Abstract
Nigeria with budgetary and balance-of-payments gaps to meet, maintaining large stakes of public debt have to set aside a sizeable fraction of their scarce resources to service their debt, which naturally affects their development spending in general and allocations for the social and community sector in particular. This study evaluates the nexus between public debt servicing and social and community sector spending in Nigeria. The panel dataset includes public debt servicing and public spending on social and community sector, it spans the period 2015–2022. Our empirical analysis is based on three interrelated equations for different spending categories, which are estimated using the general method of moments. The study’s results confirm the common wisdom that outstanding public debt and its servicing liability have an adverse impact on public spending, particularly on social and community sector spending. This suggests that Nigeria need to mobilize their own resources and minimize their dependence on borrowing as far as possible.
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