Implication of Domestic Debt on Economic Growth in Nigeria

Abstract

The study assessed the implication of domestic debt on the growth of the Nigerian economy using treasury bills, treasury bond and other domestic debt instruments on economic growth. The ex-post facto research design was used. Secondary data were gotten from the CBN statistical bulletin for the period 1990 to 2019. The data were analyzed using the Autoregressive Distributive Lag (ARDL) technique. Findings from the analyses showed that there was an insignificant effect of treasury bill on the growth of the Nigerian economy both in the short run and long run. The study showed that there is a significant short run effect of treasury bond but an insignificant long run effect on the growth of the Nigerian economy and lastly, it was discovered that domestic debt instruments other than treasury bond in Nigeria had no significant effect on economic growth. Based on the findings, the study recommended that government should reduce short term domestic borrowing and use more of long-term debt instrument in mobilizing funds for its activities to enhance economic growth. Also, in using long term borrowing instrument the focus should be on treasury bond as it promises high economic returns and prospects in the short run which could add up to long term economic progress and lastly borrowed funds should be monitored closely to avoid embezzlement and to ensure that it is used for infrastructural building and for the attainment of peace and security of lives and properties as this would trigger economic growth both in the long run and short run.