Abstract
This study empirically reviewed the implications of excessive internal borrowing and debt management with particular emphasis on Nigeria. The study covered the period from 2000 to 2020. The study examined the concept, growth, and causes of Nigeria’s domestic debt problem. It went further to study the strategies employed by government in managing domestic debt in Nigeria as well as the dominant factors that hampered domestic debt management which are poor management of borrowed funds, high cost of servicing domestic debt, excessive borrowings and rising budget deficit. Data were collected majorly from secondary source which includes Central Bank of Nigeria statistical bulletin, Debt Management Office publications and relevant journals and textbooks on financial system. Hypothesis were formulated, examining the impact of internal borrowings on Nigeria’s economy, it’s relationship with domestic debt servicing and its effect on rising budget deficit, and were tested and analyzed with the Regression analysis, correlation analysis, and the probability significance value using the Statistical Package for Social Science (SPSS) version 17. After the analysis, the work revealed that internal borrowings have affected the growth of the economy negatively, a positive relationship exists between domestic debt servicing and internal borrowings and that rising budget deficit has a negative impact on domestic debt. Based on these findings, the study recommends among others that the Federal Government should lay down well considered guidelines for internal loan, defining the purpose, duration, negotiation fee and conditions under which it can approve and guarantee a loan. Also limit domestic borrowings and mobilize untapped domestic resources as well as curb corruption in the country as borrowed funds are either misapplied or embezzled. If the Government and Debt Management Office employ the recommendations of this research, it would go a long way in boosting economic growth and development and to a positive extent ensure improvement in the overall economy of Nigeria.
Highlights
This study empirically reviewed the implications of excessive internal borrowing and debt management with particular emphasis on Nigeria
The work revealed that internal borrowings have affected the growth of the economy negatively, a positive relationship exists between domestic debt servicing and internal borrowings and that rising budget deficit has a negative impact on domestic debt
The summary of the findings of the study is presented below: 1) Internal borrowings have no significant impact on economic growth in Nigeria
Summary
In October 2000, the Nigerian government established a Debt Management Office (DMO) to verify individual statements with creditor’s statements and improve the efficiency of debt management. The other camp insisted that there was no need to engage the services of consultants and wanted the Debt Management Office to continue to manage Nigeria’s debt Those who believed that the Debt Management Office, as it was staffed and structured, should not be involved in managing Nigeria’s debt accused the agency of messing things up. They pointed to accusations by some states that the amount of their debt in their records and the record at the DMO were different. Another speculation that has been out there for a while is the time difference between when money is appropriated for debt servicing and institutions
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