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CHAPTER ONE

INTRODUCTION

1.0  BACKGROUND TO THE STUDY          

A Budget is commonly understood as the focus by a government of its expenditure and revenue for a specific period of time. The general budget can be defined as a government plan for revenue and expenditure for the coming fiscal year. According to Prof. Udabah S I, budgeting has been in operation in Nigeria and indeed other countries for a fairly long period, to assist in policy making and planning and also, to provide the basis for controlling income and expenditure. To him, the major source of anticipated revenue to backup budgetary expenditure by government is from indirect taxation because of the difficulty in the assessment and collection of direct tax from taxable individual. The inefficiency of tax officials and the corruption of some of them make it difficult for adequate revenue to be realized by government through direct tax.

Budget was employed to attain the objective of full employment in the economy, price stability, raising growth in National output, Balance of payment equilibrium and equity in income distribution. The united state of America experienced a budgetary system which places greater emphasis on the revenue than expenditure. The trend of development which places more emphasis on revenue was carried over to all the British colonies. However, in Nigeria, experience was derived from a more mature British system because, the national system was adopted during the time of independence between 1957-1960 in spite that Nigeria did not fail to encounter avoidable problem in the budget.          

Ude M.O. emphasised that government budgeting emerged out of representative democracy. Originally, in England, government budgeting was used as the instrument whereby noble compelled the monarch to be accountable to them for the expenditure of the proceeds from tax imposed by the monarch on the people later periods of Middle Ages. Fiscal and economic policy changes by government at times have destabilizing effect on the entire economy as that of Nigeria should not be disturbed with frequent policy changes.

1.1 STATEMENT OF THE PROBLEM          

The Nigerian Economy is faced with series of imbalances in their implementation, despite the availability of the various source of fund to the government. Several budgets have been designed with sole purpose of arresting decline growth in the production sector, check inflationary pressure and correction of Balance of payment deficit and maintaining a reasonable foreign exchange reserve.  However, the important question that arises is “Why is it that the objectives of government budget have not been achieved in most developing countries like Nigeria”. This has lead to an increase in the level of unemployment and equally to a general low level of standard of living. This project work, therefore, seek to have a look at loopholes that have been responsible for rendering the budget implementation ineffective, thereby not achieving the desired objectives. Though an insight into some budget have being done in the past to generally help in drawing critical analysis of the effect of budget in the economy.

1.2  OBJECTIVE OF THE STUDY

1.  To study the nature of government budgeting basically in Nigeria.

2.  To find out why targeted goals have never been achieved in Nigeria.

3. To find out the best revenue allocation formula that is suitable for economic growth and development.

4. To find out such other factors that is likely to affect budget implementation.

1.3  RESEARCH QUESTIONS

a.   Why is it that the objective of budget have not been achieved  in most developing countries such as Nigeria  

b.   What are the causes of poor implementation of budget

c.   Why targeted goals of budget have never been met up in Nigeria.  

1.4  SIGNIFICANCE OF THE STUDY

1. The result of the work will help policy makers in the area of public finance to know how to tackle some of their problem which has been researched on.

2.It is also indeed anticipated that this research work will be of immense help to the academic and others who may find study invaluable source of material for their future research work.

3. This research will help to correlate, compare and co-ordinate the financial administration of the various government departments.  

1.5  STATEMENT OF RESEARCH HYPOTHESIS

HYPOTHESIS I

H0: The problem of government budget implementation in developing countries has no significant impact on the economic growth.

HI: The problem of government budget implementation in developing countries has a significant impact on the economic growth.

HYPOTHESIS II

H0:   There is no significant relationship between the independent variable and GDP.

H1: There is a significant relationship between the dependent variables and GDP.  

1.6  SCOPE AND LIMITATION OF THE STUDY 

To cut down on the constraint this might be encountered in form of death of data and other related constraints to a manageable proportion. the scope and the coverage of this study has been narrowed down, to cover (21years).The study will cover whole of Nigeria and will be limited to an evaluation of the problem of budgetary implementation in Nigeria using some target variable to make a generalization such as government budgeted revenue and government budgeted expenditure for the period 1986-2006. There were constraints such as sourcing of data and financial constraints sourcing of data from various government institution such as central bank is not an easy task as these institutions were not ready to co-operate, carrying-out a study of this nature need a lot of money and as a student, there is always a problem of inadequate fund.   

1.7    DEFINITION OF TERMS/ CONCEPTS

PUBLIC EXPENDITURE: These are expenditures that government render on some project like roads, hospitals, street lights, schools, etc.

CAPITAL RECEIPTS: This refers to loan or grants made to the government. They can be made by other arms of the government or by international organization.

RECURRENT REVENUE: These are income received by the government annually by way of taxation, fines etc.

RECURRENT EXPENDITURE: These are expenditure on running cost of government such as salaries and interest on public debts.

ECONOMIC SERVICES: These are expenditures on productive activities such as agriculture, fisheries, forestry, transportation and communication.

TRANSFER: These are expenditure that is made not on direct productive activities; examples are interest payment on national debt, unemployment benefit, pension payments, and help to other countries.

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