The Public Debt Conundrum: Unpacking Its Effects on Nigeria’s Economic Progress

The study assessed the effect of public debt on economic progress in Nigeria from 1986 to 2022. It investigates the connections among gross domestic product growth rate which is used to measure economic progress, domestic debt, external debt, gross capital formation and exchange rate to throw light on their effect on the path of economic progress of Nigeria. Employing ARDL method, with data sourced from Central Bank of Nigeria Statistical Bulletin and World Bank Development Indicators. Findings reveals that domestic debt and external debt had a positive insignificant short-term effect on Nigeria’s economic progress and both domestic and external debt have an adverse effect on Nigeria’s economic progress in the long term. Also, gross capital formation had an adverse insignificant effect both in the short and long term, exchange rate had a negative insignificant short-term effect, but its long run effect was positive and significant on Nigeria’s economic progress. A long run cointegrating equilibrium relationship was established among the variables in the study. Based on the findings, the study recommends among others that policy makers should manage debt prudently, avoid over reliance on debt as it is only a short-term solution, boost revenue generation and capital formation to drive economic progress and manage exchange rate properly to avoid fluctuations as it has potential to boost Nigeria long-term economic progress.