IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH IN NIGERIA

Abdullahi Bashir Isah, Salihu Habibu Muhammad-Gani, Ph.D and Ajidani S. Moses, Ph.D
Volume 11 Issue 1

Abstract

This study investigates the impact of public debt on economic growth in Nigeria spanning 1982-2023. Using an ex-post facto design, secondary data extracted from the central bank of Nigeria annual statistics bulletin, and world development indicator (WDI) database 2023. Unit root test was conducted using augmented Dickey-Fuller method to determine whether the variables are stationary or not and the result shows that the variables are all stationary. Co-integration test was conducted and the result shows that there is evidence of long-run relationship among the variables. The study employed the vector autoregression (VAR) model for estimation. The findings showed that public multilateral debt (MUD) has insignificant negative impact on economic growth in Nigeria during the period under study, similarly, the findings showed that public bilateral debt (BID) has significant positive impact on economic growth in Nigeria during the period under study. The findings showed that treasury bills rate (TBR) has insignificant negative impact on economic growth in Nigeria during the period under study, and commercial paper (COP) has insignificant negative impact on economic growth in Nigeria during the period under study. Treasury bonds (TRB) has insignificant positive impact on economic growth in Nigeria during the period under study. Therefore, it was concluded that public debt has strong and positive impact on economic growth in Nigeria during the period under review. The study recommends that government should renegotiate existing multilateral debt agreements and prioritize debt repayment aligns with the policy implication to alleviate the debt burden. This strategic approach enables Nigeria to redirect resources towards economic development. Stakeholders, such as international financial institutions, should support debt relief programs, while civil society organizations should advocate for responsible lending practices. Effective debt management and transparency are crucial. Keyword: Bilateral Debt, Multilateral Debt, Treasury Bills Rate, Commercial Paper, Treasury Bonds, Economic Growth

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