Abstract
The main thrust of this study is to investigate the seeming mismatch between resource generation, resource allocation and expenditure management in Nigeria. While an ex-post facto research design was adopted in the investigation; descriptive statistics as well as a least square regression analysis were carried out on a time-series data to ascertain relationships. Real Gross Domestic Product taken as a proxy for economic growth is the dependent variable while capital and recurrent expenditures are the independent variables. Outcome of the study indicates that, the nation’s financing option is skewed towards payment of salaries and personnel emoluments (Recurrent Expenditures) as against the provision of basic infrastructures (Capital Expenditures) that are growth oriented. The trend of disbursements is not appropriately harnessed to create a favorable and positive impact on economic growth. In the short run, the disaggregated components of capital expenditure (CAPEX) indicate that expenses incurred in administration sector and external debt service transfers attracted more than their fare share of public expenditure to the detriment of economic and social community welfare services. The disaggregated component of recurrent expenditures (RECEX) indicate that expense on economic service sector and the lagged value of RGDP taken as an explanatory variable were found to have a positive significant relationship with economic growth in the long run. It is therefore recommended that conscious efforts be made by government to scrutinize and monitor budget implementations. Macroeconomic projections should guide the overall level of expenditures. This should be more realistic, internally consistent and based on more accurate and timely information. Government must embark on a careful estimation and determination of priorities and to emphasize the need for control over revenue and expenditure so as to enhance critical areas of economic growth in Nigeria.
Highlights
Background of the StudyPublic sector financial management is hinged on pursuing policies that are geared towards the attainment of overall economic development of a nation
The study revealed among other things that; there is the presence of co-integration among the variables in the model, actual public debt service and total public borrowing has significant relationship with economic growth of Nigeria, while total public expenditure and total federally-collected revenue are not significantly related to economic growth in the long run
The outcomes of this study revealed some important findings which are discussed below: 1. The aggregated components of capital expenditures have a significant short run relationship with the level of economic growth in Nigeria
Summary
Public sector financial management is hinged on pursuing policies that are geared towards the attainment of overall economic development of a nation. It addresses core objectives that include but not limited to economic and governance reform projects of government, utilizing principles of monetary discipline, legitimacy, predictability, transparency and accountability to reform and strengthen public finances. Well-designed and effectively implemented financial policies hold a great deal of promise. They help to contain helpless service delivery, enhancement of equity, minimization of debasement, reduction in deficit inclination, and time inconsistency of budgetary policies. By increasing the predictability of financial arrangement, monetary rules can likewise lower yield instability and lift long haul development ( Jinghan 1990)
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