Public Debt and Economic Development in Nigeria
DOI:
https://doi.org/10.69974/rmcrjs77Keywords:
Public Debt, Economic Development, External Debt, Domestic Debt, Debt Servicing, Gross Capital Formation, Gross Domestic Product Per CapitalAbstract
This study examined the effect of public debt on economic development of Nigeria for the period 1981 to 2021. The study used data obtained from the Central Bank of Nigeria (CBN) and World Bank data bank. The study used two (2) models to determine the effect, with Gross Domestic product per Capita (GDP/CAP) and Gross Fixed Capital Formation (GFCF) as dependent variables for Models 1 and 2 respectively. While, Domestic Debt (DD), External Debt (XD) and Total Debt Service Payments (TDS) were regressed as independent variables. The study adopted the ARDL technique to analyze the data after determining the presence or otherwise of unit root. The findings revealed that domestic debt has positive and significant effect on GDP/CAP of Nigeria in the short run and long run. While, External debt has negative and significant effect in the short run, but positive and insignificant effect in the long run. Also, Total debt service payments has positive and insignificant effect in the short run and negative and significant effect on GDP/CAP in the long run. Furthermore, all variables of public debt have negative and insignificant effects on GFCF of Nigeria during the period covered by the study. The study therefore recommends that; Government should explore all avenues of domestic borrowings before seeking external loans as the debt service paid for home loan is not a leakage from the national economy; Borrowings should be tied to specific developmental projects that can guarantee improvement in the wellbeing of citizens and residents; There should be a well analyzed and realizable debt service payments and loan repayment plan that will not adversely affect the development of the nation and her citizenry; Government should strengthen borrowing institution and agencies as well as individual that borrows on her behalf to be disciplined and corruption free in the process of public loan administration.
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