The Impact Of Public Debt On Economic Growth In Nigeria

Abstract

This study investigates the impact of public debt on economic growth, using annual time series data for a period of 42 years (1981 to s2023) using Autoregressive Distributive Lag (ARDL). The study further tested the unit root properties of the variables using Augmented Dickey Fuller (ADF) and the results indicate that most of the variables were stationary at level while others at first difference meaning that there is no unit root. The results of the cointegration test reveal that the F-statistic values of the test are greater than both I(0) and I(1) critical value bounds at 5% level of significance which is a condition for rejecting the null hypothesis of no long run relation among the variables of the equation. The study provides evidence that coefficients of investment and exchange rate are positively related to economic growth while domestic debt, external debt and debt servicing are negatively related to economic growth. The study recommends that government must ensure that borrowing should be directed strictly toward productive capital projects which will generate long-term returns. Also, exportation of domestic products should be encouraged by giving export subsidies to exporters, as high exchange rates make domestics products more attractive in the foreign markets.