Public Debt Servicing and Economic Growth in Nigeria: 1999- 2023
Abstract
Nigeria is currently grappling with the global issue of economic growth. This phenomenon is hindered by the challenges of debt and debt servicing. This study examined public debt servicing and economic growth in Nigeria. The study specifically focused on the effect of domestic debt outstanding and public external debt outstanding on the Gross Domestic Product in Nigeria. The study adopted the ex-post facto research design and data obtained from the CBN Statistical Bulletin, spanning from 1999-2023. The unit root test using ADF showed stationarity at 1(0), 1(1), and 1(2). The hypotheses were tested using the Robust Least Squares model. The results showed a significant positive effect of domestic debt outstanding on GDP and; secondly, a significant negative effect of public external debt outstanding on GDP. Based on these, the study recommends that policymakers should consider strategies to increase and optimize domestic borrowing, ensuring that funds are channelled into productive sectors that drive economic growth. There is a need for a more cautious approach to external borrowing. The government should negotiate favourable terms and ensure that borrowed funds are used for projects with high economic returns. Lastly, the Nigerian government should establish a robust debt management framework that balances domestic and external borrowing; to help mitigate the adverse effects of debt on the economy.
Keywords
Public Debt
Economic Growth
Domestic Debt Outstanding
Public External
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