Impact of Public Debt on Economic Growth in Nigeria: A Time-Series Investigation (1986–2024)

Nigeria's public debt has undergone a dramatic transformation over the past four decades, oscillating between periods of unsustainable accumulation and debt relief, and always remaining deeply intertwined with the fortunes of its oil-dependent economy. This study investigates the impact of public debt — decomposed into external debt (EXD), domestic debt (IND), and debt service payments (DS) — on economic growth in Nigeria over the period 1986 to 2024, while controlling for demographic factors (DF), macroeconomic factors (MF), institutional factors (INSF), global factors (GF), and infrastructural factors (INFF). Employing Ordinary Least Squares (OLS), Fully Modified OLS (FMOLS), and Dynamic OLS (DOLS) estimation techniques, alongside comprehensive diagnostic and stability tests, the study establishes robust long-run relationships among the variables of interest. The empirical results reveal that external debt, domestic debt, and debt service payments exert statistically significant negative effects on economic growth, consistent with debt overhang and crowding-out hypotheses. Institutional quality — measured through government effectiveness and corruption control — emerges as a potent moderator of the debt-growth nexus, while infrastructure development and human capital accumulation exert positive and significant influences on growth. Inflation consistently dampens growth across all model specifications, and oil price fluctuations, though positive, underscore Nigeria's persistent vulnerability to external commodity shocks. The findings carry important implications for fiscal sustainability frameworks, debt management strategies, and structural reform agendas in Nigeria and analogous resource-rich developing economies. The study recommends a decisive pivot toward debt-for-development strategies anchored in institutional reform, infrastructure investment, and economic diversification.