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Budget Implementation and Economic Growth: Imperative for Economic Growth in Nigeria

Author

Listed:
  • Onyemaechi, Bethel Amarachi

    (Department of Accounting and Finance, Faculty of Management and Social Sciences, Margaret Lawrence University)

  • Keremah, Sydney Clever

    (Department of Accounting and Finance, Faculty of Management and Social Sciences, Margaret Lawrence University)

Abstract

This study examines the impact of government budget implementation on Nigeria’s economic growth from 1994 to 2024, with a focus on capital expenditure, recurrent expenditure, tax revenue, and public debt financing. Using secondary data sourced from the Central Bank of Nigeria Statistical Bulletin and the Federal Inland Revenue Service (FIRS), the study employs a Vector Error Correction Model (VECM) to capture both short-run and long-run dynamics between fiscal variables and Gross Domestic Product (GDP). Empirical findings reveal a significant long-run positive relationship between capital expenditure and economic growth, while recurrent expenditure, tax revenue, and public debt financing exhibit mixed or statistically insignificant effects. The error correction mechanism indicates a slow adjustment to long-run equilibrium, suggesting the presence of structural inefficiencies in fiscal policy transmission. The results support Keynesian theory by highlighting the growth-enhancing role of productive government spending and partially validate Wagner’s Law concerning public expenditure patterns. The study concludes that sustainable economic growth in Nigeria depends on prioritizing capital investment, strengthening fiscal discipline, and enhancing institutional capacity. It recommends improved fiscal governance, transparency, and accountability mechanisms to ensure efficient resource allocation and reduce corruption and mismanagement.

Suggested Citation

  • Onyemaechi, Bethel Amarachi & Keremah, Sydney Clever, 2026. "Budget Implementation and Economic Growth: Imperative for Economic Growth in Nigeria," East African Finance Journal, East African Finance Journal, vol. 5(2).
    • Handle: RePEc:cwk:eafjke:2026-16
    DOI: 10.59413/eafj/v5.i2.2
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    References listed on IDEAS

    as
    1. Lucas Sinyangwe, 2025. "Budget Implementation Inefficiencies and Their Implications for Fiscal Sustainability, Competitiveness, and Growth: Evidence from Zambia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 219-227.
    2. Audu Abayomi YUSAU & Obinna Francis OKWECHIME, 2025. "Assessing the Impact of Budget Implementation on Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(1), pages 1969-1977, January.
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      Keywords

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      JEL classification:

      • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
      • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
      • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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