EXTERNAL DEBT, DEBT SERVICING AND ECONOMIC GROWTH IN NIGERIA
Ali Salisu , Zakari Sale and Mohammed I. Datti
Volume 2 Issue 2
Abstract
The period, 2005-2016, when Nigeria was free from the debt overhang, due to $18 billion debt written off, there is now another panic than another debt crisis that may loom in Nigeria, considering the rising debt profile of the country. In view of this, the study seeks to investigate the impact of external debt servicing on GDP in Nigeria. The study adopted econometric technique of Autoregressive Distributive Lag (ARDL) model and applied on a time-series data for Nigeria, spanning between 1985 through 2016. The empirical study is based on the ARDL bound test estimated results indicate a long-run association among the variables. The results show that external debt servicing is negatively related with economic growth both in the short-run and long-run. The evidence suggests that increase in external debt servicing leads to lower economic growth. Based on these findings, the study suggests that debt service obligation should not be allowed to rise more than the debt. And, the contracted loan should be invested in building infrastructure through efficient and judicious utilization of the loan. Keyword: External Debt; External Debt Servicing; Economic Growth; ARDL
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