Introduction

Furthermore, public finance is the study of government intervention in market regulations, it

plays an important role in economic growth and development, apart from ensuring price
stability. Musgrave (1959) defined public finance as the study of the economic activities of
government. Public finance is the study of funds allocation in public sector to execute
government programmes and projects. According to Rossen (2002), public finance is a branch
of economics that studies allocation of resources and distribution of income, it is associated
with taxes, expenditures, and monetary policy. The word public means “Government” while
finance means “Management of government financial resources”. Public finance can be
categorised into two, these are positive public finance and normative public finance. Positive
public finance is the study of facts, circumstances and relationship between sources (taxes) and
application of funds (expenditures), and budgeting.

Normative public finance is the study of state financial policy (fiscal policy) as it relates to
revenues and expenditures to improve economic stability. However, public finance and public
financial management differs in meaning and approach. According to Allen, Hemming, and
Potter (2013), Public finance focus on “What to do” which means question of government
policy while PFM focus on “How to do” which means question of policy implementation.
According to Tim Vipond (2015), public finance is the management of a country’s
revenue, expenditures, and debt load through various government and quasi-government
institutions. This guide provides an overview of how public finances are managed, what the
various components of public finance are, and how to easily understand what all the numbers
mean. A country’s financial position can be evaluated in much the same way as a
business’ financial statements.

Public Finance, a field of public policy (and economics) concerned with how governments raise
money, how that money is spent, and the effects of these activities on the economy and on
society. • Public finance studies how governments at all levels—national, state, and local—
provide the public with desired services and how they secure the financial resources to pay for
these services. In many industrialized countries, spending and taxation by the government form
a large portion of the nation's total economic activity. • Example: total government spending in
the United States equals about 40 percent of the nation's GDP.

Ishwor Thapa (2020). Public finance is the branch of economics. It is made of two words
as public and finance. The term public means government and finance means science of
management of money. So literally public finance means the study of allocation of
economic resources for achieving the goals of public affairs. Thus, public finance is the
study of allocation and management of resources and technology for achieving the goals
of public organization.
However, literally it seems to have narrow meaning but its scope and definition has
been widening and changing through the time. In public finance we study the
finances of the Government. Thus, public finance deals with the question how the
Government raises its resources to meet its everrising expenditure Ishwor Thapa
(2020).

Public finance is the study of the role of the government in the economy. It is the
branch of economics which assesses the government revenue and government
expenditure of the public authorities and the adjustment of one or the other to
achieve desirable effects and avoid undesirable ones. As Dalton puts it, “public
finance is “concerned with the income and expenditure of public authorities and
with the adjustment of one to the other.” Accordingly, effects of taxation,
Government expenditure, public borrowing and deficit financing on the economy
constitutes the subject matter of public finance.

Thus, Prof. Otto Eckstein writes “Public Finance is the study of the effects of
budgets on the economy, particularly the effect on the achievement of the major
economic objects—growth, stability, equity and efficiency.” Further, it also deals
with fiscal policies which ought to be adopted to achieve certain objectives such as
price stability, economic growth, more equal distribution of income. Economic
thinking about the role that public finance is expected to play has changed from
time to time according to the changes in economic situation.

Before the Great Depression that gripped the Western industrialized countries
during the thirties, the role of public finance was considered to be raising sufficient
resources for carrying out the Government functions of civil administration and
defense from foreign countries. During this period, the classical economists
considered it prudent to keep expenditure to the minimum so that taxing of the
people is avoided as far as possible Ishwor Thapa (2020).

Further, it was thought that Government budget must be balanced. Public

borrowing was recommended mainly for production purposes. During a war, of
course, public borrowing was considered legitimate but it was thought that the
Government should repay or reduce the debt as soon as possible.

Public Finance: Concept, Definition

Ishwor Thapa (2020).

and Importance for Country’s Development. Public

Administration Campus, Tribhuvan University, Nepal
Gadjah Mada University (2024). Public Finance: Introduction/
http://kumoro.staff.ugm.ac.id/file_artikel/Introduction,%20What%20is%20public%20finance
%3F.pdf

PFM refers to the processes and methods with which the government organises, allocates, and
oversees public resources. PWC Nigeira (2017). Public Financial Management (PFM) is the
system by which financial resources are planned, directed and controlled to enable and
influence the efficient and effective delivery of public service goals.

Public Financial Management (PFM) is concerned with aspects of resource mobilisation and
expenditure management in the public sector (for definition of public sector please read ACCA's
policy document 'Setting high professional standards for public services around the world'
Arsalan and Nida (2025). Since the private sector lacks the moral sentiment and incentives of a
responsible government to provide for various segments of the economy, including the
underprivileged, the public sector's role is significant. Expenditure on public services accounts
for more than one third of GDP in most countries, hence interest and expectations of these
services are high and management of public funds needs to be able to withstand scrutiny from
all quarters.

Public Financial Management (PFM) is all about planning, coordinating, controlling, and
utilisation of government financial resources, and formulation of policies for the wellbeing of
the citizens and the society at large. Also, PFM is the management of finance in public sector
for economic growth and maximisation of citizens’ wellbeing. Besides, finance is the lifeblood
or fuel of an organisation, either public or private, and it constitutes the lubricants for the
wheel of successful administration (Adekoya, 2020). Moreover, in public sector, finance must be
handled with care and expended according to laid down principles, rules, and regulations.
Nevertheless, a sound financial administration in public sector is the core of an efficient,
effectives and transparent service delivery. Financial management is the art and science of
financial planning, allocating, evaluating, and reporting financial resources to achieve the best
objectives, goals and performance targets. According to Lawson (2015), PFM is the set of laws,
rules, systems, and process used by government to generate resources, allocate public funds,
expends, accounts, reports, and audits for transparency, probity, and accountability.
PFM is tailored towards the attainment of country’s social economic and sustainable
development goals through transparency, accountability, and efficient management of public
resources. Welham, Krause, and Hedger (2013) viewed PFM as an instrument or means to an
end in achieving broad developmental objectives, macro-economic stability, economic growth,
efficient resources allocation, and effective service delivery. It is an activities which involved
resources generation, allocation, and expenditures management to achieve effectives and
efficient service delivery, and optimum financial reporting systems on the use of public funds.
The goals of PFM therefore, is to enhanced financial management (funds generation,
expenditures, and fiscal sustainability), operation management (budget and budgetary control,
procurement effectiveness, and value for money), governance (traceability, transparency, and
accountability), and fiduciary risk management (compliance process, control techniques, and
auditing). In addition, PFM is a catalyst for an improved quality of public goods and services,
and promotion of good governance. Moreover, social contract exist between the public
administrators and the citizens on resources management, nevertheless, citizens dissatisfaction
at time set inn due to the quality of goods and services provided by government when
compared with the resources provided.

Arsalan Shaikh, and Nida Naeem (2025). AN INTRODUCTION TO PUBLIC FINANCIAL

MANAGEMENT.

Aim and Objectives of public financial management in Nigeria:

Nigeria has a population of over 200 million peoples with a cultural diverse of over 350
indigenous languages. Nigeria operates Federal system of government, it has 36 States and
Federal Capital Territory (FCT), Abuja, and 774 local governments. Nigeria returned to
democratic government in 1999 after many years of military rules, the new government
inherited both internal and external debts of over $30 billion, decayed infrastructures,
economic downturn, high cases of corruption and unemployment rate, poor standard of living,
crisis and insecurity, and lack of transparency and accountability in government activities. Also,
the country’s economies becomes highly volatile with poor fiscal policy, weak public financial
management practices, and inconsistent budgeting process. However, with all these, the new
democratic government called for PFM reforms, and these commenced in 2004 under
Economic Reforms and Governance Project (ERGP) in alliance with World Bank. These reforms
are to strengthened governance and accountability, minimised corruption in public sector,
strengthened internal control system, promotes probity in revenues and expenditures,
eliminate ghost workers and redundancy in public sector, restructuring of ministries,
departments, and agencies for better performances, and to guaranteed efficiency and
effectiveness in public service delivery.

The main objective of public financial management system is to facilitate attainment of the
three budgetary goals of, overall fiscal discipline, effective allocation of resources to strategic
priorities, and efficient delivery of public services (OECD/DAC, 2003). Fiscal discipline requires
formulation of realistic and attainable budgets and their implementation as made without
overrun. A realistic budget is a credible one, formulated with due consideration to realizable
revenue, and reasonably coasted. The PFM system supports all the above aspects: fiscal and
revenue projections, project costing, and avoidance of budget overruns unless
undermined/overridden by the political system (TUGAR, 2013).

The PFM also supports allocation of resources to strategic priorities. Strategic allocation of
resources entails identification and distinction of development priorities from parochial and
political expediency or priorities. Development priorities flow from well-articulated strategic
policies, identifying medium to long-term development needs. The budget should ensure that
available resources address prioritized needs. The PFM system helps the process by supporting
preparation of matching fiscal forecasts and linking annual budgetary allocations to medium
term fiscal projections and strategies. For example, a well-functioning PFM system will mount
an effective gate-keeping regime that discourages allocation to non-development priority needs
at the expense of priority development areas as identified in policy document (TUGAR, 2013).

The goals of public finance management achievement in Nigeria

PFM as an integral part of organisation structure and operating mechanism, would provide
good framework for revenue generation, resources allocation, expenditure management,
transparency and accountability for achieving public sector objectives and good governance. In
addition, a good and strong PFM would drive economic growth and development, ensured
value for money in all public resources, reduced budget deficit, increased efficiency in the
management of government resources, improved debts management, enhanced good
budgeting process and implementation, and promotes efficiency and effectiveness in goods and
service delivery. Although various forms of reforms had been undertaken Nigeria government
for these past years with good success and cost savings, but there is need to consolidate these
ongoing reforms by all stakeholders if any further meaningful success is to be achieved in the
future on new areas and achieved the ultimate goals of PFM reforms. PFM reforms initiated in
Nigeria has helped the government to manage its scarce resources, ensure sustenance of fiscal
policy, and efficient provision of public goods and services in a transparent and accountable
manner. Globally, focus to improve the quality of PFM in countries has increased in recent time
with many countries in developed and developing nation having impressive step to
strengthened PFM and promote good governance.
Moreover, for years in most developing countries, budgeting process had been characterised
with various challenges of delay, corruption, manipulation, and deficit. In most cases,
anticipated expenditures are tends to be more than projected revenues thereby, resulting into
annual budget deficit and economy downturn. Besides, PFM reforms should be strengthened to
ensure that budgetary process are designed to prevent increase in public debts and budget
deficit in gross domestic product. Also, revenues generation in public sector should be
monitored to avoid leakages/loss, since revenue loss in public sector has negative impact on
budgeting process. Government should embraced policies and strategies that will minimise
corruption, embezzlement, and leakages in revenue generation, this would boost funds
availability for allocation to various government activities. Similarly, policies on procurement
should be entrenched while shortage of procurement officers in public sector should be
addressed. This would promote efficient procurement process and solve the present problems
of non-competitiveness, corruption and inefficiency in procurement of goods and services. In
addition, there should be need to extend and adopt information and communication
technology in all facets of government administration, this would ensure effectives and efficient
PFM reforms. Furthermore, in Nigeria, there have been a lot of compromise in auditing and
accounting reports of ministries, agencies, and departments, these undermined the credibility
of public audits and reports. PFM reforms in this direction would promote good governance
and enhanced credibility and trust in government administration. In addition, necessary
sanctions should be given to erring officers to serve as deterrent to others on matter of
fraudulent practices, corruption, dishonesty and wastages of government funds. The success of
PFM in public sector rest on the account, audit, and budget officers in ministries, department
and agencies of all tiers of government. Changes is dynamic, therefore, PFM can be achieved in
public sector for good governance, probity and accountability when public resources are used
in an efficient and effective manner to drive economic growth and development. This is the
stake of PFM and must be embraced in public sector.

Nigeria, like many developing nations, has strived to achieve the lofty goals of public finance
management (PFM), which include allocative efficiency, aggregate fiscal discipline, and
operational efficiency Vahyala Kwaga (2023). These goals are intrinsically linked to broader
macroeconomic objectives, such as sustainable economic growth, poverty reduction, and
improved living standards (Augustine, 2023; Sunday & Uwem, 2021).

. However, the extent to which Nigeria has realized these ambitions remains a subject of debate,
with evidence pointing to both progress and persistent challenges.

Reforms and Progress:

Since the return to democratic rule in 1999, Nigeria has implemented various PFM reforms
aimed at enhancing transparency, accountability, and efficiency in the management of public
resources Rotimi et al., (2021). Key initiatives include:

 Government Integrated Financial Management Information System (GIFMIS): This

system was designed to modernize public financial management by integrating
budgeting, accounting, and reporting processes (Rotimi et al., 2021; Nortal, 2025).
GIFMIS has contributed to improved budget execution, better financial reporting, and
the elimination of "ghost workers" from the government payroll [(Rotimi et al., 2021;
Nortal, 2025).

 Integrated Personnel and Payroll Information System (IPPIS): IPPIS aims to centralize
payroll management and eliminate payroll fraud (Eunice & Marshal, 2024; Mehdi,
2024).

 Treasury Single Account (TSA): The TSA consolidates government funds into a single
account, improving cash management and reducing the risk of corruption Nortal, 2025;
Paul, & Malachy, 2025). . It has led to the closure of thousands of government bank
accounts and significant savings in banking fees Nortal, 2025).

 Open Treasury Portal: This portal was launched to enhance transparency by providing
public access to government financial information (International Federation of
Accountants 2018; Augustine, 2023)

 Adoption of International Public Sector Accounting Standards (IPSAS): Nigeria has been
working towards implementing IPSAS across all levels of government to improve the
quality and comparability of financial reporting The Voice of Nigeria (2025).

These reforms have yielded some positive outcomes. For instance, the implementation of the
TSA has been credited with saving the government billions of naira and improving accountability
in government receipts (Eunice & Marshal, 2024, Nortal, 2025). Digital financial systems like
GIFMIS and IPPIS have shown potential to improve fiscal discipline and reduce financial
irregularities (International Federation of Accountants, 2018). The government has also
emphasized the importance of transparency and accountability in attracting investment and
diversifying the economy (John, & Luma, 2025).

Persistent Challenges:

Despite these efforts, Nigeria continues to grapple with significant challenges that hinder the
full realization of PFM goals. These include:

 Corruption: Corruption remains a pervasive problem, distorting public finance and

procurement processes, payment systems, and auditing systems (Achanya & Varzoa,
2025; Owudogu, 2025). It leads to the misallocation of resources, reduces public
trust, and undermines economic development [14][15].

 Weak Institutional Framework: Weak institutional capacity, lack of political will, and
delays in the budgetary process impede the effective implementation of PFM reforms
[4].

 Lack of Transparency and Accountability: Despite initiatives like the Open Treasury
Portal, transparency and accountability in the public sector remain a concern [16][17].
Public budgeting is often shrouded in secrecy, and there is a lack of effective
enforcement and citizen engagement [9][17].

 Inadequate Infrastructure: Deficiencies in ICT infrastructure and cybersecurity pose risks

to the sustainability of digital PFM reforms [9].

 Policy Inconsistency: Inconsistent policies and a reliance on volatile commodity prices

create instability and hinder long-term planning [14].

 Financial Mismanagement: Financial mismanagement, including embezzlement, fraud,

and poor budgeting practices, continues to plague the public sector [14][18].

Impact on Development Outcomes:

The mixed success of PFM reforms is reflected in Nigeria's development outcomes. While some
studies suggest that government expenditure has contributed to marginal growth in economic
output per capita, human development has not been positively impacted [3]. Corruption and
mismanagement of public funds continue to undermine economic development [4]. There's
also evidence that public sector decay, driven by corruption and poor financial management,
discourages investors, reduces living standards, and slows down economic development [19].

The Way Forward:

To achieve the lofty goals of PFM, Nigeria needs to address the persistent challenges and build
on the progress made. Key recommendations include:
 Strengthening Anti-Corruption Measures: Implementing strong enforcement
mechanisms, including effective detection, investigation, prosecution, and sanctions for
corruption [12][13].

 Enhancing Transparency and Accountability: Ensuring freedom of information,

promoting citizen engagement, and strengthening audit institutions [2][17].

 Building Institutional Capacity: Providing continuous capacity building and training for
personnel in financial management [2].

 Improving Infrastructure: Investing in ICT infrastructure and cybersecurity to support

digital PFM reforms [9].

 Promoting Good Governance: Strengthening the rule of law, promoting political

stability, and ensuring policy consistency [20].

1. Vahyala Kwaga (2023). Consequence Management: A Neglected Aspect of Nigerian

Public Financial Management. https://budgit.org/consequence-management-a-
neglected-aspect-of-nigerian-public-financial-management/
2. Augustine, Adekoya. (2023). Public Financial Management in Nigeria: The Goals,
Concepts, Legal and Institutional Framework, and Reforms for Good Governance.
International Journal of Management and Economics Invention. 9. 2935-2946.
10.47191/ijmei/v9i5.01.
3. Sunday Effiong Ibanga & Uwem Etim Uwah (2021). Public Financial Management
Reforms and Economic Development in Nigeria's Fourth Republic. International Journal
of Scientific Research in Social Sciences & Management Studies. Volume 5, Number 1
4. Rotimi, O., Olusola, I.E., Olusegun, E.A., Oluwayemisi, A.M.B., Rildwan, O.B., Rahmon,
T.A., & Gbenga, A.C. (2021). Public financial management tools and performance in
nigeria public sector. Academy of Accounting and Financial Studies Journal, 25(S4), 1-15.
5. Nortal (2025). Nigeria saves billions with public finance management – Nortal.
https://nortal.com/insights/nigeria-saves-billions-with-public-finance-management/
6. Eunice Ralph Court1 & Marshal Iwedi2 (2024). Public
sector
financial management reforms and government
expenditure in Nigeria. Finance & Accounting
Research Journal, Volume 6, Issue 4 567-579.
7. Mehdi Bakhtiar, Zeinab biyabani (2024). Treasury Single Account, New government
liquidity management tool: Review Structure and Location in Selected Countries.
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Nigerian Public Sector: An Integrated Conceptual Framework for Enhancing Transparency
and Efficiency. Dutch Journal of Finance and Management, 8(1), 35020.
https://doi.org/10.55267/djfm/16409
9. International Federation of Accountants (2018). How Strong Public Financial
Management in Nigeria Will Support Sustainable Growth. Gillian Fawcett | June 14,
2018.
10. The Voice of Nigeria (2025). Accountability In Public Financial Management.
https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fvon.gov.ng%2Fnigerian-
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11. John, A. J. ., & Luma, V. . (2025). The Effect of Corruption on Public Financial
Management System in Nigeria. Kashere Journal of Politics and International
Relations, 3(1), 137–149. Retrieved from
https://journals.fukashere.edu.ng/index.php/kjpir/article/view/425
12. Achanya Julius John & Varzoa Lum (2025). The Effect of Corruption on Public
Financial Management System in Nigeria. Kashere Journal Of Politics And International
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13. Owudogu George Azibaraniyar (2025). An overview of
finacial mismanagement and financial institutions in
Nigeria. Federal University Otuoke Journal of Management
Sciences.
14. Odo, Linus Ugwu (2015). The Impact and
Consequences of Corruption on the Nigerian Society and
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15. Omoniyi Oluwabusayo Samuel & Akintoye Ishola
Rufus, 2024. "Transparency and Accountability Concerns
in the Nigerian Public Sector," International Journal of
Research and Innovation in Social Science, International
Journal of Research and Innovation in Social Science
(IJRISS), vol. 8(6), pages 2406-2416, June.
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Rufus, 2024. "Transparency and Accountability Concerns
in the Nigerian Public Sector," International Journal of
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Recommendations
1. Government should embraced participatory budgeting process at all level of
government as a basis for sound public financial management.
2. There should be continuous capacity building and training for personnel in ministry of
fiancé and budget office, this is to improve budget process, implementation,
accountability, and reporting.
3. Political office holders should be trained on the importance of budgeting in order to
reduce budget padding, corruption, and political intervention during budget
implementation.
4. Public procurement initiatives and reforms should be undertaken in public sector. This
will promote professionalism, competitiveness, transparency, and probity in
procurement of goods and services.
5. Government should invest more on Information and Communication Technology (ICT).
This will ease the administrative bottleneck on internally generated revenues, minimised
cost of collection, enhanced transparency and accountability in government
expenditures, and ensured better management of government resources.
6. Government auditing (internal and external) should be strengthened. This would
promote probity, accountability, and transparency in the use of public resources and
administration, this entrenched trust in government and good governance.
7. Financial planning, control, and management should be embraced as an important
aspect of effective and efficient public financial management.
8. PFM monitoring institutions like EFCC, ICPC, FRCN, and others should braced up to
minimised corruption, impropriety, and fraudulent acts in management of public
resources. This would entrenched trust in government, citizens’ confidence, and braced
economic growth and development.
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