Budget Implementation and Economic Growth: A Neo-Classical Approach to Developing Economies

Effective government budget implementation is crucial to accelerating economic growth in any nation. This study examined the impact of government budget implementation on Nigeria's economic growth from 1981 and 2023 using the neoclassical growth theory. After controlling for inflation (INF) and exchange rates (EXR), it looked at the effects of public debt servicing (PDS), capital expenditure (CAPEX), and recurrent spending (REX) on GDP growth. An autoregressive (AR) model, diagnostic tests, SWOT and PESTEL analyses, time series data from the Central Bank of Nigeria Statistical Bulletin, and World Bank indicators were all used in the study. According to the results, CAPEX (p = 0.979), REX (p = 0.915), and PDS (p = 0.940) were not statistically significant on their own, while the AR (1) term was highly significant (p = 0.002). 37% of the variation in GDP growth was explained by the entire model, which was significant at the 1% level (F-statistic p = 0.009). Economic, institutional, and technological issues impacting budget implementation were further highlighted using SWOT and PESTEL analyses. To promote sustainable economic growth, the study recommends giving priority to profitable capital projects, streamlining ongoing spending, reorganizing debt obligations, and improving budget transparency and participatory monitoring.