CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

A budget according to Olirankise (2012) can be defined as a framework for revenue and expenditure outlays over a specified period usually one year. 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 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.

1. STATEMENT OF THE PROBLEM

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.

1.3 AIM AND OBJECTIVES OF THE STUDY

The main aim of the research work is to examine budget implementation and economic growth in Nigeria. The specific objectives of the study are:

1. to determine relationship between budget implementation and economic growth in Nigeria
2. to determine the effect of budgeting on the economic growth in Nigeria
3. to investigate the factors affecting budget implementation and economic growth in Nigeria
4. to ascertain the importance of budget implementation to the economic growth in Nigeria
5. to proffer solution to the problems or challenges facing the federal government of Nigeria in budget implementation

1.4 RESEARCH QUESTIONS

The study came up with research questions so as to ascertain the above objectives of the study. The following research questions guide the objectives of the study:

1. What is relationship between budget implementation and economic growth in Nigeria?
2. What is the effect of budgeting on the economic growth in Nigeria?
3. What are the factors affecting budget implementation and economic growth in Nigeria?
4. What is the importance of budget implementation to the economic growth in Nigeria?
5. What is the solution to the problems or challenges facing the federal government of Nigeria in budget implementation?

1.5 STATEMENT OF THE HYPOTHESIS

H0: there is no significant relationship between budget implementation and economic growth in Nigeria

H1: there is significant relationship between budget implementation and economic growth in Nigeria

1.6 SIGNIFICANCE OF THE STUDY

The study on budget implementation and economic growth in Nigeria will be of immense benefit to the all the organization in the public sector in Nigeria. The study will explore the components of budget and how it can be applicable to the economic growth in Nigeria. The findings of the study will educate the federal government on the needs for effective budgeting and resource allocation in Nigeria. The study will serve as a repository of information to other researchers and students that desire to carry out similar research on the above topic. Finally the study will contribute to the body of existing literature on budget implementation and economic growth in Nigeria.

1.7 SCOPE OF THE STUDY

 The study on budget implementation and economic growth in Nigeria will focus on the Nigeria public sector.

1.8 LIMITATION OF THE STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 DEFINITION OF TERMS

Budget: A budget is a financial plan for a defined period, often one year.

Economic Growth: Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP