IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 6 2024
DOI: 10.56201/ijefm.v9.no6.2024.pg153.172

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Public Debt Service Payment and Nigerian Economic Growth: A Threshold Analysis of Buhari-Tinubu Regime

Emeneka Ogochukwu Lynda, Prof. Joshua Kenechukwu Onoura, Madueke Obianuju Patricia

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Abstract

The study examined the effect of public debt service payment on the economic growth of Nigeria. The specific objective was to examine the effect of domestic debt service payment and foreign debt service payment on the real GDP of Nigeria (2011-2023) as well as to establish the threshold effect of public debt service payment on the economic growth of Nigeria during Buhari-Tinubu regime (2015-2023). The research utilized an ex-post facto research design. The data were sourced from secondary sources, specifically the Central Bank of Nigeria's Statistical Bulletin and the National Bureau of Statistics. The study covered a thirteen-year fiscal period from 2011 to 2023. Both descriptive and inferential analyses were conducted on the secondary data gathered for this research. To examine the null hypotheses, the study employed the Ordinary Least Square (OLS) multiple regression method and also Chow Breakpoint Test to determine the effect of public debt service payment on economic growth in Nigeria. The findings showed that: domestic debt service payment has a significant positive effect on the real GDP of Nigeria (p-value = 0.0194); foreign debt service payment has a significant positive effect on the real GDP of Nigeria (p-value = 0.0084). The positive effect of public debt service payment on economic growth of Nigeria has reduced significantly during the Buhari-Tinubu regime (p-value = 0.000226). In conclusion, while public debt service payments continued to contribute positively to economic growth during the Buhari-Tinubu regime, the magnitude of their impact, particularly domestic debt servicing, has decreased, possibly reflecting shifts in economic policies or external economic conditions during this period. We therefore recommend that the Federal Ministry of Finance implement stricter oversight and improved management practices for foreign debt. This includes assessing the effectiveness of foreign loans and reallocating funds

keywords:

Public Debt Service Payment, Economic Growth, Debt Service Payment, Foreign

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