External Debt Management and the Nigeria Economy (1981 - 2023)

Airebamen; E Anita; Nathan; Emmanuel PhD

doi:10.56201/ijefm.v10.no8.2025.pg174.196

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External Debt Management and the Nigeria Economy (1981 - 2023)

Airebamen, E Anita and Nathan, Emmanuel PhD

Abstract

This research looked at Nigeria to see how the country's economy grew and how its debt was managed between 1981 and 2023. It made use of secondary data retrieved from the CBN Statistical Bulletin, 2023 edition. With Real Gross Domestic Product growth (RGDPG) as the dependent variable and indicators of external debt (EXTDS), EXTDSP, and the External Debt- to-GDP Ratio (EDGDPR) as the independent variables, this study aimed to quantify economic growth between 1981 and 2023. Ordinary Least Squares (OLS) was the estimating method used for the analysis. The data were descriptively analyzed and tested for stationarity using the Augmented Dickey-Fuller unit root method before the model was estimated. All variables were found to have attained stationarity at first difference. The results of a cointegration test showed that the variables do, in fact, have a long-run equilibrium connection. The error correction model revealed that GDPG was positively associated with foreign debt service payments over the long run, and that there was an inelastic connection between GDPG and external debt stock. In addition, at the 5% level, the foreign debt-to-GDP ratio had a favourable and statistically significant influence on RGDPG, albeit a modest one. In light of these findings, the study suggests that political and social factors should not affect the allocation of foreign loans; instead, they should be reserved for economically viable enterprises. Keeping the primary goal of borrowing in mind, this would aid in regulating the increase of the stock of foreign debt. Another piece of advice for the Nigerian government would be to maximize national revenue and cut down on deficit financing by reducing the total debt load and the cost of repaying external debt. Reducing the national debt would enhance the country's foreign exchange reserves, boost local production, boost exports of completed goods, and free up more capital for productive projects.

Keywords

External dept stockExternal dept managementDept-to-GDPratioARDL model

References

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External Debt Management and the Nigeria Economy (1981 - 2023)

Abstract

Keywords

References

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