Public Debt Management and Economic Growth in Nigeria

Abstract

Globally, when various channels of revenue available to the government fail to yield adequate resources to handle government expenditure or financial responsibilities, the government resorts to borrowing as an alternative source to complement revenue from taxes and other sources. However, the inability to optimally utilize borrowed funds had resulted in a high public debt profile and had retarded the economic growth of the Nigerian economy over the years. Consequently, this study investigated the effect of public debt management on economic growth in Nigeria. An ex-post facto research design was employed, while time-series data on the relevance of macroeconomic variables to public debt management and economic growth were sourced from secondary sources. The sample population purposively was chosen from data available from the 2020 edition of the Central Bank of Nigeria’s (CBN) Statistical Bulletin, which covers 40 years (1981-2020). Results revealed that public debt management RGDP) had a positive significant effect on economic growth in Nigeria (AdjR2 = 0.995; F (5, 31) = 99.562; p-value = 0.000). The conclusion validated that effective public debt management tends to have a positive significant effect on economic growth in Nigeria. It is therefore recommended that adequate measures be put in place to ensure optimal investment of borrowed funds in productive ventures in Nigeria Also, the loans should be serviced when they are due to avoid sanctions and accumulation default charges.