Abstract
Purpose of the article: An examination of budget performance’ relationship with fiscal administration in selected countries of sub-saharan Africa is the thrust of this study. Secondary data from 12 countries in Sub-Saharan Africa (SSA) for the period (2002–2016) was sought and analysed. Methodology/methods: Analytical tools deployed for statistical analysis include the Ordinary Least Square (OLS) regression method, correlation analysis, variance inflation factor (VIF) tests for multicollinearity, and Breusch-Pagan/Cook Weisberg test for heteroskedasticity. 5% level of test of significance was employed to measure the altitude of statistical association between all variables. Scientific aim: Efforts were made to empirically ascertain by means of available statistics the relationship between budget deficits and fiscal administration in SSA. Findings: Indications from this study implied that countries SSA recorded trends of significant levels of revenue decline and fiscal balances have deteriorated despite the various acclaimed adjustments in the expenditures profiles by governments in the region. Also a significant relationship was found between budget deficit and fiscal administration among countries in SSA. Conclusions: Since budget deficit has remained a recurring decimal in SSA, countries in the region have resorted to high reliance on borrowed funds to finance the increasing amounts of budget deficits; the consequence being the exposure of countries in SSA to high cost of borrowing.
Highlights
Government budgets have remained crucial to the operation of various economies, and its reciprocal linkage with economic growth has continued to generate series of debates among scholars. Aigheyisi (2013) believes that the effectiveness of governments’ actual expenditure in expanding and engendering rapid growth in any economy depends on whether such expenditures are productive or not.Notwitstanding Obinyeluaku (2013) reiterated that in all regions of Sub Saharan Africa (East Africa, Mid Africa, Southern Africa and West Africa), public expenditure is found to have exceeded revenue consistently almost throughout a studied 33 year period (1980–2012)
Findings from prior studies reveal that government revenue has dropped from an average of 22 percent of GDP recorded during the 1980s; whereas, public spendings have displayed remarkable increase at unprecedented pace to reach over 28 percent of GDP on the average (Obinyeluaku, 2013; Aigheyisi, 2013; and Chude, Chude, 2013)
Variables analysed include Budget Deficit (BuDef) measure alongside components of the independent variables which included Tax revenue (TaxRev), Non Tax revenue (NTaxRev), Capital Expenditure (CapExp), Recurrent Expenditure (RecExp), Budget Variance (Bvar) and Borrowed Fund used in financing budget deficit (FisDefF)
Summary
Government budgets have remained crucial to the operation of various economies, and its reciprocal linkage with economic growth has continued to generate series of debates among scholars. Aigheyisi (2013) believes that the effectiveness of governments’ actual expenditure (which presumably is a function of budgeted expenditure) in expanding and engendering rapid growth in any economy depends on whether such expenditures are productive or not. The consequence of the perceived budget trends in Africa have resulted in widened deficits almost throughout the region This is deemed a clear indicant of ineffective budgeting process in Sub Saharan Africa (SSA), resulting to failure in the promotion/ achievement of the craved culture of balanced budget, budget discipline, and qualitative budgeting for both national and economic development. This is well captured by the instances of budget variances recorded over the years which Onakoya, Somoye (2013) blamed on budget mismatch rather than inadequate provisioning.
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