Nexus Between Public Debt and Nigeria Economy

Abstract

The research work evaluated the impact of public debt on Nigeria economy. The major problem that led to this study was how Nigeria has been borrowing continually without a corresponding increase in the Economic growth and development. Nigeria has been trapped in debt servicing that has taken a greater percentage in our National Budget. The specific objectives of this study are: To evaluate the effect of public debt on Nigeria economy growth. To ascertain the effect of domestic debt on Nigeria economy growth. To examine the effect of external debt on Nigeria economy growth. This research work was anchored on Richardo theory of public debt which suggests that to finance public expenditure appropriately, there must be an external source of fund. Being an ex post facto research design, data was collected from secondary source i.e world bank, ministry of finance, central bank of Nigeria statistical bulletin report. SPSS was used in running the analysis. The findings of this study are: Public debt has positive and significant relationship on Nigeria economy growth, Domestic debt has no significant impact on Nigeria economy growth, External debt does not have significant effect on Nigeria economy growth. The study recommended amongst others, that the government should look more better ways of generating funds apart from borrowing. In the aspect of domestic debt, that the government should make use of our local institutions more than meeting private individuals. In the aspect of external debt, that the government should reduce the way the source money externally because the duties of servicing debt is more tedious than the main loan itself.