Budget Implementation Inefficiencies and Their Implications for Fiscal Sustainability, Competitiveness, and Growth: Evidence from Zambia

Lucas Sinyangwe

International Journal of Economics & Business Administration (IJEBA), 2025, vol. XIII, issue 3, 219-227

Abstract: Purpose: This study examines the systematic relationship between budget implementation inefficiencies and macroeconomic performance in Zambia using comprehensive data from 2010-2023. Design/Methodology/Approach: We construct a novel Budget Implementation Efficiency (BIE) index incorporating expenditure variance measures, institutional coordination metrics, and accountability indicators. Our empirical analysis employs vector autoregression, structural equation modelling, and instrumental variable techniques to establish robust causal relationships. Findings: Results demonstrate that for one standard deviation improvement in budget implementation efficiency increases GDP growth by 0.8 percentage points annually, reduces public debt-to-GDP ratios by 2.3 percentage points, and enhances foreign direct investment by 34%. The findings reveal that implementation inefficiencies create policy uncertainty that systematically deters foreign investment and undermines international competitiveness. Practical Implications: The evidence suggests that budget implementation reforms represent a critical yet underutilized tool for macroeconomic stabilization in developing economies. Originality/Value: We develop a comprehensive policy framework showing that targeted reforms requiring $36 million investment can generate $129 million in net present value over five years.

Keywords: Fiscal policy; budget implementation; public debt sustainability; economic growth; international trade; institutional reform. (search for similar items in EconPapers)
JEL-codes: E62 F43 H50 H60 O23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:xiii:y:2025:i:3:p:219-227

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