IMPACT OF MACROECONOMIC DETERMINANTS OF PUBLIC DEBT ON DEBT SUSTAINABILITY IN NIGERIA (1992–2024)
Mohammed Adamu Bara, Francis A. Akawu, PhD and Abdul Adamu, PhD
Volume 14 Issue 2
Abstract
This study investigated the impact of selected macroeconomic determinants of public debt on debt sustainability in Nigeria from 1992 to 2024. Using an ex-post facto design and annual time-series data obtained from the Central Bank of Nigeria (CBN), Debt Management Office (DMO), and National Bureau of Statistics (NBS), the study examines how Gross Domestic Product (GDP), interest rate, and exchange rate influence the sustainability of Nigeria’s public debt. The study applied Augmented Dickey–Fuller (ADF) tests to verify stationarity of the data and employed the Autoregressive Distributed Lag (ARDL) bounds-testing approach to estimate both short- and long-run relationships. Empirical results reveal that GDP exerts a negative and significant long-run impact on debt sustainability, implying that economic expansion enhances the government’s ability to meet debt obligations. Conversely, interest rates and exchange rates exert positive but significant effect in the short run, suggesting that macroeconomic instability undermines fiscal discipline and debt service capacity. The study concludes that Nigeria’s debt sustainability is highly sensitive to macroeconomic performance. The study recommends that the government should strengthen productive investment, stabilise exchange-rate management, and adopt growth-oriented fiscal and monetary policies to improve debt sustainability. Keywords: Macroeconomic, Public Debt, Gross Domestic Product, Interest Rate, Exchange Rate, Debt Sustainability
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