DEBT LEVEL AND ECONOMIC PERFORMANCE OF NIGERIA: EFFECTS
Keywords:
Debt Level, Debt Servicing Level,, Domestic Debt Level, Economic Performance, External Debt Level, Gross Domestic ProductAbstract
Domestic and external debts of Nigeria have continued to rise geometrically over the years amidst undermining the nation’s economic capacity to repay. This has heightened the debt crisis regardless of several economic and fiscal policies put in place by relevant regulatory government agencies in Nigeria to control the debt menace and level. Specifically, the study ascertains the effect of domestic debt level, external debt level and debt servicing level on the gross domestic product of Nigeria for the period under review. The ex post-facto research design was adopted and the time series data deployed to analyse public debt trends in Nigeria when compared to the GDP growth rate over a period of twenty three (23) years (1999 – 2021). The Ordinary least square regression, unit root test, and Johansen cointegration tests were conducted and the study found out that domestic debt level significantly and positively affects the gross domestic product performance in Nigeria (ß1 = 2.784464, p-value = 0.000); external debt level significantly but negatively predicts the movement of the gross domestic product in Nigeria (ß2 = -1.340768, p-value = 0.000), while the debt servicing level had no significant implications on the gross domestic product of Nigeria (ß3 = -0.062668, p-value = 0.1101). The study concluded that accumulated debt service payment creates a evitable problems for Nigeria especially where the nation’s revenue continues to deplete due to gross mismanagement of scarce public funds, endemic corruption and leadership failure which apparently positions the country in a state of been unable to meet its debt servicing obligations. It was therefore recommended that: the government should resort to domestic debts up to sustainable debt levels that do not crowd out development and social programmes. It was also recommended that there is imminent need of the government to prevent issues of debt overhang by ensuring that borrowings from international markets are utilized effectively even as concessionary loans, rather than commercial loans, should be sought afte. Lastly, the money recovered from past loots should be used to service Nigeria’s public debts rather than relying on oil revenue that barely meets the country’s recurrent expenditure needs.
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