Project Materials

THE PROBLEM OF GOVERNMENT BUDGETING IMPLEMENTATION IN DEVELOPING COUNTRIES.

Chapter one

INTRODUCTION

1.0 Background of the Study

A budget is typically defined as a government’s focus on expenditure and revenue over a specified time period. The general budget is the government’s revenue and expenditure plan for the upcoming fiscal year.

According to Prof. Udabah S I, budgeting has been used in Nigeria and other countries for a long time to help with policymaking and planning, as well as to offer a foundation for regulating income and expenditure.

Because of the difficulty in assessing and collecting direct tax from taxable individuals, he believes that indirect taxation is the most likely source of revenue to support government budgetary expenditure.

Inefficiency and corruption among tax officers make it difficult for the government to collect adequate income through direct taxation.

The budget was used to achieve the goals of full employment in the economy, price stability, increased growth in national output, balance of payment equilibrium, and equitable income distribution.

The United States of America had a fiscal structure that emphasised revenue over expenditure. The tendency of development that focusses more on revenue was carried across to all British territories.

However, in Nigeria, expertise was taken from a more mature British system because the national system was introduced during the period of independence between 1957 and 1960, despite the fact that Nigeria encountered unnecessary budget problems.

Ude M.O. stressed that government budgeting arose from representative democracy. Originally, in England, government budgeting was used as a tool to compel the king to be accountable to the nobles for the expenditure of the earnings from the monarch’s taxation of the people throughout the later Middle Ages.

Fiscal and economic policy changes by the government can have a destabilising effect on the entire economy, as Nigeria’s should not be disrupted by frequent policy changes.

1.1 Statement of the Problem

Despite the availability of multiple funding sources for the government, the Nigerian economy faces a number of imbalances in its implementation.

Several budgets have been draughted with the sole objective of halting decline growth in the production sector, controlling inflationary pressures, correcting the balance of payment deficit, and keeping a reasonable foreign exchange reserve.

However, the essential question that arises is, “Why have the objectives of the government budget not been achieved in most developing countries, including Nigeria?” This has resulted in an increase in unemployment and an overall low standard of living.

As a result, the purpose of this project task is to look into the loopholes that have made budget implementation ineffective, resulting in failure to meet the targeted objectives.

Though some budget insights have been provided in the past to aid in the critical analysis of the budget’s impact on the economy.

1.2 GOAL OF THE STUDY

1. To investigate the nature of government budgeting, particularly in Nigeria.

2. To determine why specified goals have never been met in Nigeria.

3. Identify the most effective revenue allocation method for economic growth and development.

4. To identify other elements that are likely to influence budget implementation.

1.3 RESEARCH QUESTIONS

a. Why have most developing countries, including Nigeria, not met their budget objectives?

b. What are the causes of poorly implemented budgets?

c. Why has Nigeria never met its budgetary targets?

1.4 Significance of the Study

1. The findings of the study will assist policymakers in the field of public finance in determining how to address some of the issues raised in the research.

2. It is also predicted that this research will be extremely beneficial to academics and others who may find the study to be an excellent source of material for future research project.

3. This research will assist in correlating, comparing, and coordinating the financial management of various government agencies.

1.5 Research Hypothesis

Hypothesis I.

H0: The issue of government budget execution in emerging nations has no substantial effect on economic growth.

Hello: The problem of government budget execution in emerging nations has a substantial impact on economic growth.

Hypothesis II.

H0: There is no substantial correlation between the independent variable and GDP.

H1: There is a substantial correlation between the dependent variables and GDP.

1.6 SCOPE OF THE STUDY

The scope and coverage of this study have been limited to include (21 years). The study will cover the entire country of Nigeria and will be limited to evaluating the problem of budgetary execution in Nigeria using a target variable to make a generalisation, such as government planned revenue and expenditure.

1.7 Limitations of the Study

To reduce the constraint, which may occur in the form of data mortality and other associated limitations, to a reasonable amount.

There were constraints such as data sourcing and financial constraints. Obtaining data from various government institutions such as the central bank is a difficult task because these institutions are unwilling to cooperate. Conducting a study of this nature requires a large sum of money, and as a student, there is always the issue of insufficient funds.

1.8 Definition of Terms

PUBLIC EXPENDITURE: These are the funds that the government spends on various projects such as roads, hospitals, street lights, and schools.

CAPITAL RECEIPTS: These are loans or grants given to the government. They can be created by other government agencies or international organisations.

RECURRENT REVENUE: This refers to the government’s annual income from taxation, fines, and other sources.

RECURRENT EXPENDITURE: These are expenditures for government operations such as salaries and interest on public debt.

ECONOMIC SERVICES: These are expenses for productive activities including agriculture, fishing, forestry, transportation, and communication.

TRANSFER: These are expenditures that are not spent on direct economic operations; examples include interest payments on national debt, unemployment benefits, pension payments, and assistance to other countries.