Effect of Budget Finance on Economic Growth in Nigeria

Abstract

Purpose: This study investigated the effect of budget finance on Nigeria’s economic growth using annual data from 1991 to 2021 and the Autoregressive Distributed Lag technique.

Methodology: The E-Views 10 statistical software was employed to carry out multiple Autoregressive Distributed Lag (ARDL) approach to co-integration proposed by Pesaran et al. (2001) to empirically analyses the long- and short-run effect of budget finance on economic growth in Nigeria 1991 to 2021.

Results: The results of the study showed that government capital expenditures during the period had negative and non – significant effects on Nigeria’s real gross domestic product but recurrent expenditure and debt shows that there is positive and significant relationship with Nigeria’s real gross domestic product. The results suggested that there should be proper monitoring in the capital expenditure project in order to contribute positively to the economic growth in Nigeria.

Unique Contribution to Theory, Policy and Practices: The study recommends that government should improve in their capital expenditure for increase in the growth of the economics. In addition, the government should ensure adequate capital and recurrent expenditure implementation in the country, particularly in construction of roads and buildings, and efficient capital budget implementation in the country. Moreover, is it advisable for government to reduce the level of borrowings because if continues it will lead to debts of the country.