Munich Personal RePEc Archive

Does external debt impair economic growth in Nigeria?

Ekor, Maxwell and Orekoya, Tayo and Musa, Philip and Damisah, Osikwemhe (2021): Does external debt impair economic growth in Nigeria? Published in: Journal of Economics and Finance , Vol. 12, No. 2 (2021): pp. 20-26.

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The debt and economic growth debate remain topical in Nigeria given the controversies that often trail the government’s plan to always borrow to fund the annual budget deficits. This study provides an empirical contribution to the national discourse by assessing the impact of foreign debt on the Nigerian economy. Applying a dynamic variant of the auto-regressive distributed lag model, the main result from this study is that in the long run, external debt accumulation and the associated service payments have negative effects on the economy. The policy implication is that government should always ensure that external debt accretion is sustainable and used for infrastructure development.

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