Budgeting In Public Economy Sector

Budgeting In Public Economy Sector (A Case Study Of Enugu State Government)

                                                Abstract

The purpose of the study is to determine the effect of budgeting on the economic development of the state to determine the factors which account for the difference between the capital expenditure and the recurrent expenditure and to take an overview of the analysis of the relationship between estimated and actual expenditure in the last five financial years. The study is aimed at improving budgeting as an effective tool for financial planning and of the problem associated with this study include, ascertaining whether the budget is usually prepared aimed at realizing the states objectives or if the budge and make is usually ambitions, why are budgeting bigger of smaller over the years? What account for deficient of surplus budgets.

Five years consolidated financial statement of estimates of Enugu State of Nigeria, approved revenue estimated, actual revenue and revised revenue estimates. The instrument of data collection was a structured questionnaire and it was self-administered. The allowed for easy comparison. The finding reveal the “call circulars” are issued in July and at the “estimates committee” is the only body charge with reviewing proposals from every ministry and government bodies, the state has not adopted. The planning programming and budgeting system (PPBS). The states major source of revenue are the federation account is receivable short of the expected revenue. It was also found that while the civilian budget was mostly done at a deficit that of military government is either a balanced one or a surplus one.

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The implication of this finding for budget preparations revenue control are made regarding how budgeting can be improved to help check the up-serge of recurrent expenditure and improving the internally generated revenue

CHAPTER ONE

1.0  Introduction

In this budget of December 23, 2003 presented the year 2004 budge the re the governor of Enugu State Governor Chimaroke Nnamani said that the thrust of the 2004 budget is poverty reduction of the people. The state government appreciated the dangers of delaying the narrowing of gay between the two socio-economic order the rich and the poor so as to provide equal footing for both.

For proper integration of social and economic environment in the state, it has become imperative to reduce Unemployment poverty in the state to the barest minimum. For  us in Enugu State, it meant drastic reduction in personnel cost, recovery of government  founder and properly filtered away during the civilian administration, increase in internal revenue generation, judicious spending and accountability. Though, a can be prepare simply on the basis of what was done on the previous year adjusted for any change in condition or scope of the activity that may be anticipate for the coming year, a soundly  conceived view of his own operation.

The fundamental difference between the public sector and private sector is that the late organized and operated to make a profit for its owner while the former exists to provide services to its citizens substantially on a non-profit basis. The Enugu state Annual Budget like any other state in the federation consists of two segments: the recurrent over the years is one factor that has seriously affected state budgets. Also the recent federal government ban on the statement for securing loan from external or internal sources and the heavy dependence on imports for essential raw materials, spare parts and capital goods has continued to affect the state budgeting. Others include unacceptable high rate of inflation and unemployment low productivity, and an adverse debt payment position. It is this state of affairs that made Enugu State government to adopt the following strategies to achieved the derived goals.

  1. Maximization of internal revenue by improving revenue collection machinery and policies.
  2. Judicious management of expenditure so as to conserve scare fund.
  3. Concentration of attention on the execution and completion of some selected project in the various sector, thereby avoiding the used mistakes of preading scarce resources thing over two many project and achieving little or not.
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1.1     Objective Of The Study

The study aims at collecting quantities information on budgeting control measure data generation from such information are essential for:

  1. Providing a base and framework for improving the quantity and quality current budgetary control statistics.
  2. Planning problem, formulating and appraising the budgeting techniques of the public sector.
  3. The measurement and assessment of the contribution of the role of budget in the economy of the state.

1.2     Purpose Of Study

the purpose of the study is to

  1. To take an overview of the analysis of the relationship between approved estionates and actual expenditure in the last five financial year and whether there is a wide or narrow gab between financial provision in the budget and what was achieved and to draw conclusion from such analysis.
  2. To determine the factors which account for the difference between the capital expenditure and the recurrent.
  3. To determine the effect of budgeting on economic development of the state.

1.3     Significance Of The Study 

The study will contribute toward improving the budgetary planning control techniques in Enugu State.

The study will also help the state government a technique for effective financial control and control over revenue collection. The study will enable the government and the ministries broaden their understanding of the role of budgeting as a planning and control device in the public sector. This could be done by allowing the respective ministries, parastatals corporation  e.t.c have second look at the budgeting techniques.

Statement of Hypothesis;

For the purpose of this research work the following assumption were made in order to employ a scientific approach to the recitations of the following hypothesis were analyzed.

H0:    There is no effective budgeting in public sector economy.

Hi:     There is effective budgeting in public sector economy,

Ho     Internal revenue generation is not effective in the public sector economy.

Hi:    Internal revenue generation is effected sector economy.

Limitation of the Study:

The finding of the study and generalization are limited to Enugu State of Nigeria. Due to time and financial contract, it will be wrong to claim that the findings are extra stave and conclusive as far this subject is concerned.

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Another limitation is that the researcher retied entirely on data from Enugu State official gazette, previous and budget proposal and speeches of pass head of government Enugu State journals and past student publication and this is therefore only means of acerbating validity and reliability.

However these sources can provide unitization information about budgeting but could not be a good guideline to behavioual implication of budgeting.

As during the data collection provides the respondents were not variable in their offices and several visit has to be made before the interview and questionnaires could be administered. The interview had the tendency not to talk about their areas of difficulties and showed little interest in the other, thus to there night have been some falsification of information.

Scope of the Study

The scope of the study is that in public sector economy in Nigerian consist:

  1. The government parastatals partly or completely financed by the government parastals operation in some private sector fashion, government presence coming only in the form of control, directive and subvention, E.G mass transit services of state an local government rural electrification bounds, state housing corporation.
  2. The federal government visits its ministries department and agencies like WEC, NDE, NBTE, NUE, ETE.
  3. The government represented by its ministries and departments.
  4. The local government.
    • Definition of Terms

In this study certain term are to be used and whenever it found are to be given the following meaning:

The Federation Account

It is a distributable pool account into which all revenue collected by the federal government department or an authority by the states on behalf of the federal government.

Exclusive Revenue Of The Federal Government

          Federal collectable revenue is made up of two disproportions parts. The first and often the small parts is the revenue which accrues exclusively to the federal government from its own independent source such as from tax of the personnel for the armed force of federation of the Nigeria police force, the ministry of external affairs and residents of the  capital territory, Abuja. The second and whatever that is not included in the first above.

Conclusion Revenue

          It is a special fund into which all revenue and many receivable by the federal government is paid. Except in some few cases where some revenue is received into other funds like capitals receipt into the capital development fund.

Contingent Revenue

Contingent revenue or contingencies fund could be defined according to sector 15

(1) of the constitutional amendment order 1958 provided that a sum one million pounds be transferred from the consolidated revenue fund for its creation in 1958. The amount is set aside to tae care of the unforeseen expenditure, and is operation by the issue of a warrant. If the contingencies   for which fund is presided not to arise within the financial year under revenue, the fund relent to consolidated revenue fund at the beginning of the financial year. The and any other unspent revenue from what is generally termed consolidated revenue fund “surplus”.

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Revenue Allocation Formula  

It is a model indicating the proportion into which the distributable pool account is to be divided between federal and state.

Government Operation

These operations do not resemble commercial activities, usually financed from wholly or partially from used charged, these operations are primary services financed from tax revenue. Examples are education, public safety, judiciary, social services and administration.

Proprietary Operation

          Proprietary operation resembles commercial activities, usually financed or partially from used charged, these operations may be considered secondary services. Samples are utilities, public transportation parking facilities, proprietary, usually have the objection of earning a profit or recovering operational cost.

Capital Budgets

These are long range budget often prepared for particular project e.g. road, construction company.

Capital Project Fund

These are fund design to be used for the acquisition of construction of major capital facilities (other than those financed by the proprietary fund, special assessment fund and trust funds)

Budget Committee

The budget committee is a group of reprehensive   various sectors in the public sector who have been brought together for the purpose of receiving and reviewing budget estimate from the respective department or division. Recommending charge an approval of revised budget s. receiving studying and analysis of periodic report and comparing the budget with the actual performance. Considering and making recommendation for revision of the budget when warrant.

Planning Programme

This is a system of budgeting introduced by the united state of department of defiance that was intended to improve the system by concentrating on the output of the department improving budgeting together with quicker estimate of requirements looking further ahead of than just one or two year, the planning program and budgeting system (PPBS) requires that the objective of the organization be clearly defined and feasible alter natives means of achieving this objective be considered and a cost beefiest analysis done to choose the most effective alternative.

Advance Variances

Advance variances occur when the actual budget is greater than the planned or approved estimate.

Favorable Variances  

Favorable variances occur when the actual budget less than the planned or approved estimates.

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