Local governments play a critical role in ensuring that the benefits of effective governance reach rural areas. However, in most parts of Nigeria, the pace of rural development has been slow over the years; this has resulted in growing disparity between income distribution and rising poverty rates. This study sought to examine local government budget implementation and rural economic development in Nigeria, particularly in Obingwa and Osisioma-Ngwa LGAs of Abia State. Using survey research design and random sampling technique, questionnaire was distributed to a sample size of 400 respondents from a total population of four hundred and one thousand, five hundred and twenty-six (401,526) respondents drawn from ten (10) towns in each of Obingwa and Osisioma-Ngwa LGAs in Abia State as determined using Taro Yamane’s formula sample determination. The collated data was analyzed using IBM SPSS Statistics software and their frequencies and percentages were presented in tables, while the hypotheses were tested using analysis of variance (ANOVA) at the 5% level of significance. Results of the study showed that budget and finance exhibited an insignificant effect on rural economic development (F = 0.569, pvalue = 0.451), budget implementation exhibited a significant effect on rural economic development (F = 5.394, p-value = 0.021). The study also found that corruption, poor budgeting tools, state interference, and bureaucracy influence budgeting at the local level. The study concluded that the condition of rural areas in Nigeria is a major cause for concern and budget planning and implementation is critical to its development. On the strength of this, the study recommended that accountable leadership and fiscal responsibility should be emphasized in local government administrations to promote efficient management and utilization of available funds and resources.