An Econometric Analysis of the Impact of Public Debt Burden on the Nigerian Economy

Abstract

Amongst development economists, the injection of capital from outside a system, be it corporate or national has become an acceptable way of boosting investment and improving the balance of payment. Thus, there is nothing wrong whatsoever in the accumulation of debt especially when the debtor’s policies inspire confidence in his ability to manage his aitairs effectively and repay the debt when due. A cause tor concern arise however when the debt are accumulated at a fairly rapid pace far in excess of the debtor’s capacity to repay or where the pattern of debt accumulation borders on financial imprudencc only in such case do the magnitude of debt and their servicing obligations begin to pose serious problems to both the borrowers and his creditors. This study examines the impact of public debt burden on the Nigeria economy and agrees that public debt growth has negative implications on gross domestic investrnent and Nigeria's external trade. Certain policy recomrnendations are made to reduce the country‘s public debt burden, accelerate the growth of gross investment and improve balance of payment.