Abstract
This study examined the impact of External debt management on economic growth of Nigeria. Using annual time series data collected over the period of 33 years (1986 – 2018). The data for the study were collected from the CBN statistical bulletin annual report. The variables on which data are collected include: Real Gross Domestic Product, External Debt, External Debt service, Balance of Payment and Exchange Rate. Data were analyzed using the Ordinary least squares (OLS) multiple regression analysis. It proceeded with Descriptive statistics; Augmented Dickey Fuller (ADF) unit root test, Co-integration test and Auto-Regressive Distributed Lag (ARDL). The study revealed that impact of external debt management on economic growth of Nigeria over the period under review was statistically significant with external debt, external debt service payment and balance of payment but statistically insignificant with exchange rate. The study recommended that governments should establish and adopt an optimal balance between external debt acquisition and application /allocation of the acquired funds to productive projects for the purpose of making a high output and a steady economic growth. The management should live up to expectation by encouraging efficient commitment of borrowed funds to productive projects so as to comply with debt serving agreement and outright payments, measures such as improving exports should be implemented to ensure that local currencies are stable.
Highlights
It is in the habit of developing countries to borrow fund for developments needs
The outcome of the analysis showed that there is a significant impact of debt payment to Nigerian creditors on the Gross Domestic Product (GDP) and Gross Fixed Capital Formation of Current Market Prices (GFCF)
Our finding from the analytical result revealed that of the four independent variables tested, External Debt (EXD) and External Debt Servicing (EXDS) exhibited an impact that is statistically significant on Nigeria’s economic growth proxy by (RGDP), this relationship is heterogeneous across the various lags
Summary
It is in the habit of developing countries to borrow fund for developments needs. Nigeria as a developing country source for external fund since domestic fund is insufficient to meets the Published by: needs for economic growth. Nigeria was to disburse a huge sum of $4.9 million each year lying on debt service prior to the debt termination deal (Aluko and Arowolo, 2010) Such indebtedness would have made it impossible to attain exchange rate constancy or a few significant growths in the country. According to Noko, (2016) debt does not essentially mean a slow growth of an economy; it is a nation’s incapability to comply with debt service requirements coupled by insufficient awareness on the whatness and structure of the debt as well as the money the nation is required to pay raise hardship in the economy and woes in the nation This is another important call out developing nations are facing, including Nigeria. It is on this premise that this study is set to evaluate the impact of external debt management on economic growth of Nigeria within the past 33 years
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