INTERNALLY GENERATED REVENUE AND FOREIGN DEBT: EVIDENCE FROM NIGERIA’S NORTH CENTRAL STATES (2010-2023)

The issue of Debt sustainability has brought several debates and reactions by stakeholders in accounting literature. There have been mixed results as to either financing operations of the states by debt or not and this remains inconclusive thereby motivating this paper. Sustaining the high debt profile of North Central states has become worrisome that needs urgent attention. The study therefore investigated the effect of Internally Generated Revenue (IGR) on debt sustainability in Nigeria with special focus on the North Central States. Ex-post facto research design was adopted. The population of the study was 6 States in the North central, Nigeria which also constitute the sample of the study. Data covering a period of 14 years (2010-2023) were extracted from audited accounts of the States. The reliability of the data was premised on the Nigerian regulatory and legal framework. Descriptive and inferential statistics were used to analyze the data at 0.05 level of significance. From the post estimation tests the regression results suggested the Fixed effect with Driscoll-Kraay SE. Findings reveal that internally generated revenue measured with PAYE and ORS having a significant effect on size of foreign debt (Adj R2 = 0.719, F (4, 79) = 75.62, p < 0.005). The study concluded that internally generated revenue impacted debt sustainability of North Central States in Nigeria especially on the size of foreign debt. The study recommends that the government of the states in North Central Nigeria should prioritize policies aimed at diversifying revenue streams by investing in sectors that encourage economic growth and generate substantial internally generated revenue (IGR).