An Empirical Analysis of National Debt, Debt Servicing and the Growth of the Nigerian Economy (Published)
Nigeria’s national debt and debt servicing expenditure has been on the increase since from 1981 till date, this has prompted the researchers to study the impact and economic implications of this rise in debt and debt servicing profile on the growth of the Nigerian economy. The study adopted annual debt stock, debt service expenditure and the control variables of exchange rate and inflation rate as the independent parameters which were regression against gross domestic product as proxy for the growth of the Nigerian economy and response variable. Secondary data were collected from Central Bank of Nigeria Statistical Bulletin and the Debt Management Office for the ranging from 1981 to 2019. The study employed multiple regression techniques assisted by the E-views computer software for the analysis of data. The results revealed that annual national debt and exchange rate had significant impact on the growth of the Nigerian economy with a P-value of 0.0180 and 0.0070 respectively which were less than the 0.05 level of significance. Debt servicing and inflation rate had no significant impact on economic growth in Nigeria with a P-value of 0.1054 and 0.5011 respectively. In the overall, the results of the model indicated that debt and debt servicing had statistically significant effect on economic growth with overall probability of F-statistics value of 0.050683 which less than the 0.05 significance level. Based on the findings the study recommended that the monetary authorities should put in place appropriate steps to properly manage the Nation’s debt stock and the cost of servicing debt; and that the country’s borrowings should be invested on viable capital projects as well as human capital that will yield economic returns.
This paper examined the implications of public debt sustainability on poverty incidence in Nigeria. Specifically, the impacts of external debt stock and interest payment on external debt, proxy for external debt servicing on poverty headcount was estimated using Stock-Watson Dynamic Least Squares (DOLS). Data were extracted from the National Bureau of Statistics (NBS) and World Bank World Development Indicators. The Augmented Dickey-Fuller tests results show that the series are difference stationary as they are integrated of order one. The result of the Johansen-Juselius cointegration test reveals that the series have long run relationship. Thus, the null hypothesis of no cointegration is rejected at 5 percent level. The estimated cointegrating regression model shows that external debt stock as a share of GNI has significant positive relationship with poverty headcount as 10 percent increase in external debt stock induces 7.59 percent increase in poverty headcount. This is a pointer that policy intervention should focus on the effective management of the borrowed funds from external sources in order to drive the process of economic development. On the other hand, it was found that interest payments on external debt as a proportion of GNI is negatively related to poverty headcount. This is suggestive that the extent of debt servicing in Nigeria seems not to undermine the sustainable path of debt management and the developmental goal of poverty reduction. Accordingly, it is recommended for improved fiscal consolidation across various levels of government in Nigeria with a view to keeping the economy on the path of sustainability in terms of external debt management.