Effect of Budget Implementation on Nigeria’s Economic Development

Abstract

This study investigates the effect of budget implementation on Nigeria's economic development. Effective budget implementation is crucial for translating government policies and programs into tangible outcomes that drive economic growth and development. However, persistent challenges in budget preparation, approval, release, and monitoring have hindered the realization of the desired developmental impacts in Nigeria. Using annual time-series data from 2010 to 2023, the study employs a ARDL regression model to examine the relationship between various stages of the budget implementation process and Nigeria's economic development, as measured by the Gross Domestic Product (GDP) growth rate. The key independent variables include capital expenditure, recurrent expenditure, inflation rate and exchange rate. The empirical findings reveal that all the budget implementation variables have positive and statistically significant effects on Nigeria's economic development. The results show that capital expenditure and recurrent expenditure have positive and significant effect on GDP while inflation and exchange rate have negative effect on GDP. The study offers important policy implications for the Nigerian government, highlighting the need to prioritize effective budget implementation as a critical lever for fostering sustainable economic progress. The recommendations include improving budget preparation and approval processes, streamlining budget release mechanisms, and establishing robust budget monitoring and evaluation frameworks. These findings also have broader relevance for other developing countries facing similar challenges in aligning budget management practices with their economic development goals.