Present Implication of Debt and Debt Service in Nigeria

Indebtedness in a poor country like Nigeria has recently drawn researchers’ attention since after the 2006 debt relief. With the current exchange rate, debt servicing is almost the generated revenue in Nigeria. This has the implication of crowding out fiscal projects for development. This is the crux of this study. The study used secondary data, from CBN financial report from 1985-2021. Using Vector Error Correction (VECM) Estimates, the study established a long-run relationship among the variables. Further findings revealed that Foreign Debt (FDBT) has significant and negative effect (-0.02p-0.015) on Nigerian economic growth. However, against our apriori expectation, debt servicing had a positive impact on NGDP. The government should acquire external debt largely for productive economic reasons to the extent that the debt should be repaid from such productive adventure. This would increase the productivity of the nation.