The Effect of Internally Generated Revenue Components on Domestic Debt Accumulation in Nigeria’s North Central States

Domestic debt has been a major concern and has brought about several reactions by stakeholders in accounting literature. Sustaining the high debt profile of North Central states has become worrisome that needs urgent attention. The size of domestic debt has been a persistent problem that has brought about the inability to meet societal expectations. This inability to sustain the debt profile can be traced to the insufficiency of internally generated revenue. The study therefore investigated the effect of Internally Generated Revenue (IGR) on domestic debt of North Central States in Nigeria. Ex-post facto research design was adopted. The population of the study was 6 States in the North central, Nigeria which also constitute the sample of the study. Data covering a period of 14 years (2010–2023) were extracted from audited accounts of the States. The reliability of the data was premised on the certification of the audited accounts by the Nigerian regulatory and legal authorities. Descriptive and inferential statistics were used to analyze the data at 0.05 level of significance. Findings reveal that internally generated revenue had a significant effect on size of domestic debt (Adj R2 = 0.266, F (4, 79). The study concluded that internally generated revenue impacted size of domestic debt of North Central States in Nigeria. The study recommends that the State Government should enhance compliance mechanisms to streamline Pay as You Earn (PAYE) collection processes and incentivize tax compliance.