STATE BUDGETARY ALLOCATION: AN APPRAISAL OF BUDGET IMPLEMENTION AND EFFECTS IN NIGERIA

Topics: Gross domestic product, Local Government Areas of Nigeria, States of Nigeria Pages: 53 (11288 words) Published: September 23, 2013
STATE BUDGETARY ALLOCATIONS: AN APPRAISAL OF BUDGET
IMPLEMENTATION AND EFFECTS IN NIGERIA*

By

Prof. Aderibigbe S. Olomola
Director, Surveillance & Forecasting Department
Nigerian Institute of Social and Economic Research (NISER), Ibadan

PAPER PRESENTED AT THE NISER RESESEARCH SEMINAR SERIES
(NRSS) HELD AT THE NIGERIAN INSTITUTE OF SOCIAL AND
ECONOMIC RESEARCH, IBADAN

SEPTEMBER 11, 2012
1

STATE BUDGETARY ALLOCATIONS: AN APPRAISAL OF BUDGET
IMPLEMENTATION AND EFFECTS IN NIGERIA
By
Prof. Aderibigbe S. Olomola
Director, Surveillance & Forecasting Department
Nigerian Institute of Social and Economic Research (NISER), Ibadan

1. INTRODUCTION
The role of budget in an economy cannot be overemphasized. This is because budget is an important instrument of national resource mobilization, allocation and economic management. It is an economic instrument for facilitating and realizing the vision of the government in a given fiscal year. Since the inception of democratic governance over a decade ago, Nigerians have built up very high expectations that the budget would contain laudable programmes that would lead to poverty reduction in particular and promote their welfare in general. But concern seems to be growing among stakeholders regarding the ability of the budget to fulfill the policy objectives of the government and by implication satisfy the aspirations of the people. The budget can be considered as the engine of the on-going economic reforms. If it is switched off at any time or if it is malfunctioning, the reforms cannot generate the expected outcomes. All the laudable programmes of the government especially in the areas of poverty reduction, infrastructure development as well as development of key sectors of the economy such as agriculture, manufacturing, education, health, communication, tourism and commerce will only bring out the best results if the defects in the budget process are curtailed and eventually eliminated. The budget process involves key stages such as budget conception, preparation, approval, execution, monitoring and control as well as budget evaluation. A good budget process must attain three important objectives, namely; (i) maintenance of fiscal discipline especially in terms of realistic expenditure proposals, realistic revenue projections, compliance with budget provisions, compliance with financial regulations (maintenance of strict financial management), timely release of funds and avoidance of undue fiscal imbalances; (ii) attaining allocative efficiency and (iii) attaining operational or technical efficiency. In order to fulfill the specified objectives, the budget must possess the following characteristics (a la Olomola, 2000) appropriate spending priorities, comprehensiveness, transparency, timeliness, appropriate balance in recurrent and capital expenditure and proper sequencing. The budget process in Nigeria still falls short of these qualities and the desired objectives are far from being fully achieved. Up to the end of the 20th century, the budget process was bedeviled with monumental imperfections and suffered myriad of abuses including (i) inability of existing medium- longterm plans to provide useful guide to the budgetary process, (ii) lack of political will and commitment to abide by stipulated rules and budget guidelines, (iii) high incidence of extrabudgetary expenditure, (iv) persistently chronic budget deficit, (v) off-budget resource allocation and (vi) overlapping institutional arrangements in the budget process resulting in lopsided allocation of resources and delays in arriving at a consensus on critical decisions (Olomola, 2009a). Policy reversals are the order of the day, sometimes leading to extra-budgetary spending or abandonment of projects leading to frustration of stakeholders. Despite the various reforms of the budgetary process since 2000, the defects in the budget process including poor implementation of budget continue unabated.

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