Budgeting in Public Sector Economy

Budgeting in Public Sector Economy

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Chapter one on Budgeting in Public Sector Economy

INTRODUCTION

 BACKGROUND OF THE STUDY

In his budget of December 23, 2011 presented the year 2012 budget, there the governor of Enugu state governor Sullivan chime said that the thrust of the 2012 budget is poverty reduction of the people. The state government appreciated the dangers of delaying of delaying the narrowing of gay  between the tow 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 and poverty in the state to the barest minimum. For us in Enugu state  it meant drastic reduction in personnel cost, recovery of government funds and properly filtered away during the civilian administration, increase in internal revenue generation, judicious spending and accountability. Though ,a budget 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 budgetary plan should be such that will  simulate the executive to take a more critical view of his own operation.

The fundamental difference between the public sector and private sector is that the later is organics 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 expenditure and the capital expenditure .However the drastic collapse in oil revenue over the year is one factor that has seriously affected state budgets. 
Also the recent federal government ban on the state from securing loan from external or internal sources and the heavy dependence on  imports for  essential raw material spare parts and capital goods has continued to affect the state budgeting . Others include unacceptable high rate of inflation and unemployment ,low productively ,and an adverse debt repayment position .it is this state of affairs that made Enugu state government to adopt the following strategies to achieve the derived goals .           
A}  Maximization of internal revenue by improving the revenue collection machinery and policies .         
B}  judicious management of expenditure  so as to conserve scare fund .   
C}  concentration of attention on the execution and completion of some selected project in the various sector ; thereby avoiding the used mistakes of preaching scarce resources thing over tow many project and achieving little or nothing .  

 OBJECTIVE   OF THE   STUDY     

             
The study aims at collecting quantities information on budgeting  control measures.   Data generation from such information  are essential for :    
(A)  providing a base and framework for improving the quantity and quality of current  budgetary  control statistics    
(B)  planning  problem ,formulating and appraising the budgeting techniques of the public sector .   
(C)  The measurement and assessment  of the  contribution of the  role of budget in the economy of the state . 
(D) Budget  implementation committee .  

PURPOSE OF STUDY  

 The purpose of the study is:
(A)  To   take an overview of the a analysis of the relationship between approved estimates  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 .   
(B)  To determine  the factors which account for the difference between the capital expenditure and the recurrent  .   
(C)  To determine the effect of budgeting on the economic development of the state .,     

SIGNIFICANCE OF THE STUDY   

The   study will contribute toward improving the budgetary   planning control techniques in Enugu state. Thy study   will also help the state government a technique for effective financial contor 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 etc .have second look at their 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. 
1  HO:   There is no effective budgeting in public sector  economic .
    HI:   There is effective budgeting  in public  sector economy , 
2  HO  internal  revenue  generation is not effective  in the public sector economy.
    HI   internal revenue generation is effective sector economy .  

LIMITATION OF THE STUDY            

The finding of the study and generalization are  limited  to Enugu state of Nigerian . Due to time and financial contract it will be wrong to claim that the findings are exhaustive and conclusive as far as this subject is concerned .Another  limitation is that the researcher relied entirely on data from Enugu state official gazette ,previous budget proposal and speeches of pass head of government of  Enugu state ,journals  and past student publication and this is therefore the only means of acerbating validity  and reliability .      
However, these  sources can only provide quantization information  about budgeting but could not be a good guideline to behavioral implication  of budgeting. Also during the data collection provides the respondents were not variable in their offices and several visit had 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 :-  
(A)  The  government  Parastatals partly  or completely  financed  by  the government  Parastatals  operate in some private sector fashion , government  presence coming only in the from of control ,directive and subvention .E.G  mass transit services of state an local government rural electrification  bounds ,  state housing corporation . 
(B)  The federal  government visit its  ministries ,department  and  agencies  like, INEC,  NDE ,NBTE ,NUE, ETE .     
(C)  The state government represented by its ministries and departments. 
(D)  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: –    
(A) THE   FEDERATION ACCOUNT  
It is  the distributable pool account into which all revenue collected by the federal government departments or an authority by the states on behalf of federal government.   
(c) EXCLUSIVE REVENUE OF THE FEDERAL GOVERNMENT  
Federally collectable revenue is made up of two disproportionate parts. The first and often the smaller parts is the revenue which accrues exclusively to the federal government from its own independent sources such as from income tax of the personnel for the armed force of federation of the Nigeria police force the ministry of external Affairs and residents of the federal capital territory , Abuja. The second and is whatever that is not included in the first part above.

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