1.1 Background of the study
The hallmark of any economic development of a country is traceable to its budget implementation. In the words of Abdullahi (2007), a government budget is a political and administrative instrument by which the executive and legislative bodies endeavour to allocate scarce resources among the various organs of government either at state levels or federal level. It is basically a tool for selecting a particular mix of public and private goods and services. In the public sector, budget performs the same allocative functions that the price mechanism performs in the private sector (Abdullahi, 2011).
According to Olomola (2009), the role of budget in an economy cannot be overemphasized. A budget is an important economic instrument of national resources mobilization, allocation and economic management. It is an important economic instrument for facilitating and realizing the vision of government in a given fiscal year. A budget had to be well-designed, effectively and efficiently implemented, adequately monitored and its performance well evaluated. Very recently, budgeting, in Nigeria 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 were 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 out and employment. Meanwhile, in macroeconomic issues such as high unemployment, inadequate national savings, excessive budget deficits, and large public debts burdens, fiscal policy has been acknowledged to hold center stage in policy debate in both developed and developing economies played a vital role in stimulating economic growth and development. In such situations every economy attempts to promote its economic growth through increasing government expenditures and reducing taxes. Public expenditures 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 targeted 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.
According to Abogun & Fagbemi (2011), challenges to the full implementation of the annual federal Government budget has been of major concern to the Federal Government in recent years. This necessitated the government implementing several policies aimed at improving on its revenue generation, and spending effectiveness and efficiencies. In this regard, the Government through the federation ministry of finance/budget offices of the federation has been engaging key stakeholders to workout optimal budget implementation strategies. These included engagements through workshops (including strengthening budget implementation for enhances project execution and service delivery”, and enhancing internally Generated Revenue (IGR). By implication, therefore, budge implementation must have direct impact on the economic development of Nigeria.
1.2 Statement of the Problem
There is no doubt a strong and viable economy is dependent on budget implementation. The budget process in Nigeria before 2005 had been facing numerous challenges and had come under different reforms from one government to another. The main challenges have been lack of political will, commitment of abide by stipulated rules and budgets guidelines, inability to develop a macro-economic framework for budget formulation and ambiguities in the roles of various agencies involved in the formation and monitoring of budgets, periodic changing of budget like items classification which inhibited the formulation and monitoring of the budget. This has continued to affect budget implementation. All these have made it necessary to determine the impact of budget implementation on economic development in Nigeria.
1.3 Objectives of the Study
The broad objective of this study is to examine the relationship between budget implementation and economic development in Nigeria. The following are the specific objective.
To identify how lack of political will hinders budget implementation in Akwa Ibom State.
To find out how inability of government to develop a macro-economic framework affects budget implementation in Akwa Ibom State.
To analyze reasons that lead to periodic changes in budget classification in Akwa Ibom State.
To identify reasons why government do not abide by stipulated rules in terms of budget guide lines.
To find out if lack of budget monitoring has affected budget implementation in Akwa Ibom State.
1.4 Research Questions
What are the factor that hinders budget implementation in Akwa Ibom State?
What are the remote causes of in effective budget monitoring in Akwa Ibom State?
What are the factors that lead to government inability to developed a macro-economic framework?
What are the reasons why governments do not abide by stipulated guide lines?
Does effective budget monitoring contribute to the budget implementation in Akwa Ibom State?
H1: Periodic changes in budget classification lead to low economic development in Akwa Ibom State.
H2: Lack of political will in terms of budget implementation militate against the development of Nigeria.
H3: Inability of government to developed a macro-economic framework has hinder budget implementation in Nigeria.
1.6 Significance of the Study
The following are the significance of this study.
In the light of growing importance of ensuring that budgetary provisions matches with the outcomes, this study will provide some useful information for all the tiers of government and non-governmental organization who make use of budget in Nigeria.
The study will provide a guideline for government in the implementation of its economic policies and the development of Nigeria.
1.7 Scope of the Study/Limitation of the Study
This study will focus on the impact of budget implementation and the development of Nigeria’s economy from 2007–2015.in There is hardly any study without limitation. There are certain factors that limited the successful completion of this study on time. Such limitations include; lack of enough materials, lack of time to undertake the study having in mind that we have to satisfy the requirement for other courses, etc.
1.9 Definition of Terms
Budget Deficit: This is the excess of budgeted expenditure over budgeted revenue.
Budget Discipline: This is the degree of adherence to rules and limits in the preparation and implementation of budgets. It covers three areas namely, adherence to budgetary estimate, adherence to budget calendar and adherence to budget polices.
Budget Input: The allocation of money to particular uses in the budget.
Budget outcomes: The ultimate impact on the society or economy as the result of budget allocation to a particular programme or sector.
Budget output: The public services that are provided by the government through the use of budget inputs.
Budget practice: A procedure that assists in accomplishing a principle and element of the budget process.
Budget process: This connotes the series of activities involving budget conceptualization, budget preparation, approval, implementation, monitoring and evaluation. It’s simply the process of proving a budget and implementing the budget to achieve the budgeted objectives.
Budget Surplus: This is the excess of budgeted revenue over budgeted expenditure for a budget year.
Budgetary Control: This relates to the systematic control of an organizations operations through the establishment of standard and targets regarding income and expenditure and a continuous monetary and adjustment of performance against them.
Effective Budgeting: This refers to the budgetary process that is characterized by discipline efficiency and effectiveness. In an effective budget, the budget outcomes must have great resemblance the original plans.
Line-item Budgets: This is a budget in which the expenditure are expressed in considerable details, but the activities being undertaken are given little attention. It shows the nature of spending not the purpose.
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