External Debt Burden and Economic Growth in Nigeria

Abstract

This study examined external debt burden and economic growth in Nigeria. Accordingly, the main objective of the study is to investigate the impact of external debt burden on economic growth in Nigeria, using the econometric analytical technique. Annual time series data were sourced from the Central Bank of Nigeria Statistical Bulletin. Economic growth was measured by gross domestic product (GDP) while external debt burden was represented by external debt stock and debt service payment. The bound testing and Autoregressive Distributed Lag model estimation techniques were employed for the analysis. The study found that external debt and debt service payment have significant and negative effect on economic growth in Nigeria. The study recommends that; government should restructure her external debt management by increasing the debt expenditure to capital project that can easily translate to economic growth and development. Debt management office should put up strategies like debt renegotiation, avoid increase in borrowing, offset debt just to address debt servicing and reduce pressure on economic operations. The government should diversify the economy so as to increase internally generated revenue to finance government expenditures, which will help reduce government borrowing.

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