External Financing of Budget on Sustainable Economic Growth in Nigeria

Abstract

The papers attempt to validate/invalidate economic growth sustainability vis-à-vis external financing of budget in Nigeria. The external financing channels - multilateral, Paris Club, London Club, promissory notes, bilateral, Euro bond, diaspora debts, and others - were tracked in relation to economic growth sustainability. The data is accessed from Emission Database for Global Atmospheric Research [EDGAR], the World Bank Development Indicator (WDI), and the Central Bank of Nigeria (CBN) statistical bulletin, for forty years (1981 to 2020). The study analysis follows plotting the visual trend of the series to ascertain its movement over time. Likewise, descriptive inference – skewness (sk), Kurtosis (k) & Jacque-Bera (JB) statistics were inferred for series normality. Also, Augmented Dickey-Fuller (ADF) unit root test, cointegration, vector autoregression (VAR), and the impulse response function (IRF) technique formed the basis of the estimation tools. Finding validates that there is no significant long-run relationship between external financing of the budget and sustainable economic growth in Nigeria. As a result, a reduction, and or a stop to further contracting external financing for budget purposes, and ensuring a funding-project-tied, is strongly recommended.