CRISES OR CATALYST? ASSESSING NIGERIA’S PUBLIC DEBT BURDEN AND ITS IMPACT ON ECONOMIC GROWTH
Rabi’u Isah Moh’d , Ilemona Adofu and Aishatu Ibrahim Ogiri
Volume 4 Issue 1
Abstract
The study examined the relationship between public debt burden and economic growth in Nigeria, spanning 1981- 2022, a 42-year period. It investigates the interactions among Gross Domestic Product (GDP), domestic debt, external debt, debt service and exchange rate to shed light on their influence on the country's economic path. Data is sourced from the Central Bank of Nigeria statistical bulletin and World Development Indicators. The study employs ARDL techniques to assess short-run and long-run connections between these variables and Gross Domestic Product. The findings reveal that external debt has a statistically significant long-term negative effect, while debt servicing significantly negatively impacts GDP. Domestic debt has a positive influence on economic growth, emphasizing its role as an economic stimulant. While, exchange rate fluctuations have a negative impact on GDP. The study recommends, among others, that policy makers should prudently manage external debt, reduce debt servicing costs, leverage domestic debt for targeted investments, and ensure exchange rate stability to foster economic growth. Keyword: Domestic Debt, External Debt, Debt Servicing, Exchange Rate, Gross Domestic Product; ARDL Approach
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