OVERVIEW OF PUBLIC DEBT AND ECONOMIC GROWTH IN NIGERIA (2001 – 2019)

OVERVIEW OF PUBLIC DEBT AND ECONOMIC GROWTH IN NIGERIA (2001 – 2019)

Abstract:
This paper provides an overview of the relationship between public debt and economic growth in Nigeria from 2001 to 2019. Public debt has been a critical issue for many developing countries, including Nigeria, as it carries both potential benefits and risks for economic development. Understanding the dynamics between public debt and economic growth is crucial for policymakers in formulating effective debt management strategies.

The study utilizes a comprehensive dataset on public debt levels and economic indicators to analyze the relationship between public debt and economic growth in Nigeria over the specified period. Various economic variables, including GDP growth rate, debt-to-GDP ratio, inflation rate, and external debt, are considered in the analysis.

The findings suggest a mixed relationship between public debt and economic growth in Nigeria during the study period. Initially, public debt was associated with higher economic growth, indicating that borrowing was used to finance productive investments. However, as the debt burden increased, the positive relationship weakened, and the adverse effects of debt on economic growth became more prominent.

The analysis also reveals that the composition of public debt plays a crucial role in shaping its impact on economic growth. External debt, particularly when denominated in foreign currencies, poses significant challenges due to exchange rate volatility and increased vulnerability to external shocks. On the other hand, domestic debt can have a more positive effect on economic growth if it is channeled towards productive sectors and accompanied by effective debt management policies.

Furthermore, the study highlights the importance of sound macroeconomic policies, institutional frameworks, and governance in managing public debt. Effective debt management strategies, including debt sustainability analysis, debt restructuring, and proper allocation of borrowed funds, are essential for minimizing the adverse effects of public debt on economic growth.

In conclusion, this study provides valuable insights into the relationship between public debt and economic growth in Nigeria from 2001 to 2019. It emphasizes the need for prudent debt management practices, a diversified debt portfolio, and supportive macroeconomic policies to ensure sustainable economic growth while minimizing the risks associated with public debt. These findings have implications for policymakers and stakeholders involved in debt management and economic development in Nigeria.

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