- 20 Marks
Question
In all Government units, the executive arm prepares the budget and submits the same to the legislative arm for review, modifications, and approval. The approved budget serves as a basis for the activities of that government unit for the fiscal year under focus.
Required:
a. Explain any TWO main purposes which a government budget serves. (2 Marks)
b. Explain any THREE basic features of each of the following budget concepts:
- i. Performance budgeting. (6 Marks)
- ii. Zero-based budgeting. (6 Marks)
c. Nigeria is said to be low in budget implementation. Discuss any THREE key factors that negate efficient and effective budget implementation in the Nigerian public sector. (6 Marks)
Answer
a. Main Purposes of a Government Budget
- Policy Tool for Economic Growth: A government budget outlines policies aimed at promoting economic growth, maintaining full employment, and enhancing the quality of life for citizens.
- Resource Allocation Guide: It serves as a framework for resource allocation, ensuring that government spending aligns with legislative approval and societal priorities.
b. Features of Budget Concepts
- Performance Budgeting:
- Function-Based Classification: Expenditure is organized by functions or projects to focus on outcomes.
- Outcome Measurement: It measures work done or output per activity, prioritizing results over expenditure.
- Direct Cost-Income Comparison: Allows a clear comparison between project costs and expected benefits.
- Monitoring: Ensures actual performance is aligned with budget expectations, facilitating adjustments as needed.
- Zero-Based Budgeting:
- Justification Requirement: Every budget item must be justified from scratch, disregarding previous year’s budget.
- Activity-Oriented Allocation: Encourages a systematic examination of activities, allocating funds only to necessary and cost-effective programs.
- Focus on Cost Efficiency: Emphasizes economic use of funds, cutting non-essential expenses.
- Resource Optimization: Helps eliminate redundant activities, optimizing resource allocation.
c. Factors Affecting Budget Implementation in Nigeria
- Delayed Funding Releases: Funds are often not disbursed on time, stalling project execution.
- Weak Institutional Framework: Lax enforcement of budgetary rules and lack of accountability hinder effective monitoring and implementation.
- Corruption: Misallocation and embezzlement of public funds reduce the resources available for intended projects, impairing budget performance.
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