National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (National Debt and Budget Performance-1)

Consistent with Mackay (1998) developing national measurement capacities is a means for ensuring that measurement findings are available to assist countries in three areas. First, measurement findings can be an important input for government decision making and prioritization, particularly in the budget process. Second, measurement assists managers by revealing the performance of on-going activities at the project, program or sector levels—it is therefore a management tool which leads to learning and improvement in the future (i.e., results-based management). Similarly, measurement results can also be used to assess the performance of organizations and institutional reform processes. Third, measurement data contribute to accountability mechanisms, whereby managers and governments can be held accountable for the performance of their activities.
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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Budget Performance-2)

National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Budget Performance-2)Anwar & Chunli (2007) giving reasons for the above levels of performance affirmed that when revenues are over estimated and expenditures underestimated, sharp expenditure cuts must be made later when executing the budget. On the revenue side, overestimation can come not only from technical factors, such as bad appraisal of the impact of a change in tax policy or of increased tax expenditures, but often also from the desire of politicians or ministries to keep in the budget an excessive number of programs while downplaying the difficulties of financing them. Similarly, on the expenditure side while underestimation can come from unrealistic assessments of the cost of unfunded liabilities (for example, benefits granted outside the budget) or of permanent obligations, underestimation can also be a deliberate tactic to launch new programs, with the intention of requesting increased appropriation later, during budget execution.
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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Budget Performance-1)

Operationally, in the words of KCL (2012) budget performance is defined as a comparison between estimated revenues and expenditures and actual revenues and expenditures resulting into either a deficit (where aggregate expenditures of the government is greater or more than its total revenues collected within a given period), a surplus (where government expenditures is less than its revenues) or an equilibrium/balanced budget (where total revenues of the government equal the total expenditures). A confirmation from Sheriffdeen (2012) indicate that while a surplus budget occurs when the proposed expenditure is less than the expected revenue, implying some saving at the end of the budget year, deficit budget is a situation in which the expected revenue is lower than the proposed expenditure, to be financed from accumulated savings or borrowings. Better still, balanced budget means equality between estimated revenue and proposed expenditure.

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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Why Measure Performance?)

National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Why Measure Performance?)The Budget as a Performance Indicator
The main financial document that reflects the state policy regarding the set up and the use of public resources is the budget. A budget is also a forecast of expenditures and revenue for a specific period of time; usually one year. As a planning document a budget enables business, government, private organizations and households to set the priorities and monitor progress toward selected goals. To David (2007) the budget itself is a financial document, but in fact it is much more than that. It is a financial document that reflects program planning and service priorities in financial terms and also, ideally, in terms of performance expectations. Budget can be used as a benchmark, as a control system, that allows managers to compare actual performance with estimated or desired performance. Following David (2007) a good set of performance measures is a vital tool for building accountability and support of planning/budgeting efforts.

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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (What is Performance Measurement?)

The Institute of Public Administration of Canada (IPAC) posits that performance measurement is an on-going process of ascertaining how well, or how poorly, a government program is being provided. It involves the continuous collection of data on progress made towards achieving the program’s pre-established objectives. Performance indicators, or measures, are developed as standards for assessing the extent to which these objectives are achieved.
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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Review of Related Literature-Public Sector)

National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Review of Related Literature-Public Sector)The importance of the public sector is an indisputable social and economic reality throughout the world. This is because only the public sector can effectively and efficiently carry out certain functions and indeed only national governments can assume the responsibilities that affects the state as a whole. The public sector sometimes referred to as the state sector or the government sector, is a part of the state that deals with either the production, ownership, sale, provision, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal. Examples of public sector activity among others include delivering social security, administering urban planning and organizing national defence.
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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Introduction-2)

Thus, though it is the most popular concepts in current public management theory and practice, public sector performance is an ambiguous, multi-dimensional, and complex concept. Obviously, performance in the public domain is an elusive conceptand therefore difficult to define and measure because “stakeholders often disagree about which elements of performance are most important, and some elements are difficult to measure [… and because] tinkering with agency performance also has strong political implications” Brewer & Selden (2000).
Though no public sector can afford to overlook the importance of clearly defining its objectives and priorities as well as assessing performance against well-defined benchmarks, there exist many types of public sector performance evaluation tools including on-going monitoring and performance information; project and program evaluation—ex ante, on-going/formative and ex post/summative; performance (or value-for-money) audits; financial auditing among others. For the fact that measurement findings can be an important input for government decision-making and prioritization, particularly in the budget process, budget performance can equally be employed as an appropriate base to measure the performance of public sector. Therefore, with the New Public Management (NPM) movement in general and for the fact that since the late 1 980s, performance measurement, in particular, have been offered as approaches to help governments reduce their annual budgetary deficits, lower their accumulated debt and improve service delivery (IPAC), this study seek to investigate the relationship between national budget performance and national debt as measures of public sector performance of an emerging economy like Nigeria.
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National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Introduction-1)

National Budget and Debt as Measures of Public Sector Performance: Empirical Evidence from Nigeria (Introduction-1)The concept of performance encompasses the efficiency of a project or activity—the ability to undertake an activity at the minimum cost possible. It also includes effectiveness—whether the objectives set for the activity are being achieved. Performance measurement is the comparison between plans and actuals and it is a valuable exercise which provides an opportunity and a framework for asking fundamental questions such as: What are we trying to achieve? What does “success” look like? How will we know if or when we have achieved it?
In response to the global financial crisis, in 2009, IFAC recommended to G20 that governments, like companies, need timely and accurate financial information to monitor and manage their performance. Traditionally, companies’ performances are measured using details on their profit and loss account, including the balance sheet. Contrary, government performance is evaluated based on key fiscal and monetary indicators and objectives, which include general economic growth, price stability and inflation rate, employment of resources, income redistribution, gross domestic product (GDP), per capita income, standard of living, exchange rate, employment rate, and debt burden among others.
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