PUBLIC DEBT MANAGEMENT AND ECONOMIC GROWTH IN NIGERIA

Abstract

The study examines public debt management and economic growth in Nigeria. The study adopts the ex-post facto research design and data for the study is collected for 41 years spanning across 1981 to 2021. The Auto Regressive Distributed Lagged (ARDL) Model is adopted to analyze the data for the study. The first hypothesis tested shows that, public debt mounting has a negative and insignificant effect on gross domestic product in Nigeria. The second hypothesis tested shows that, public debt servicing has a positive but insignificant effect on gross domestic product in Nigeria while the third hypothesis tested revealed that, public debt restructuring has a negative and insignificant effect on gross domestic product in Nigeria. As a result, it is recommended that, the Nigerian government needs to prioritize debt sustainability.

Even though the study found an insignificant effect of public debt on economic growth, it is crucial to maintain debt sustainability through adequate debt servicing to avoid potential risks in the future. Nigeria should carefully manage its debt levels, ensuring that borrowing is sustainable, and debt servicing does not become a burden on the economy growth potential of the country as it is at the moment. Furthermore, Nigerian government needs to foster regional integration and more efficient international debt repayment agreements. Nigeria can benefit from regional integration and these agreements by restructuring its debt servicing in a way the ratio of debt servicing to gross national income becomes more efficient and sustainable to enhance more economic growth.