Effect of Public Debt Servicing on Economic Growth in Nigeria

This study evaluated the effect of public debt servicing on the economic growth of Nigeria using external debt servicing and domestic debt servicing as explanatory variables. The gross domestic product is the explained variable of the model. The study used time series research design and collected data from CBN statistical bulletin for the period, 1982 to 2023. The study conducted the Descriptive statistics, stationarity and co-integration tests and found out that the variables were stationary in mix order and had long-run relationship. The study therefore adopted the autoregressive distributed lag model for analysis. The findings suggest that external and domestic debt servicing have significant effects on economic growth for the period examined. The study recommended the re-negotiation of externally sourced debts so as to reduce accumulated interest outstanding as paying less from the foreign reserve will reduce the negative effect which the external debt servicing has on the Nigerian economy. It was further recommended that domestic debt service requirement should not be allowed to increase above a certain percentage of the gross domestic product in order to reduce the incidence of debt over-hang on the economy. Furthermore, domestic debt should be devoted to infrastructure development only.