PUBLIC DEBT AND ECONOMIC PERFORMANCE IN NIGERIA: STOCKADJUSTMENT MODEL (1990-2019)

Abstract

Economic performance has become a challenge for most countries around the world with public debt becoming
inevitable. Therefore, the main reason of this study is to examine the impact of public debt on future economic
performance in Nigeria using the period from 1990 to 2019. Stock adjustment technique was employed in the
analysis. Gross domestic product, which proxied economic performance, was made the dependent variable while
public debt, broken into domestic debt and external debt, stood as the independent variable. The result showed that,
in both short and long run periods, domestic debt had a positive and significant impact on economic performance
while external debt also had a positive but insignificant effect on economic performance. The study therefore
recommends that the government should not relent from its borrowings when the need arises, and priority should be
given to domestic debt since it has significant impact on the performance of the economy at present and future
periods. Prudent measures should be put in place to ensure that all externally borrowed funds are tailored to the
right direction and purpose of obtaining them. Also, government should improve product development by
encouraging the development of varieties of money and capital market instruments.