Al-Hikmah University Journal

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.