The Impact Of External Debts On Economic Growth In Nigeria

The Impact Of External Debts On Economic Growth In Nigeria

Preface

Nigeria’s debt profile has been on the increase over the times, and the country may soon reach a debt threshold that would affect profitable growth negatively. This may lead the frugality to a debt trap. The study empirically examines the impact of external debt on profitable growth in Nigeria. Descriptive and econometric logical tools were used in data analyses. Data on Real Gross Domestic Product( RGDP), External Debt Stock, External Debt Service Payment, and Exchange Rate were collected from Central Bank of Nigeria Statistical Bulletin, 2014 and Debt Management Office 2014, colorful issues. individual tests were conducted using Augmented Dickey Fuller Unit Root Test,Co-integration, and Error Correction Model. Threshold Autoregressive model was used to test the position of debt sustainability in Nigeria within the period under review. The independent variable was RGDP, while the explicatory variables were External debt stock, External Debt Service Payment, and Exchange Rate. The study showed that External Debt had a positive and significant relationship with Real Gross Domestic Product in the long run. The exploration shows that Nigeria isn’t in a debt trap and external debt is sustainable in Nigeria. The study recommended amongst others, application of external debt in to productive sectors of the frugality rather than intermittent expenditure, presently Nigeria isn’t in a debt trap, thus can still adopt for growth purposes and that the current trend in external debt is still feasible. The country can adopt within the quested threshold. This will affect profitable growth appreciatively.