Budget Quality and Fiscal Outcomes in Oil-Exporting Economies

  • Ismail A. Muhammed Department of Economics, Faculty of Social Sciences, University of Lagos
  • David M. Oke Department of Economics, Faculty of Social Sciences, University of Lagos
Keywords: Budgetary institutional quality, Fiscal outcome, Oil-exporting countries, System GMM


In this paper, we investigated the effect of budget quality on fiscal outcomes in oil-exporting economies as well as the causality between the twin variables. We rely on the literature in computing an index of quality of budget including rules and procedures in budget process. The components of the index include budgetary institutional quality along five criteria: top-down budgeting, rules and controls, sustainability and credibility, comprehensiveness and transparency across the three stages of the budget process: planning and negotiation, legislative approval and implementation stages. With theoretical background from the common pool and agency phenomena, the system generalised method of moment was employed to estimate the parameters of the models and the results revealed that the quality of budget influences fiscal outcome by improving government net primary balance in oil-exporting nations. Budget institution is not what matters for external debt considerations in these countries but the overall level of institutional quality. However, the rules guiding each of the stages of budget cycle should be strengthened. Given a relatively low performance in the implementation stage, governments of oil countries must take necessary steps that would strengthen the rules guiding their budget implementations.


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