two components: investment and consumption components. Many researchers concede that higher level of government consumption expenditure is growth retarding and therefore undesirable. The aim of this paper was to establish the economic determinants of government consumption expenditure in Kenya. The results showed that in the long-run, while 1USD increase in GDP causes USD1.3 increase in government consumption expenditure, a unit increase in inflation rate would cause USD1.8 increase in consumption expenditure. However, 1USD increase in foreign direct investment and external debt stock causes, respectively, USD 0.07 and USD 2.6 drop in government consumption expenditure. Corruption, democracy and political instability have positive effects on government consumption expenditure in Kenya. Urbanization and population dynamics jointly affect the variable in the short-run. This paper recommends that the government should strengthen its institutions that are mandated to deal with graft cases, create peaceful political setting at all times and ensure a friendly environment to foreign investors.
The paper examines the impact of public sectoral expenditure on economic growth in Nigeria for the period 1981-2013. It was observed that the growth of government expenditure has not fully felt by the economy. The econometric methodology employed is the ARDL model and results show that while the impact of government expenditure on administration and debt servicing were positive on economic growth in the long and short run, expenditure on economic and social sectors has negative impact. We argue that this may not be unconnected with the high level of corruption prevalent in the public sector where funds that are meant for provision or maintenance of social-economic activities like agriculture, roads, transportations, schools and hospitals are diverted for personal use. The CUSUM and CUSUMSQ test show the model is stable as neither of them cross the 5% boundary. The paper recommended that government should increase expenditure to the social and economic sectors while debts or debt servicing should be reduced. Also, corruption so prevalent in the public sector must be minimized if cannot be eradicated.
Using time series data, this study investigated the effect of aggregated and disaggregated public spending on economic growth in Nigeria during the period 1980 – 2015. Time series data such as aggregated expenditure proxy by total federal government expenditure (TFGE), disaggregated expenditure proxy by recurrent expenditure (REXP) and capital expenditure (CEXP,) and economic growth proxy by GDP were obtained from central bank of Nigeria (CBN) statistical bulletin. Error Correction Model (ECM) was used to estimate the model. The result of the finding revealed that the total federal government expenditure (TFGE) and capital expenditure (CEXP) exerts positive and significant influences on GDP while recurrent expenditure (REXP) has a positive and insignificant influence on GDP. This implies that the higher the public spending, the higher the GDP. The researchers therefore, recommend that for sustainable Economic Growth (GDP), federal government should increase capital expenditure by allocating more funds to the productive sector of the economy. More so, the positive contributions of public spending to economic growth necessitate the continued use of fiscal policy instruments to pursue macroeconomic objectives in Nigeria.
Abstract: The paper examines the impact of public sectoral expenditure on economic growth in Nigeria for the period 1981-2013. It was observed that the growth of government expenditure has not fully felt by the economy. The econometric methodology employed is the ARDL model and results show that while the impact of government expenditure on administration and debt servicing were positive on economic growth in the long and short run, expenditure on economic and social sectors has negative impact. We argue that this may not be unconnected with the high level of corruption prevalent in the public sector where funds that are meant for provision or maintenance of social-economic activities like agriculture, roads, transportations, schools and hospitals are diverted for personal use. The CUSUM and CUSUMSQ test show the model is stable as neither of them cross the 5% boundary. The paper recommended that government should increase expenditure to the social and economic sectors while debts or debt servicing should be reduced. Also, corruption so prevalent in the public sector must be minimized if cannot be eradicated.
Assessment of Public Financial Management and State of Infrastructure in Tara...IJASRD Journal
This study examined public financial management and state of infrastructure in Taraba State of Nigeria. The study used survey design. Data were collected through administration of questionnaire to respondents across the state, interviews were also conducted. The questionnaire was designed on 5-point Likert scale. Descriptive statistics, Pearson correlation were employed in the analyses of data. Also, chi-square was used in testing the research hypotheses. The study reveals that budget performance has positive and significant effect on state of infrastructure. In addition, it was revealed that the state of infrastructure in Taraba State does not reflect the budget. The findings have implications on government officials, relevant government agencies, and the general public. The study therefore recommends that government should take it as an obligation to implement significant proportion of budget to improve the state of infrastructure.
An Analysis of the Relationship between Fiscal Deficits and Selected Macroeco...IOSR Journals
This study investigates the relationship that exists between the Government Deficit Spending and selected macroeconomic variables such as Gross Domestic Product (GDP), Exchange Rate, Inflation, Money Supply and Lending Interest Rate. The period covered is 1970 (when the civil war ended) and 2011. Ordinary Least Squares (OLS) technique was adopted to analyze the relationships. The study concludes that Government Deficit Spending (GDS) has positive significant relationship with GDP. Government Deficit Spending also has positive significant relationship with Exchange Rate, Inflation, and Money Supply. Government Deficit has negative significant relationship with Lending Interest Rate and most likely crowd-out the private sector by raising the cost of funds. Deficit spending has been known to have adverse effects on the economy and government is advised to curtail excessive deficit spending. It is recommended that further research is done to establish other variables that are affected by government deficit spending.
Government expenditure is a very instrumental demand tool in achieving economic stability and policy makers frequently use it to influence certain economic outcomes. Government expenditure majorly consists of two components: investment and consumption components. Many researchers concede that higher level of government consumption expenditure is growth retarding and therefore undesirable. The aim of this paper was to establish the economic determinants of government consumption expenditure in Kenya. The results showed that in the long-run, while 1USD increase in GDP causes USD1.3 increase in government consumption expenditure, a unit increase in inflation rate would cause USD1.8 increase in consumption expenditure. However, 1USD increase in foreign direct investment and external debt stock causes, respectively, USD 0.07 and USD 2.6 drop in government consumption expenditure. Corruption, democracy and political instability have positive effects on government consumption expenditure in Kenya. Urbanization and population dynamics jointly affect the variable in the short-run. This paper recommends that the government should strengthen its institutions that are mandated to deal with graft cases, create peaceful political setting at all times and ensure a friendly environment to foreign investors.
The paper examines the impact of public sectoral expenditure on economic growth in Nigeria for the period 1981-2013. It was observed that the growth of government expenditure has not fully felt by the economy. The econometric methodology employed is the ARDL model and results show that while the impact of government expenditure on administration and debt servicing were positive on economic growth in the long and short run, expenditure on economic and social sectors has negative impact. We argue that this may not be unconnected with the high level of corruption prevalent in the public sector where funds that are meant for provision or maintenance of social-economic activities like agriculture, roads, transportations, schools and hospitals are diverted for personal use. The CUSUM and CUSUMSQ test show the model is stable as neither of them cross the 5% boundary. The paper recommended that government should increase expenditure to the social and economic sectors while debts or debt servicing should be reduced. Also, corruption so prevalent in the public sector must be minimized if cannot be eradicated.
Using time series data, this study investigated the effect of aggregated and disaggregated public spending on economic growth in Nigeria during the period 1980 – 2015. Time series data such as aggregated expenditure proxy by total federal government expenditure (TFGE), disaggregated expenditure proxy by recurrent expenditure (REXP) and capital expenditure (CEXP,) and economic growth proxy by GDP were obtained from central bank of Nigeria (CBN) statistical bulletin. Error Correction Model (ECM) was used to estimate the model. The result of the finding revealed that the total federal government expenditure (TFGE) and capital expenditure (CEXP) exerts positive and significant influences on GDP while recurrent expenditure (REXP) has a positive and insignificant influence on GDP. This implies that the higher the public spending, the higher the GDP. The researchers therefore, recommend that for sustainable Economic Growth (GDP), federal government should increase capital expenditure by allocating more funds to the productive sector of the economy. More so, the positive contributions of public spending to economic growth necessitate the continued use of fiscal policy instruments to pursue macroeconomic objectives in Nigeria.
Effect of Fiscal Responsibility Act on Budgeting and Accountability Practice ...ijtsrd
This study examines the effect of the Fiscal Responsibility Act on budgeting and accountability practice in Nigeria's Fourth Republic. Specifically, the study determines the relationship between the pre and post effect of the Reform Act to ascertain if there is any significant difference in the management of the nation's fiscal operations. The study made use of secondary data obtained from the Central Bank of Nigeria Annual Reports and Accounts, the Central Bank Nigeria Statistical Bulletins and report of the Accountant General of the Federation as audited by the Auditor General of the Federation for the period under study. Six research questions and seven hypotheses were formulated to guide the study. The data generated for this study were presented in tables, graphs and mean scores and analyzed using the Statistical Package for Social Sciences version 22. The hypotheses were tested using the T test of difference and the Pearson Correlation r . Results revealed among others that the number of months of default on the publication of Federal Government Audited Accounts was reduced in the post Fiscal Responsibility Act era. Again, there is a significant negative trend in the mean corruption index after the introduction of the Act and that actual capital expenditure is more closely related to capital expenditure budget in the post than pre Fiscal Responsibility Act period. Based on the findings, we recommended that budgeting and accountability practice should be made more proactive by imbibing the culture of timely auditing and reporting standards as stated in sections 49 and 50 of the Fiscal Responsibility Act, 2007. Okegbe, T. O. "Effect of Fiscal Responsibility Act on Budgeting and Accountability Practice in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-5 , August 2019, URL: https://www.ijtsrd.com/papers/ijtsrd26639.pdfPaper URL: https://www.ijtsrd.com/management/accounting-and-finance/26639/effect-of-fiscal-responsibility-act-on-budgeting-and-accountability-practice-in-nigeria/okegbe-t-o
IMPACT OF FISCAL POLICY AND MONETARY POLICY ON THE ECONOMIC GROWTH OF NIGERIA...AJHSSR Journal
ABSTRACT: This research work focused on the impact of fiscal and monetary policy on Nigeria‟s economic
growth between 1980 and 2016. In the study, variables such as government expenditure and taxation revenue
were used to proxy fiscal policy while the broad money supply was employed as a proxy for monetary policy.
The other variable employed as controlled variable is interest rate. The unit root test confirmed that all the
variables were not stationary at levels but were stationary at first difference. Also, the Johansen cointegration
test confirmed that a long run relationship exists between fiscal policy, monetary policy and economic growth in
Nigeria. The empirical results reported using the ordinary least squares technique suggested that fiscal policy
has positive and significant impact on economic growth, and monetary policy has positive impact on economic
growth as well. We, therefore, conclude that both fiscal and monetary policies have positive and significant
impact on Nigeria‟s economic growth between 1980 and 2016. To this end, we recommend that the Federal
Government of Nigeria should focus on using the fiscal policy instruments to stimulate the economy in the
desired direction in order to sustain economic growth process. We also call on the Central Bank of Nigeria to
consistently embark on appropriate and effective monetary policy to boost the economy. Furthermore, since
interest rate is observed to negatively impact economic growth, efforts should be made as lowering the cost of
borrowing in the commercial banks and other financial institutions in order to boost investment and increase
economic growth in the country.
Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria 1...ijtsrd
Nigeria is a developing economy with active participation of the federal government in various economic sectors not only to promote economic growth and development but also to instill fiscal and economic discipline in the economy. Government participation in the economy means greater funding of economic activities and this is expected to impact on economic indicators. This study analyses the effect of government expenditure on inflation rate in Nigeria within a period of 39 years spanning 1981 2019 . The study specifically seek to ascertain, determine, explore and assess the extent to which government expenditures on key sectors of agriculture, education, health and telecommunications respectively affect inflation rate in Nigeria. In line with the specific objectives of this study, four research questions are raised and four hypotheses duly formulated. Data used for this study were collected from the Central Bank of Nigeria CBN Statistical Bulletin. Government Expenditure on Agriculture GOA , Government Expenditure on Education GOE , Government Expenditure on Health GOH and Government Expenditure on Telecommunication GOT are the independent variables while inflation rate INF is the dependent variable. Descriptive statistics, diagnostic test employing the Augmented Dickey Fuller and a multivariate regression based on Johanson Cointegration and Error Correction Model ECM are used to analyze the data. Our findings indicate that government expenditures on education and agriculture have positive but insignificant effect on inflation rate and on the other hand, government expenditure on health and government expenditure on telecommunications have positive and significant effect on inflation rate. Based on our findings, the study recommends that government should increase its allocation to the health and education sectors to trigger increased skills and healthcare of economic operators for enhanced human capital development and economic productivity. Government should also provide adequate infrastructures to facilitate economic growth and reduce high inflation rate. Mbanefo, Patrick Amaechi | Atueyi, Chidi Leonard "Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria (1981-2019)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-2 , February 2022, URL: https://www.ijtsrd.com/papers/ijtsrd49237.pdf Paper URL: https://www.ijtsrd.com/management/management-development/49237/analyzing-the-effect-of-government-expenditure-on-inflation-rate-in-nigeria-19812019/mbanefo-patrick-amaechi
Foreign Aid and Fiscal Behaviour in Nigeria: An Impact Assessment of Deregula...iosrjce
The study examined the influence of deregulation on the relationship between foreign aid and fiscal
behaviour in Nigeria. The equation which described foreign aid as function of important fiscal variables and
other macroeconomic variables is derived from the famous two-gap model. Chow test is used to examine if there
is any structural changes since the adoption of deregulation that has significantly affected the relationship
between foreign aid and fiscal behaviour. The result shows that deregulation has positively and significantly
affected the impact of fiscal behaviour in Nigeria on foreign aid accessibility. But the effect has been short-lived
recently owing to the recent drastic fall in foreign aid available to Nigeria despite the sustained increase in both
government revenue and expenditure. It is recommended that assessment of other shocks that can affect the
fiscal behaviour in Nigeria should be conducted with a view to getting the reason why deregulation fails to
maintain positive relationship that exists between fiscal behaviour and foreign aid in Nigeria.
Do Regional Finance Accountability And Budgetary Composition Enhance Regional...inventionjournals
Accountability is pivotal factor in the implementation of successful good governance since accountability is an indicator whether public fund is spent properly or not. Another relevant factor is budgetary composition more particularly local tax revenue and capital expenditure due to their correlation with public service. Empirical evidence showed that regional finance accountability affected regional economic performance measured using the Supreme Audit Board opinion and the amount of saved fund had negative and significant influence towards Gross Regional Domestic Product. On the other hand, budgetary surplus had positive and significant influence towards the Gross Regional Domestic Product. Budgetary composition and regional expenditure improved regional economic performance measured using local tax revenue and capital expenditure that have positive and significant influence towards Gross Regional Domestic Product.
Running Head BUDGET AND PUBLIC FINANCEBUDGET AND PUBLIC F.docxhealdkathaleen
Running Head: BUDGET AND PUBLIC FINANCE
BUDGET AND PUBLIC FINANCE
Colorado Technical University
Budget and Public Finance
Nana Lawson
Individual project unit 4
July 31st 2019
BUDGET AND PUBLIC FINANCE.
Finance and budgeting are essential to public administration since it involves spending and transparently allocating public dollars. Managing funds mostly involves budgeting and understanding public reaction (Simon, H. A., Smithburg, D. W., & Thompson, 2017). Financial resource availability shapes many of the outcomes that matter to public administration including the effectiveness of public service, undertaking management reforms, performance implications and decisions to pursue. In 1988, the chamber of deputies changed the procedures regulating the budget session to control the formation of public needs.
The current financial crisis of our world today has forced organizations to cut budgets, reset priorities, restructure services and assume new financial responsibilities. This reminds us of the centrality of financial resources management to the public service. Budgets help in laying a foundation for the achievement of goals. When we focus on public finance, political, economic, legal and administrative aspects of public finance are examined.
Budgeting is not an easy process as it may seem and it involves many things. Many issues are involved when it comes to budgeting and public finance. Each budgetary decision made impacts various parts of a community that mainly depend on the government. For instance, looking at the day today ever-rising population, limited resources are a major factor when budgeting due to the large percentage of people existing in a world that has limited resources not enough to sustain them all.
Communication has also become an issue when we consider budgets. Just as many people say, communication is the key to success. For continuity to take place, communication must be considered. When we look at our world most communication mostly takes place through online services which mostly involves lies and corrupt activities. This hinders the budget and public finance process since almost everything relies on new technology.
Change of culture has also become a hindrance when we look at the differences between then old and new centuries since this century involves a lot of things. Infrastructure comes in since dealing with infrastructure and finding the way to invest in it with revenues that are not growing at the same rate as costs are hard.
Vision is also an issue since the government lacks an up straight vision on where the community is going. The government and its staff majorly base on obtaining power, being the best which makes it hard to budget (GrReed, B. J., &Raudla, 2010). This is because, when we focus on a vision, it becomes easier for budgeting since we can know what needs ...
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
when will pi network coin be available on crypto exchange.DOT TECH
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5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
The secret way to sell pi coins effortlessly.DOT TECH
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What price will pi network be listed on exchangesDOT TECH
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Budget implementation and economic growth in nigeria
1. Developing Country Studies
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.3, No.13, 2013
www.iiste.org
Budget Implementation and Economic Growth in Nigeria
OKE. M.O. (dr.okemike2012@yahoo.com)
DEPARTMENT OF BANKING AND FINANCE, FACULTY OF MANAGEMENT SCIENCES
EKITI STATE UNIVERSITY
ABSTRACT
This study examines the effect of budget implementation on the Nigerian economic growth and
provides panacea to the problem of budget allocation and its implementation. To achieve this broad goal, the
econometric model of ordinary least square (OLS) regression test was employed for analysis and time series data
span from 1993 to 2010 was considered. Budget in the public sector of Nigeria has almost become a ritual or a
yearly affairs which though good in content but without appreciable result. The issue of budget implementation
has long been a source of concern to the public and also considering the important impetus of budget
implementation on economic growth and development in Nigeria. The dependent variable was proxied by gross
domestic product (GDP), while the independent variables were public total expenditure (PEX), public recurrent
expenditure (PRE), public capital expenditure (PCE) and external debt (EXD). The results revealed that budget
implementation has a positive effect impact on Nigeria economic growth. The results further showed a positive
relationship between GDP and public total expenditure (PEX), public recurrent expenditure (PRE), public capital
expenditure, external debt (EXD), while public capital expenditure (PCE) shows a negative relationship to GDP.
The study recommends that government should enact on enabling law that will ensure the workability of its
budgets according to plans and increase the proportion of capital expenditure to recurrent expenditure so that the
budget can have growth and development inducement among others
Keywords: Budget, Budget implementation, Government policy Public expenditure, Fiscal policy.
1.0 INTRODUCTION
A budget is a framework for revenue and expenditure outlays over a specified period usually one year
(Olurankise (2012)). It is an instrument stipulating policies and programmes aimed at realizing the development
objectives of a government. Meigs and Meigs, (2004) defined budgets as a comprehensive financial plan, setting
forth the expected route for achieving the financial and operational goals of an organization”. Earlier before then,
Omolehinwa (2003) viewed Budget as the plan of dominant individuals in an organization expressed in
monetary terms and subject to the constraints imposed by other participants and the environment indicating how
the available resources may be utilized to achieve whatever the dominant individual agreed to be the
organization’s proprieties”. Very recently, budgeting in Nigerian has continued to spring up various
controversies as to the modality for preparation and administration in the country due to continuous change in
government and consequential change in policy and ideology. Most especially with the understanding that a
large percentage of the country’s population has gotten, this has made them advocate the need to review the size
of governance in order to push up the provisions available for more necessary projects. Only recently too was the
controversy over the oil benchmark that has hindered the national assembly from the passage of the 2013 budget
due to dispute over the price that must be used for budgeting purposes. It is important to state here that
implementation cannot be discussed without appropriate planning and reassessing coupled with proper
monitoring to facilitate it efficient implementation.
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 center 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 such situations every economy
attempted 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
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2. Developing Country Studies
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.3, No.13, 2013
www.iiste.org
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. The length of period of spending authorization is determined in
functional cash flow forecast for the period when payments are anticipated. 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. In Nigeria, budget process includes budget
preparation by the executive, legislative approval and implementation by the different ministry, department and
parastatal of the government.
2.0.
LITRATURE AND EMPIRICAL REVIEW
Various scholars have examined the effect of government budgeting on the economies of both
developed and developing nations. Nurudeen and Usman (2010), investigated the effect of government
expenditure on economic growth with disaggregated expenditure data from 1979 to 2007. The results reveal that
government total capital expenditure, total recurrent expenditures, and government expenditure on education
have negative effect on economic growth While the foregoing studies focused on the Keynesian model which
stipulates that expansion of government expenditure accelerates economic growth, the most relevant study in
tracing the causal relationship from output to government spending is that of Ighodaro et.al (2010). In addition to
total government expenditure they used a disaggregated government expenditure data from 1961 - 2007,
specifically; expenditure on general administration and that of community and social services to determine the
specific government expenditure that economic growth may have significant impact on. Other variables
reflecting fiscal policy changes and political freedom were also included in the model to augment the functional
form of Wagner’s law. All the variables used were found to be I(1) and long run relationship exist between the
dependent and the independent variables except in the case where only GDP was used as the independent
variable. Wagner’s hypothesis did not hold in all the estimations rather Keynesian hypothesis was validated.
Oyinlola (1993), examined the relationship between the Nigeria’s defense sector and economic
development, and reported a positive impact of expenditure on economic growth. Fajingbesi and Odusola (1999)
empirically investigated the relationship between government expenditure and economic growth in Nigeria. The
econometric results indicated that real government capital expenditure has a significant positive influence on real
output. However, the results showed that real government recurrent expenditure affects growth only by little. A
study by Ogiogio (1995) also revealed a long-term relationship between government expenditure and economic
growth. Moreover, the author’s findings showed that recurrent expenditure exerts more influence than capital
expenditure on growth. Akpan (2005), used a disaggregated approach to determine the components (that include
capital, recurrent, administrative, economic service, social and community service, and transfers) of government
expenditure that enhances growth, and those that do not. The author concluded that there was no significant
association between most components of government expenditure and economic growth in Nigeria. Castles and
Dowrick (1990) used the shares of disaggregated public expenditure in health, education, and social transfers to
explain economic growth. They found that social transfers and education had a positive effect on growth.
Devarajan et al. (1996) also assessed the impact of different types of public expenditure on economic growth, but
they did not find any significant relationship. Dogan (2006) investigated the relationship between national
income and public expenditures for Indonesia, Malaysia, Philippines, Singapore, and Thailand. Granger causality
tests were used to investigate the causal links between the two variables. The result of Granger causality revealed
that causality runs from public expenditures to national income only in the case of Philippines, and there was no
evidence for other countries.
Verma and Arora (2010) examined the validity of Wagner’s law in India over the period from 1951 to
2008. Empirical evidences regarding short-run dynamics refuted the existence of any relationship between
2
3. Developing Country Studies
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.3, No.13, 2013
www.iiste.org
economic growth and the size of the government expenditure. Afzal and Abbas (2012) reinvestigated the
application of the Wagner’s hypothesis to Pakistan over the period from 1960 to 2007 using time series
econometrics techniques. The study found that Wagner’s hypothesis does not hold for aggregate public spending
and income for three periods (1961–2007, 1973–1990, and 1991–2007) while it holds only for the period from
1981 to 1991. However, when fiscal deficit is included, the results supported the existence of Keynesian views
about public spending and growth.
Zheng et al. (2010) studied the empirical analysis on the relationship between the size of Chinese
government, as measured by its annual spending, and the growth rate of the economy. More specifically, it
designed to examine the applicability of Wagner’s law to the Chinese economy. The statistics used in this
research is annual time series data on total government spending and gross domestic product covering the period
from 1952 to 2007. Empirical results showed no strong evidence in support of the validity of Wagner’s law for
Chinese economy. Olomola (2004) confirmed the Wagner’s hypothesis both in short run and in the long run in
Nigeria for the period from 1970 to 2001.
Komain and Brahmasrene (2007) examined the relationship between public expenditure and economic
growth in Thailand, by employing the Granger causality test. The results revealed that public expenditure and
economic growth are not co-integrated, but there exists a significant positive effect of public expenditure on
economic growth. Barro (1991) in a study of 98 developed and developing economies found a positive but weak
relation between public expenditure and economic growth over the 1960 to 1985 period. Loizides and Vamvouks
(2005) employed the causality test to examine the relationship between public expenditure and economic growth,
using data set on Greece, United Kingdom, and Ireland. The authors found that government size Granger causes
economic growth in all the countries they studied. The results also indicated that economic growth Granger
causes public expenditure for Greece and United Kingdom.
Bingxin et al. (2009) assessed the impact of the composition of public expenditure on economic growth
in developing countries. They used a dynamic generalized method of moment (GMM) model and a panel data
set for 44 developing countries between 1980 and 2004. The results indicated that the various types of
government spending had different impact on economic growth. In Africa, human capital expenditure
contributes to economic growth whereas, in Asia, capital formation, agriculture, and education expenditure had
strong growth promoting effect. In Latin America, none of the public expenditure items was significant impact
on economic growth. Ramayandi (2003) reviewed the relationship between government size and economic
growth in the context of Indonesia and identified that government size tends to have a negative impact on
growth.
Herath (2004) examined the relationship between public expenditure and economic growth in Sri Lanka
for the period from 1959 to 2003. The study found that government expenditure has a positive effect on
economic growth; further his study suggested that openness is beneficial for Sri Lanka as it increases economic
growth. Alam et al. (2010) examined the long-run relationship between social expenditure and economic growth
in Asian developing countries including Sri Lanka. According to the analysis of the study concluded that
expenditure in infrastructure, education, and health played an important role in promoting economic growth in
all the selected Asian countries. Dilrukshini (2004) studied the relationship between public expenditure and
economic growth in Sri Lanka from 1952 to 2002 using time series data to test the validity of Wagner's law and
found that there is no empirical support either for the Wagner’s law or Keynesian hypothesis, in the case of Sri
Lanka.
3.0
INTRODUCTION
This study employs the use of Ordinary Least Square of regression analysis test the
effect of
international financial institutions on the Nigerian economic growth between 1993 and 2010. Secondary data
for the study were sourced from Central Bank of Nigeria’s publications and statistical bulleting as well as
publications from the Federal Office of Statistics (FOS)
3.1
MODEL SPECIFICATION
The model adopted in this study is that of Mayandy Kesavarajah (2012) in the study of the Wagner’s
Law in Sri Lanka: This model will be modified by adding two additional variables to suit the Nigerian situation.
The model can be represented as:
GDP = f (PEX, PRE, PCE, EXD, µ) ----------------------------------------- (1)
3
4. Developing Country Studies
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.3, No.13, 2013
www.iiste.org
Where
GDP
-
Gross Domestic Product
PEX
-
Public Total Expenditure
PRE
-
Public Recurrent Expenditure
PCE
-
Public Capital Expenditure
EXD
-
External debt
µ
-
Stochastic variable
F
-
Functional notation
This model for simplicity sake will be presented in mathematical terms as depicted below
GDP = β0 + β1PEX + β2PRE + β3PCE + β4EXD + µ
Where
Β0 – β4 =
coefficient of estimates
3.3 PRIOR EXPECTATION
In this study, the expected outcome of each of the explanatory variables adopted is presented below:
1. It is expected that Public Total Expenditure (PEX) will be positively related to Gross Domestic Product
(GDP). That is f’ (PEX) is expected to be >0. This implies that an increase in Public Total Expenditure is
expected to result into significant increase in Gross Domestic Product.
2. The level of Public Recurrent Expenditure (PRE) is expected to show a negative relationship with Gross
Domestic Product (GDP). That is f’ (PRE) is expected to be <0. That is an increase in level of Public Recurrent
Expenditure is expected to bring about a decrease in Gross Domestic Product (GDP).
3. It is expected that the level of Public Capital Expenditure (PCE) will keep a positive relationship with Gross
Domestic Product (GDP). That is f’ (PCE) is expected to >0. This implies that an increase in Public Capital
Expenditure will result into increase in Gross Domestic Product (GDP).
4. Also, External Debt (EXD) expected is expected to keep a negative relationship with Gross Domestic Product
(GDP). That is f’ (EXD) is expected <0. This implies that an increase in EXD is expected to result into a
reduction in the value of Gross Domestic Product (GDP).
4.0
DATA ANALYSIS AND FINDINGS
The table below shows the results of the ordinary least square test conducted on the specified model.
The OLS results reveal the relationship that exists between the dependent variable and each of the independent
variable
Table 4.1
Summary of Result
VARIABLE
C
PEX
PRE
PCE
EXD
R2 = 0.990200
COEFFICIENTS
STANDARD ERROR
PROBABILITY
7.573314
0.001883
0.0000
0.000691
0.000346
0.0674
0.001014
0.000759
0.2047
-6.52E-05
0.000740
0.9312
0.000483
0.000227
0.0529
Adj R2 = 0.987185
F-STAT = 328.3961
DW-STAT = 0.992515
Source: Author’s Computation
4
5. Developing Country Studies
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.3, No.13, 2013
www.iiste.org
From table 4.1, the relationship between the dependent variable (GDP) and the independent variables (PEX,
PRE, PCE and EXD) can be deduced can be expressed mathematically as in:
MD = 7.573314 + 0.000691PEX + 0.001014PRE- 6.52E-05PCE + 0.000483EXD + µ
From the above result, the constant parameter is positive, showing that if all Independent variables are
held constant, the dependent variable (GDP) will increase by7.573314units. The coefficient of PEX is also
positively related to GDP with an estimate of 0.000691. This implies that an increase in the Public Total
Expenditure (PEX) will lead to an increase in GDP by 0.000691units. Also, the coefficient of PRE also showed a
positive relationship with Gross domestic product (GDP) with a coefficient of 0.001014. This means that an
increase in the Public recurrent expenditure in the country will lead to increase in the Gross domestic product
(GDP) by 0.001014units. Meanwhile, the coefficient of Public capital expenditure (PCE) shows a negative figure
of -6.52E-05, meaning that an increase in the value of the Capital expenditure (PCE) will lead to 6.52E-05unit
decrease in the Gross domestic product (GDP). The coefficient of EXD on its own part showed a positive
relationship with Gross domestic product (GDP), with a coefficient of 0.000483. This means that an increase in
the value of External debt of the nation will lead to 0.000483units increase in the value of Gross domestic
products.
The coefficient of multiple determinations (R2) as given in the result of the regression result of the
ordinary least square is given as 0.990200 which implies 99.02% with an adjusted R2 of 0.987185 which implies
98.72%. This explains that the explanatory variables (PEX, PRE, PCE and EXD) accounted for 98.72%
behaviour of the Gross Domestic Product (GDP), while the remaining 1.28% is accounted for by the stochastic
variable. The t-test is done to test the significance of each if the explanatory variables using the student tdistribution test. It is carried out on a two tail test and by comparing the T-Cal and the T-tab.
The decision rule is that If T. Cal > T-tab, accept H1 and reject H0 and if T- Cal < T-tab, accept H0 and reject H1.
Table 4.2. Summary of T-statistical test for the parameters
Variables
T-calculated
C
4021.777
PEX
1.995397
PRE
1.335391
PCE
-0.088024
EXD
2.129467
T-tabulated
H0
H1
Remark
1.771
Reject
Accept
Significant
1.771
Reject
Accept
Significant
1.771
Accept
Reject
Insignificant
1.771
Accept
Reject
Significant
1.771
Reject
Accept
Significant
From the above table, it can be deduced that the constant parameter and two other variables (PEX and EXD) are
statistically significant while the other two explanatory variables (PRE and PCE) shows statistical insignificance.
Table 4.3. Summary of F-statistical test
Summary
Decision
F-Calculated
F-Tabulated
H0
328.3961
3.03
Reject
The F-test shows the statistical significance of the whole model.
H1
Accept
Remark
Significant
The table above show F-Cal > F-Tab, hence, we accept H1 and reject H0. The rejection of H0 means the
model is statistically significant.
The statistical test of Durbin Watson shows that DW value falls within the “Inconclusive region”. This means
that the statistical presence of autocorrelation in the model is inconclusive.
5
6. Developing Country Studies
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.3, No.13, 2013
4.1
www.iiste.org
SUMMARY AND IMPLICATION OF FINDINGS
The results in this study shows that only Public Capital expenditure (PCE) shows negative relationship
with the explained variable while the constant parameter and all other explanatory variables; Public total
expenditure (PEX), Public recurrent expenditure (PRE) and External debt (EXD) shows a positive relationship
with the Gross domestic product (GDP) of the country. Meanwhile in the statistical test carried out, only the
coefficient of Public recurrent expenditure (PRE) was statistically insignificant while others shows significance.
The coefficient of multiple determinants (R2) shows the goodness of fit of the model with an estimated 0.990200
which indicates that approximately 99% of the behaviour of behaviour of the GDP of any economy can be
explained by the variously identified explanatory budget implementation variables (PEX, PRE, PCE and EXD).
While the error term account for the remaining 1%. Also, the Durbin Watson statistics shows that the
autocorrelation test is inconclusive, hence implying the need for further research on this topic in which this
objective work will serve as a starting point for.
The implication of the above is therefore that a nation needs to take the issue of budget very seriously.
A critical evaluation of the result also revealed that the variable with lowest of effect is the debt level which
implies that the multiplier effect of any foreign debt obtained by a nation is not always commensurate with the
volume of loan gotten. Most of the return on it is used in the servicing of the loan itself. The coefficient of Public
capital expenditure which shows negative is not in any way surprising as the benefits of these expenses are not
meant to be enjoyed in the immediate year but expected to have a multiplier effect over a long period of time.
Capital expenditure on the short-run do usually seem like a negative decision at the time of making them but
later result into positivity as the spill-over effect begins to surface. On the overview, the model was significant in
the explanation of the behaviour of a nation’s performance and therefore implies that an appropriate implement
of budgetary plan will increase the performance level of a nation.
5.0 SUMMARY OF FINDINGS AND RECOMMENDATIONS
The paper critically examined the effect of Budget implementation on the performance the Nigerian
economy. The main finding emerging from this research indicates that Budget implementation has significant
impact on the performance of the economy; hence, it justifies the assertion of the Wegner who uphold the
preparation of a good budget and it appropriate implementation. In light of the findings of this study, it is of
cognizance to recommend policy measures to further enhance the effect of budget implementation on national
performance. The following recommendations were made:
1.
2.
3.
4.
Nations should endeavor to include more capital expenditure in it budgetary plan in other to speed
record a yearly increase in the value of growth process that is brought about by the future effect of
capital investment.
The proportion of debt finance in the national budget should be kept as low as possible as well as make
appropriate and judicious use of such.
Apart from paper documentations, government should ensure effective implementation of budget by
translating the budgeted amount into tangible assets such as good roads, infrastructures, electricity
supply among others so that the ordinary citizen on the road can feel the impact of good governance.
Finally, the government should also try to put in place effective machinery that will ensure the strict
adherence to due process and total implementation of annual budget provision and avoid diversion of
public funds to personal uses..
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Alam, S., A. Sultana, and Butt M. S., (2010) “Does social expenditures promote economic growth? A
multivariate panel co-integration analysis for Asian Countries,” European Journal of Social Sciences,
(14) 1, 44–54
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