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Budget Implementation Inefficiencies and Their Implications for Fiscal Sustainability, Competitiveness, and Growth: Evidence from Zambia

Author

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  • Lucas Sinyangwe

Abstract

Purpose: This study examines the systematic relationship between budget implementation inefficiencies and macroeconomic performance in Zambia using comprehensive data from 2010-2023. Design/Methodology/Approach: We construct a novel Budget Implementation Efficiency (BIE) index incorporating expenditure variance measures, institutional coordination metrics, and accountability indicators. Our empirical analysis employs vector autoregression, structural equation modelling, and instrumental variable techniques to establish robust causal relationships. Findings: Results demonstrate that for one standard deviation improvement in budget implementation efficiency increases GDP growth by 0.8 percentage points annually, reduces public debt-to-GDP ratios by 2.3 percentage points, and enhances foreign direct investment by 34%. The findings reveal that implementation inefficiencies create policy uncertainty that systematically deters foreign investment and undermines international competitiveness. Practical Implications: The evidence suggests that budget implementation reforms represent a critical yet underutilized tool for macroeconomic stabilization in developing economies. Originality/Value: We develop a comprehensive policy framework showing that targeted reforms requiring $36 million investment can generate $129 million in net present value over five years.

Suggested Citation

  • 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.
    • Handle: RePEc:ers:ijebaa:v:xiii:y:2025:i:3:p:219-227
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    References listed on IDEAS

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    1. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 199-217.
    2. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
    3. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 199-217.
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    Cited by:

    1. 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).

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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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