The Effect of Budget Formulation on the Public Sector Effectiveness Moderated by Participative Budgeting

Abstract

The effectiveness of the public sector refers to how well government institutions and organizations can efficiently achieve their goals in providing public goods and services, promoting citizen welfare, and implementing public policies. It encompasses various aspects, including the delivery of high-quality services, effective policy formulation, responsible use of resources, responsiveness to citizen needs, transparency, and accountability. In this specific study conducted in the Addis Ababa City Administration, the researcher aimed to investigate the effect of budget formulation on public sector effectiveness moderated by participated budgeting. The study employed a pragmatic research paradigm involving a mixed research approach to achieve the research objective. Qualitative data were collected from employees working in selected public sectors through a 7-point Likert scale questionnaire. A mixed sampling method was utilized in this study. Once the data was gathered using the aforementioned methods, it was analyzed using SPSS version-26 and AMOS-23. The analysis focused on factors related to budget formulation (which included strategic planning, budget preparation, the competence of human resources, and budget approval) and the study also examined the influence of budget participation, as a moderating variable on the effectiveness of public sectors. The findings were presented using descriptive and explanatory research techniques, leading to a discussion of the results. The study result revealed a direct and significant positive relationship between the independent and dependent variables, as well as a significant effect of the moderating variables. To achieve effectiveness in the public sector, the city administration's public sectors should consider strategic planning, participative budgeting, and the existing line-item budget system during budget formulation.

Keywords: approval, Budget, Effect, effectiveness, Ethiopia, formulation, planning, preparation

DOI: 10.7176/PPAR/14-2-04

Publication date: May 30th 2024