The role of macroeconomic management and microeconomic planning is emphasized in formulating and implementing government budgets. Before any effective implementation is taken, budget designers must first of all address macroeconomic needs and then micro-level investment and expenditure plan. They do this by formulating macroeconomic framework, setting medium-and long-term economic performance targets. Every economic sector whether private or public normally want to ascertain its performances over a period of time based on a number of economic decisions such as budgeting which remains the most tactical instrument for both decision making and as well as allocation of limited resources. Omce these annual and medium-term macro strategies are determined, the government can design a budget which will best meet those economic priorities (Premehand, 2000). Hence, our central interest in this chapter is to analyze the capital budgeting in both private and public sector with a view to linking it to economic planning. We shall discuss key terms separately to reduce the level of ambuiguity in its exact meaning and then look at the nexus between economic plannning and budgeting.