Abstract
Research Purpose: Amidst ongoing economic challenges, this study delves into Nigeria’s public debt profile, aiming to unveil its impact on the nation’s economic growth and development. With escalating concerns over debt sustainability, understanding these dynamics is paramount for informed policymaking and sustainable progress.
Methodology: Employing a descriptive research design, this study analyses data from 2001 to 2023, using ordinary least square regression, Augmented Dickey Fuller unit root test, Johansen cointegration test, and Error correction modelling. These tools enable a comprehensive exploration of the relationship between public debt and economic indicators.
Findings: The analysis reveals significant findings: public debt positively influences Nigeria’s economy, with external debt exhibiting a particularly notable impact on economic growth. However, internal debt shows a negative and insignificant effect. Causality tests indicate a unidirectional relationship between external debt and GDP.
Conclusion: Nigeria’s public debt exerts both positive and negative effects on its economic growth, underscoring the need for judicious debt management strategies. The findings highlight the importance of directing external loans towards infrastructure development and implementing sound debt management policies.
Recommendations: To foster sustainable economic growth, the government should prioritise utilising external loans for infrastructure projects, enact legislation to enhance the business environment, and implement effective debt management policies. Moreover, there’s a pressing need to redirect borrowing towards human capital development to ensure long-term prosperity and resilience.
Key words: Public Debt, Debt Profile, Domestic Debt, Debt Servicing, Economic Growth and Development.
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