IS THERE REASONABLE BALANCE BETWEEN NIGERIA’S PUBLIC EXPENDITURES AND ECONOMIC PERFORMANCE?
Keywords:
Capital Expenditure, Economic Performance, Gross Domestic Product, Size of Recurrent ExpenditureAbstract
While the federal government continues to intensify its effort towards resuscitating the economy, which no doubt, has equally resulted in the unprecedented increase in the nation’s annual public expenditures, the spate of mismanagement of this same scarce financial resources remains worrisome. In view of this, the study investigated the effect of government public expenditures on the economic performance of Nigeria with due emphasis on growth. Specifically, the study ascertained the extent of effect of capital expenditure and recurrent expenditure on the gross domestic product of Nigeria. Data from the Central Bank of Nigeria's Statistical Bulletins since the return of Nigeria to democratic rule (1999 – 2023) was utilized and subjected to further statistical analysis. As a result, the Ordinary Least Squares (OLS) regression method was employed to test the relevant hypotheses formulated. The findings revealed that: capital expenditure has a negative and non-significant effect on the gross domestic product (GDP) of Nigeria (b = -1.615543; p-value = 0.5374); the size of Nigeria’s recurrent expenditure has a positive and significant unhealthy effect on the gross domestic product (GDP) of Nigeria (b = 17.75409; p-value = 0.0000). In conclusion, while recurrent expenditure maintained a damaging posture towards the nation’s GDP growth possibilities perhaps due to the high external borrowings habitually taken by successive administrations in Nigeria from time to time to run personnel and administrative costs cum high cost of governance, the size of the nation’s capital expenditure overtime has failed to demonstrate a positive effect, thus also reflecting potential inefficiencies in its implementation. The study therefore recommended that the Presidency and the National Assembly should reassess the nation’s utilization of scarce financial resources, especially the external borrowed funds, ensuring that more of these are not only allocated to capital expenditures but should focus more on improving its efficiency amidst targeting high-impact productive sectors that promises commendable revenue contributions for effective debt servicing and economic sufficienc
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